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Exxon Mobil starts construction on $2B Baytown chemical expansion

December 14, 2021

Construction has started on a roughly $2 billion expansion at Exxon Mobil Corp.’s (NYSE: XOM) petrochemical manufacturing complex in Baytown — the largest in the United States — one of the project’s contractors said.

The Irving, Texas-based company is adding an alpha olefins unit and a performance polymers unit to the complex, the company said. The additional units have been in the works since at least 2018, according to documents filed with the Texas comptroller’s office.

The company made a final investment decision, or FID, on the project in May 2019.

Exxon expects both units to start up in mid-2023, said Denise Burcham, strategic ventures executive for Exxon Mobil Chemical Co.

Australia-based industrial contractor Worley has handled engineering and procurement and now is constructing the offsite portions of the project, including the infrastructure needed to connect the new units to the larger complex, the company said.

The linear alpha olefins unit will have the capacity to produce 350,000 tons of LAOs per year, while the performance polymers unit is designed to produce 400,000 tons of Vistamaxx-branded polymers per year, according to Exxon.

Production of LAOs uses ethylene as feedstock, which is derived from ethane, a natural gas liquid. Thanks to the shale fracking boom, production and availability of NGLs like ethane has tripled in the U.S. since 2008, according to Energy Information Administration data.  

“We’re creating an entire new business based on LAOs,” joining a $10 billion global market, a spokesperson said in a promotional video on Exxon’s website. LAOs are used to produce polyethylene plastic, engine and industrial oils, and other chemicals. 

Vistamaxx polymers, whose feedstocks include ethylene and propylene, are typically blended with other plastic feedstocks to add elasticity, softness, flexibility or cost savings, according to Exxon’s website. The end results include plastic film, elastic nonwoven fabrics and drinkware, among other products.

“As industry demand for linear alpha olefins and Vistmaxx continues to grow, and we look forward to continuing to supply our existing customers and welcoming new ones,” Burcham said in a statement.

Goose Creek Independent School District and Exxon agreed in 2019 to limit the taxable valuation of the two new units over the first 10 years of their operation, a tax incentive that will save the company $107 million over the life of the agreement, according to the Texas comptroller’s office.

However, the agreement under Chapter 313 of the Texas Tax Code also requires Exxon to pay Goose Creek ISD millions of dollars to make up for some of the lost tax revenue.

The 100-year-old Baytown complex is the largest integrated petrochemical complex in the U.S., the company has said. It spans about 3,400 acres along the Houston Ship Channel and includes a refinery, chemical plant, olefins plant, plastics manufacturing and a global technology center.

By Emily Burleson, Houston Business Journal