In the latest sign of the petrochemical resurgence spurred by the U.S. shale boom, a La Porte plastics manufacturing complex will undergo an expansion to produce more high-density polyethylene, which is used to make plastic bags, bottles, jugs and pipes.
Ineos Olefins & Polymers USA announced Friday that it broke ground on the new facility at its La Porte manufacturing complex. The $500 million project is a joint venture between the North American subsidiary of the privately owned Swiss-chemicals company Ineos and Sasol, energy and chemical company headquartered in South Africa.
“The economics of shale gas have been a real game-changer for the ethylene market and thus the downstream business as well,” said Charles Saunders, chief legal officer at Ineos Olefins & Polymers USA in an interview with Fuel Fix. “Gas in the U.S. has been so price advantaged for so long – and will continue to be price-advantaged – that the economics are just there for this type of expansion.”
Although the plunging price of international crude may steal away some of the competitive advantage of cheap domestic gas that has fueled a petrochemical building spree in North America, Saunders said Ineos remains optimistic about the viability of the market for such projects.
Related: Oil prices not hitting petrochemical plant expansions
Ineos Olefins & Polymers USA will operate the facility, which is expected to produce 470 kilotons per year of high-density polyethylene once it begins operations in 2016.
The project will generate 1,000 construction jobs and 30 permanent jobs, Saunders said.
Ineos’ La Porte complex was an ideal location because it offers close access to Sasol’s expanding footprint in Southwest Louisiana, where the company recently announced plans to build a $8.1 billion ethane cracker. The massive piece of equipment converts ethane, a natural gas liquid, into ethylene, a key component in plastics and chemicals.
Related: Sasol approves plan for $8.1 billion ethane cracker near Lake Charles
“We are delighted to be moving ahead on this important project which supports our North American growth strategy,” Fleetwood Grobler, executive vice president of Sasol’s global chemicals business said in a statement.
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