IIR Chemicals Analyst: Chevron Phillips Chemical Startups Point to Strong Confidence in Ethylene, Polyethylene Projects
Chevron Phillips Chemical (The Woodlands, Texas), a 50:50 joint venture between Chevron Corporation (NYSE:CVX) (San Ramon, California) and Phillips 66 (NYSE:PSX), is in a good position to take advantage of the remarkably low prices for ethane, as three of its largest petrochemical projects under construction will use the chemical to create ethylene, a key ingredient for plastics. With plastics demand booming globally, the joint venture could be looking at further growth after these projects come online next year. Industrial Info is tracking $3.37 billion in growth projects at facilities operated fully or in part by Chevron Phillips.
Ethane is so cheap right now that many natural gas processers are choosing to leave it in the natural gas stream, rather than spend the money to extract it; the ethane later is sold as natural gas at fuel value, a practice known as "ethane rejection."
“The Petrochemical Industry continues to witness positive sentiment toward long-term growth, with even more polyethylene and ethylene capacity announced and confirmed in recent weeks,” said Trey Hamblet, Industrial Info's vice president of global Chemical Processing Industry research. “Even in the wake of billions of pounds in new ethylene capacity under construction in the U.S., even more is planned and still more continues to be announced in recent weeks.”
He added: “The confirmation of new capacity moving ahead in the U.S. Northeast region is a strong indicator of the level of confidence most everyone has in the chemical industry currently.”
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