Rebirth of Chemical Industry in Texas due to Cheap Natural Gas and Ethane

Texas Chemical Industry Rebirth

Celanese Plans Methanol Plant To Use Cheap Methane from Natural Gas

Celanese Corp. (CE), the world’s largest maker of acetic acid, plans to produce methanol from natural gas, currently a low cost commodity, outside Houston in Texas, according Bloomberg News. 

The chemical plant at the company’s site in Clear Lake, Texas, will produce 1.3 million metric tons of methanol a year when operations begin after July 1, 2015. Methanol is used to make acetic acid.

Celanese is the latest chemical maker to announce new facilities to take advantage of inexpensive natural gas, which hit a 10-year low in April. Methanex Corp. (MX), the world’s biggest methanol maker, is relocating a Chilean chemical plant to Louisiana, and Chevron Phillips Chemical Co. is spending $5 billion to make plastics in Texas.

“The positive developments in the U.S. energy complex and the current and emerging natural-gas surplus make it advantageous for us to produce our own methanol requirements for U.S. acetyl production,” Mark Rohr, Celanese chairman and chief executive officer, said in the statement.

Acetyls, including acetic acid, are used in paints, adhesives and polyester. The company isn’t disclosing the cost of the project, said Linda Beheler, a Celanese spokeswoman.

New Chevron Phillips Chemical Plant in Texas

A chemical plant to make 1-hexene is now under construction at Chevron Phillips Chemical‘s Cedar Bayou complex, which will be the world’s largest, and further illustrates Texas’ growth as a major international hub for a petrochemical industry benefiting from a surplus of cheap natural gas.

This will be the first new facility for Chevron Phillips Chemical in the Gulf Coast area since 2003. Chevron Phillips Chemical, headquartered in The Woodlands, is a 50-50 joint venture of San Ramon, Calif.-based oil giant Chevron Corp. and Phillips 66, which recently spun off from Houston’s Conoco-Phillips. 

According to the Houston Chronicle, the plant will use ethylene to create 1-hexene, an essential ingredient for a range of plastic products. Ethylene is a product of ethane, one of the largest components of natural gas. The company plans to hire 1,000 workers to build the plant, which is expected to be online in early 2014.

Chevron Phillips Chemical also plans other expansions of its Gulf foothold – a new ethane cracker at Cedar Bayou; two new polyethylene units near its Sweeny plant in Old Ocean; and an expansion of its fractionator that separates the individual components out of natural gas liquids at the Sweeny facility.

“This marks the first time that “downstream technology” has been a source of economic growth in Houston for three decades,” said Barton Smith, professor emeritus of economics at the University of Houston. “For a lot of our petrochemical products, natural gas is a crucial input, and all of a sudden, you have natural gas prices at fire sale prices. It really is a rebirth for manufacturing.”