WTI Crude
50.43
Brent Crude
56.58
Natural Gas
2.96

Houston prepares for its plastics and chemicals export boom

Facebooktwitterlinkedininstagrammail

Written by Jordan Blum

Click HERE to Read the Article by the Publisher.


920x1240The Port of Houston has evolved as the largest U.S. port that ships more products overseas than it imports as the region’s burgeoning chemicals, plastics and fuels industries make the region an increasingly bigger player in the global economy.

That role is expected to expand as growing populations and rising standards of living in developing nations demand more energy and products derived from Texas’ oil and gas fields. Along the Gulf Coast, companies are moving to meet that demand, building facilities to process liquefied natural gas and plants to make chemicals and plastics.

In less than a decade, more than 100 petrochemical projects worth $50 billion are expected to be completed in Texas, according to the American Chemistry Council, a trade group.

The equivalent of more than 1.1 million containers were shipped out of the Port of Houston last year, 15 percent more than were imported, making Houston the biggest net-exporter among major U.S. ports. It was the sixth consecutive year that exports exceeded imports at the Port of Houston, a stark contrast to the nation as whole, which has run a trade deficit for 40 years.920x1240-1

The growth of Houston’s exports is another example of how the so-called shale revolution has remade the local economy and its relationship with the world. Despite the oil bust that has led to scores of bankruptcies and tens of thousands of job losses, the production and abundance of cheap oil and natural gas has spurred the explosion in petrochemicals, which use natural gas as a feed stock, and LNG projects, which allow natural gas to be shipped to foreign markets hungry for energy.

The lifting last year of the decades-long ban on crude exports also could add to Houston’s trade surplus, as could the recently completed expansion of the Panama Canal, which will allow larger ships to take the shortcut to Asia.

The port and the Houston Ship Channel are moving to accommodate the expected surge in exports as new plastics and petrochemical plants come online over the next several years. The Port Authority is spending $315 million on improvements and expansions this year.

Overall, more than $700 million will be invested to upgrade and add larger container cranes to the Barbours Cut terminal, where plastics cargoes are loaded onto ships. The channels at the Barbours Cut and Bayport terminals are being dredged to accommodate the expected increase in traffic and ship sizes.

“What are you going to do with all this (plastic)resin business? We know it’s coming,” said Roger Guenther, executive director of the Port of Houston Authority. “We’ve been preparing for it.”

Overseas demand

Speaking Thursday at the Gulf Coast Industry Forum – previously called the Petrochemical Maritime Outlook Conference – in Pasadena, top executives highlighted how the region will ship out more plastics, petrochemicals, crude oil, liquefied natural gas, ethane, propane, butane and refined fuels to power the developing world.

“The transportation systems and the port are going to get very busy over the next few years,” said Dale Friedrichs, a plant manager for LyondellBasell, the Houston-based petrochemical giant.

LyondellBasell could decide as soon as September where to build a major plastics plant along the Gulf Coast. La Porte, southeast of Houston, is among the possible locations.

Most of the overall growth comes in the manufacturing of building-block chemicals and plastics to serve the growing middle classes in China, India and other parts of the world as they demand more products and packaging. The locally made resins are typically shipped in tiny pellet form to be melted and shaped as needed overseas.

ExxonMobil and Chevron Phillips Chemical are building out multibillion-dollar expansions in Baytown and Mont Belvieu. Exxon’s existing Mont Belvieu plastics production is mostly consumed in the U.S. But the new production from the expansion, scheduled to be completed next year, is slated entirely for export.

The growth in the petrochemical industry and exports are another example of how Houston has become more than an oil town, helping it to weather the recent oil bust better than in the past, said Maria Burns, director of the University of Houston’s Logistics and Transportation Center.

“The past year has been tough,” she said. “But, even if the oil prices are low, the resins and chemicals are going to lift Houston up,” Burns said.

‘We had a vision’

So far this year, overall port activity is down 5 percent from a record-breaking 2015. Officials say the decline is temporary, attributing it to the drop in oil field equipment coming through the port, officials said.

Still, the region is now exporting crude oil and Houston-based Cheniere Energy in February became the first U.S. company to export liquefied natural gas out of the Sabine Pass terminal in Louisiana near the Texas border.

Houston’s Enterprise Products Partners is the world’s largest exporter of propane. The company also will ship out ethane, the primary feedstock for petrochemicals, when it completes the world’s biggest ethane export facility along the Houston Ship Channel.

“We had a vision five years ago watching the shale revolution that the U.S. was going to be long on hydrocarbons,” said Enterprise Executive Vice President Bill Ordemann, referring to the booming production that led to the glut.

“We felt like a vibrant export market was going to be necessary.”


Tags: oil, crude, energy, natural gas, gas


News Article Email Sign-Up
Sending

Written by Jordan Blum

Click HERE to Read the Article by the Publisher.

Houston 2016 VIP Ticket

Facebooktwitterlinkedininstagrammail