ExxonMobil awards contract for new PP unit in Baton Rouge

Katherine Welles/Shutterstock.com

EXXONMOBIL is investing in a new polypropylene production unit at its Baton Rouge complex in Louisiana, US. The news comes alongside plans to dramatically increase oil and gas output from its Permian fields.

Construction of the new 450,000 t/y polypropylene unit will begin this year and startup is expected by 2021. An engineering, procurement and construction (EPC) contract for the unit has been awarded to Jacobs Engineering and Turner Industries.

Polypropylene has a wide range of end-uses, including food packaging and automotive plastics. The Baton Rouge complex currently includes a 502,000 bbl/d refinery, as well as chemicals plants producing polyethylene and lubricants.

The investment is part of a wider initiative that ExxonMobil calls ‘Growing the Gulf’. This includes building a third crude unit at its Beaumont refinery in Texas that will expand processing capacity by more than 65%; expand polyethylene output at Beaumont, also by 65%; and building a new 1.5m t/y ethane cracker at its Baytown refining and chemicals complex in Texas.

This boost in chemicals output is joined by further output upstream with the oil major announcing plans to increase production from its Permian assets located in the southern US by 80% – or 1m bbl/d of oil equivalent output – as soon as 2024. To support this growth, it will construct 30 sites to boost oil and gas processing capacity, water handling, and facilities to handle up to 600,000 bbl/d of oil and 1bn ft³/d of gas.

The company expects double-digit returns from its investments, even at low oil prices, revealing its Permian production will average returns of more than 10% even at US$35/bbl. Today’s price for West Texas Intermediate crude is above US$55/bbl.

Analytics firm IHS Markit projected last year that production from the Permian Basin will more than double by 2023, rising 3m bbl/d to 5.4m bbl/d. It expects this will contribute 60% of total growth in global production.