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Exxon, SABIC plan Gulf Coast ethylene cracker

Project marks first major U.S. shale gas play for Saudi Arabia’s SABIC

by Marc S. Reisch
July 27, 2016 | A version of this story appeared in Volume 94, Issue 31

Construction workers surrounded by concrete and steel forms.
Credit: ExxonMobil
ExxonMobil is already building this ethylene cracker in Baytown, Texas.

ExxonMobil Chemical and Saudi Basic Industries Corp. are planning a multi-billion-dollar petrochemical complex on the U.S. Gulf Coast. The jointly owned project marks SABIC’s first major effort to take advantage of U.S. shale gas feedstock.

SABIC already operates ethylene crackers and derivative plants alone and with partners in Saudi Arabia, Europe, and Asia. The proposed U.S. facility would include a 1.8 million metric-ton-per-year steam cracker—the world’s largest, the partners say—and downstream ethylene glycol and polyethylene plants. Sites in Louisiana and Texas are being considered.

SABIC and ExxonMobil are already partners in two petrochemical ventures in Saudi Arabia—Yanpet and Kemya—that have allowed ExxonMobil to take advantage of low-priced gas feedstock for 35 years. But now the tables have turned. With the recent run-up in Saudi gas prices, the U.S. has become the more attractive investment location.

Dow Chemical, ChevronPhillips, Sasol, and ExxonMobil itself are among the companies already building shale gas-based ethylene plants in the U.S. These facilities are generally set to open in the next year or two. If the new SABIC/ExxonMobil plant is built, it will likely come on line after 2023.

Dave Witte, senior vice president at the consulting firm IHS Chemical, expects most of the proposed plant’s ethylene derivative output to be exported. World ethylene demand is growing at 5 million metric tons per year. Both SABIC and ExxonMobil are already global ethylene leaders and need to invest if they want to keep their market share, he says.


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