Due to North America’s copious supply of hydrocarbon feed and energy, developers have committed to nearly $160 billion of announced capacity investments in petrochemical projects growth, including ExxonMobil Chemical Co.’s ethylene expansion in Baytown, Texas. But how sturdy are these investments in an ever-changing energy environment?
According to ExxonMobil Chemical President Neil Chapman, the only way to ensure these major investments will be financially robust across the industry cycles is to ensure the projects are advantaged across the entire value chain.
“Our particular toolkit contains advantages in integration on the operating feed side, higher-value differentiated products versus selling commodity products, a sophisticated global supply chain and people on the ground in the high-growth developing economy markets to deliver the support our customers require,” he said.
Discussing “The Foundation for Petrochemical Success in a Changing Energy Environment” at the 31st Annual IHS World Petrochemical Conference held recently in Houston, Chapman reminded conference delegates market volatility, particularly in the energy and petrochemical markets, is the norm rather than the exception.
“Over the last 18 months, crude oil is down, naphtha is down and North America’s ethylene advantage is also down,” Chapman said. “But have any of the fundamentals really changed? At ExxonMobil, we don’t believe so.”
ExxonMobil’s investment in the Baytown expansion, an ethylene cracker, is based on “two simple long-term beliefs,” Chapman said. “First, the growth in petrochemical demand remains robust. And second, the North American resource base, driven by unconventional oil and gas, is abundant.”
Chapman noted the main driver in demand growth for chemicals and chemical products is population. While the global population is expected to rise to about 9 billion people by 2040, more important, Chapman said, are rising “middle-class” incomes.
“We see global demand for chemicals rising by nearly 45 percent, or 4 percent per year, over the next decade,” he said. “The growing urbanized middle classes will drive heightened demand for products made from petrochemicals — everything from pack-aged goods to automobiles and appliances.”
Chemical producers will meet this growing product demand by maintaining access to competitive feedstock and energy.
“Today, thanks to shale and other unconventional oil and gas, North America has one of the largest resource bases in the world,” Chapman said.
Another key to ExxonMobil’s success, Chapman said, is its ability to remain resilient over a wide range of feedstock and energy scenarios.
“It’s an objective that we relentlessly pursue at ExxonMobil. We’ve long under-stood the value of a diversified and integrated business that’s robust to industry cycles,” he explained. “We optimize our integrated business across the entire value chain. Our chemical facilities are highly integrated with our refineries around the world or have access to attractive upstream feedstocks.”
ExxonMobil’s refining and chemical facilities share an unwavering focus on operational excellence and increased efficiency, Chapman added.
“At our large integrated manufacturing platforms, we pursue efficiencies enabled by interconnected facilities between the chemicals and refineries, harmonized operating practices and sophisticated models to optimize all the streams, not just on a day-to-day basis but even on an hour-to-hour basis,” he explained. “That’s the way to become efficient for us.
“When you’re this integrated, you’re better able to create additional value, you enjoy long-term relationships, and all of that can help mitigate the volatility of the markets.”
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