Chemical Business Segment at Phillips 66

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Conoco and Phillips 66 announced on November 18, 2001 that their boards of directors had unanimously approved a definitive agreement for a "merger of equals". The merged company, ConocoPhillips, became the third-largest integrated U.S. energy company based on market capitalization and oil and gas reserves and production. On November 11, 2011 ConocoPhillips announced that Phillips 66 would be the name of a new independent oil and gasoline refining and marketing firm, created as ConocoPhillips split into two companies. ConocoPhillips kept the current name of the company and concentrated on oil exploration and production side while Phillips 66 included refining, marketing, midstream, and chemical portions of the company. Photo: Hugh Pickens all rights reserved.

by Hugh Pickens, Ponca City Oklahoma


The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy.

Major Sections of this report on Phillips 66 include:

Safety, Environment, Legal


Corporate


Strategic and Financial


Business Segments


Stock Market


Reference

Refining Business Segment


Increasing Profitability in Refining Business Segment


Detailed Look at Ponca City Refinery


Other Phillips Refineries


Other Locations


Contents

Master Index of Articles about Phillips 66

The 587 foot tall Mammoet PTC 140 crane, seen here from North First Street, towers over the Refinery Complex in Ponca City. The supercrane was used to move two new 232 ton coker reactor units within the refinery on September 29, 2013. Phillips was willing to invest $70 million in the two new coker reactor units because the Ponca City Refinery is one of the best run, safest, and most profitable of Phillips' fifteen worldwide refineries and Garland wants the refinery in Ponca City to continue to run smoothly and profitably. This photograph of the supercrane in Ponca City was taken from almost two miles away from the crane. Photo: Hugh Pickens All Rights Reserved.
Hugh Pickens, an analyst who closely follows Phillips 66, speaks with Phillips CEO Greg Garland (right) about the disposition of the North Tower, South Tower, and Research West at Phillips' Ponca City Refinery after Garland's speech to the Bartlesville Chamber of Commerce on August 13, 2014.

by Hugh Pickens, Ponca City Oklahoma


The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy.

Major Sections of this report on Phillips 66 include:

Safety, Environment, Legal


Corporate


Strategic and Financial


Business Segments


Stock Market


Reference

Refining Business Segment


Increasing Profitability in Refining Business Segment


Detailed Look at Ponca City Refinery


Other Phillips Refineries


Other Locations

Chemical Business Segment within Phillips 66

CPChem. Phillips 66's Chemicals business is conducted through its 50 percent interest in Chevron Phillips Chemical Company LLC (CPChem), a joint venture with Chevron U.S.A. Inc., a wholly-owned subsidiary of Chevron Corporation. Now in its 12th year of operations, CPChem is one of the world's top producers of olefins and polyolefins with more than 30 billion pounds of net annual chemicals processing capacity across its product lines. The rapid development of natural gas and NGL from shale formations in the United States is driving major growth opportunities for CPChem. At its Cedar Bayou Chemical Complex in Baytown, Texas, CPChem is building the world's largest on-purpose 1-hexene plant capable of producing up to 250,000 metric tons (551,000,000 lbs.) per year. Construction of the 1-hexene plant is expected to begin in the first half of 2012, and the project is anticipated to start up during 2014. CPChem also aims to construct a world-scale ethane cracker at its Cedar Bayou facility in Baytown, Texas, and two polyethylene facilities near its Sweeny facility in Old Ocean, Texas, with anticipated startup in 2017, pending final investment decisions. "Phillips 66 starts out with a clear advantage over many other downstream companies," said Garland. "We have a robust portfolio of businesses that already rank among the best-performing players in their industry segments, a strong financial position, an extraordinary global workforce, and a continued commitment to safety and operating excellence. We have an unparalleled foundation for success."[1] Graphic from Phillips Presentation to USB Global Oil and Gas Conference May 21, 2013.
The return on capital for the Chemicals Business Segment at Phillips 66 has been high in recent years. Garland said during his analyst call on April 9, 2012 that the Chemicals segment is primarily conducted through the 50/50 JV with Chevron. CPChem is one of the largest producers of olefins and poly olefins and has spent the last 10 years building one of the best positions in the Middle East, and CPChem has significant assets in the US which are advantaged given the NGLs from the North American shale plays. Garland plans to increase capital invesment in the Chemicals Business Segment. Derivative Photo: Hugh Pickens
Chevron Phillips Chemical Plant in Pasadena, Texas. Photo: Photo: Glass Door Only original, non-copyrighted images.
Chevron Phillips Chemical Plant in Cedar Bayou, Texas. Photo: Photo: Glass Door Only original, non-copyrighted images.
Chevron Phillips Chemical Plant in Sweeny, Texas. Photo: Photo: Glass Door Only original, non-copyrighted images.
Chevron Phillips Chemical Plant in Port Arthur, Texas. Photo: Photo: Glass Door Only original, non-copyrighted images.

There are two other operating segments in the new company: Chemicals and Midstream. “You never really heard us talk about chemicals; you never heard us talk about midstream, and both of those businesses trade at higher multiples than the refining business," says Garland. Phillips 66 will own half of the ChevronPhillips Chemical Company, a JV with Chevron. “Midstream and chemicals is what differentiates us."[2]

Garland said during his analyst call on April 9, 2012 that the Chemicals segment is primarily conducted through our 50/50 JV with Chevron. CPChem is one of the largest producers of olefins and poly olefins and has spent the last 10 years building one of the best positions in the Middle East, and CPChem has significant assets in the US which are advantaged given the NGLs from the North American shale plays.[3][4][5]

"As we've said, our Chemicals operations are conducted through our CPChem joint venture with Chevron. Our Chemicals businesses delivered superior returns. We think it's an exceptional growth platform. CPChem produces petrochemicals in over 70,000 different commercial and industrial products, holds global market positions in several key products, such as olefins, poly olefins, aromatics and other specialties. It has a large global footprint and we're rapidly expanding outside of the US. We think part of CPChem's success and its foundation is based upon -- is proprietary technology.We believe this ensures lower cost for us, it enhances our competitiveness.These are markets, these are technologies that we understand thoroughly. As you know, advantage feed stocks is critical to profitability and sustained returns in this business. CPChem has a substantial footprint in the Middle East. CPChem also has a large asset base in the US. It's primarily based upon ethane. It's allowing CPChem to recover attractive margins today.We believe after the Middle East, the US-based ethane based ethylene margins are going to be significantly advantaged versus margins in Asia and Europe, which are primarily based on naphtha. CPChem's done a good job over the last few years in terms of their portfolio management. They've been very disciplined on their costs.They have been shifting investments into higher returning opportunities, and the have moved from really last in their peer group to number one in their peer group on economic return."[6][7][8]

Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that Phillips is the only downstream independent company to have a significant ownership in a petrochemicals business. "We conduct our chemicals operation primarily through Chevron Phillips Chemical Company, 50/50 JV with Chevron. This joint venture is 12 years old. It stood the test of time. We have a great relationship with Chevron. We like the management team. We think they're a very talented group of individuals. We think there's good value between Phillips and Chevron as we manage the joint venture. We're completely aligned in terms of the growth profile, significant organic investment opportunity and growth in CPChem over the last ten years and certainly in the next ten years that we see."[9]

Chevron Phillips Chemical

Chevron Phillips Chemical, a joint venture with Chevron that will be part of Phillips 66, is benefiting from low prices for the natural gas it uses as feedstock to make products such as ethylene and polyethylene plastic. The company has made it clear that Chevron Phillips Chemical is a top priority. It has announced plans to invest in a new $5 billion ethylene cracker at Cedar Bayou.[10]

Phillips 66's Chemicals business is conducted through its 50 percent interest in Chevron Phillips Chemical Company LLC (CPChem), a joint venture with Chevron U.S.A. Inc., a wholly-owned subsidiary of Chevron Corporation. Now in its 12th year of operations, CPChem is one of the world's top producers of olefins and polyolefins with more than 30 billion pounds of net annual chemicals processing capacity across its product lines. The rapid development of natural gas and NGL from shale formations in the United States is driving major growth opportunities for CPChem. At its Cedar Bayou Chemical Complex in Baytown, Texas, CPChem is building the world's largest on-purpose 1-hexene plant capable of producing up to 250,000 metric tons (551,000,000 lbs.) per year. Construction of the 1-hexene plant is expected to begin in the first half of 2012, and the project is anticipated to start up during 2014. CPChem also aims to construct a world-scale ethane cracker at its Cedar Bayou facility in Baytown, Texas, and two polyethylene facilities near its Sweeny facility in Old Ocean, Texas, with anticipated startup in 2017, pending final investment decisions. "Phillips 66 starts out with a clear advantage over many other downstream companies," said Garland. "We have a robust portfolio of businesses that already rank among the best-performing players in their industry segments, a strong financial position, an extraordinary global workforce, and a continued commitment to safety and operating excellence. We have an unparalleled foundation for success."[11]

Latest News and Views on the Chemical Business Segment

November 10, 2017: Chevron Phillips Inaugurates Two New Polyethylene (PE) Units at Old Ocean, Texas

ICIS reported on November 10, 2017 that Chevron Phillips Chemical has inaugurated two new polyethylene (PE) units at its facility in Old Ocean, Texas, each with a capacity of 500,000 tonnes/year. They are part of CP Chem’s US Gulf Coast Petrochemical Project, a $6bn investment encompassing the two new PE plants in Old Ocean as well as a new ethane cracker at the company’s Cedar Bayou facility in Texas. “Congratulations to CPChem on a milestone that is helping Phillips 66 achieve its vision of providing energy and improving lives,” said Tim Taylor, president of Phillips 66. “The two new polyethylene units on the Texas Gulf Coast will have a global impact, providing the world with plastics for everything from automobile parts to smartphones." CP Chem’s new PE plants at Old Ocean will source much of their ethylene from the existing crackers at the Old Ocean site, while the company expects to remain a merchant seller of ethylene even with the new PE capacity. Company executives stated that much of the product from the new plant will be destined for export, although the percentages likely to be exported are not as high as many market participants had been anticipating for new US PE facilities. Exports will be shipped to whichever region of the world provides the best netback, with the company adding that the Old Ocean facility is among the most efficient and competitive PE plants currently operating in the global marketplace.[12]

September 29, 2017: Sweeny Homeowner's Lawsuit Says Phillips 66 and Chevron Phillips Knowingly Forced Floodwaters into their Neighborhood

Phillips 66 Built Dams "in the dark of night" Causing Homes to Flood Says Lawsuit by 350 Sweeny Residents. The Army Corps of Engineers is investigating claims by residents of Sweeny, Texas, that floodwaters were knowingly forced into their neighborhoods when Phillips 66 and Chevron Phillips dammed up two bayous. A lawsuit filed by about 150 families claims that by damming two nearby bayous without warning, the companies knowingly pushed floodwater away from the plant and into neighborhoods.

CBS News reported on September 29, 2017 that the Army Corps of Engineers is investigating claims by residents of Sweeny, Texas, that floodwaters were knowingly forced into their neighborhoods when Phillips 66 and Chevron Phillips dammed up two bayous. A lawsuit filed by about 324 families claims that by damming two nearby bayous without warning, the companies knowingly pushed floodwater away from the plant and into neighborhoods. Video shows how the plant stayed dry – and left homes under water. "It was full. I mean, it was almost to the top of where we're standing right now," said lawyer Josh Bowlin. Bowlin represents the families now suing the Phillips 66 and Chevron Phillips. He showed one spot that was dammed and a video of the backhoe that was used to remove the blockage. "I've talked to so many people that if they just had a little bit of notice they could have saved so much," Bowlin said.

Chevron Phillips did not respond to repeated requests for comment. But in a statement, Phillips 66 said, "Our priorities during the flood were to protect people and the environment...we do not believe these actions on one side of our property impacted the ongoing flooding event adjacent to the refinery or in the community." "I apologize for the profanity but that's a bunch of bull**** straight up. They made a conscious decision to save their plant but those actions have consequences and they need to be held responsible for those actions," said David Harquist. Residents say disaster struck after the storm had moved on. Floodwaters stopped receding and began rising again -- this time, into the house. "I was shocked. I was like what in the world is going on and then all of the sudden the water came up and it started coming up quickly," Harquist said.[13]

According to the Brazaport Facts, the petition alleges Phillips 66, Chevron Phillips and Chevron Phillips Chemical Co. caused flooding in areas near Phillips 66’s Old Ocean refinery by erecting dams on the Linville Bayou and Little Linville Bayou “in the dark of night,” starting August 30, 2017. “These dams gave the water flowing downstream nowhere to flow, except to flood the land and its people surrounding the Sweeny Refinery,” the petition states. Refinery employees “never warned a single Sweeny resident of the imminent danger upon them,” the petition states. The petition also claims “multiple chemical and petroleum spills occurred in Sweeny Refinery and were threatening contamination in the flowing waters.” Bowlin said the contaminants included the carcinogen benzene and wastewater, though analyses of the contaminants still are ongoing. Bowlin said he witnessed the blocked bayous first-hand and is confident evidence will show the refinery’s managers to have been at fault. The dams constructed by refinery workers contributed to flooding in an area that stretched as far north as FM 1301 and as far south as FM 521, Bowlin said. More than 350 residents and businesses have joined in a lawsuit claiming the actions at a Sweeny-area industrial site caused their properties to flood, and that number likely will grow, said Bowlin .[14]

The plaintiffs claim Phillips 66 employees erected temporary dams at the Linnville and Little Linnville bayous to prevent petroleum and chemical leaks at its Sweeny refining and petrochemical complex. The lawsuit alleges the Houston-based energy giant knew the efforts would cause nearby homes to flood, but that they did so anyway without notifying local communities. The lawsuit alleges that Harvey passed through the Sweeny area without causing any significant flooding, leaving residents to believe their properties survived intact. "They were wrong," the suit asserts. Phillips 66 built dams "in the dark of night" on August 30 to protect its massive refining complex. The suit contends that, because of the dams, the water level in Sweeny kept rising and flooded many homes, trapping people inside of their houses. "Unforgivably, defendants never warned a single Sweeny resident of the imminent danger upon them," the lawsuit claims. "Instead, defendants sat quietly even though their hydrologists had told them the town was going to flood because of the dams."[15]

September 20, 2017: Hurricane Harvey Delays Large Part of $6 billion Chevron Phillips Expansion at Sweeny Complex

My San Antonio reported on September that a large portion of Chevron Phillips' $6 billion expansion at Sweeny Complex is being delayed until next year after Hurricane Harvey's floodwaters created additional problems. The larger Baytown portion of the expansion project, which was originally expected to be finished by now, won't be completed until next year, Chevron Phillips said. The project involves a massive ethane cracker - on a plot the size of 44 football fields - that will separate a component of natural gas called ethane, which will provide the feedstock for some 1.5 million metric tons a year of ethylene, a common building block of plastics. Chevron Phillips said it is now on track to be finished by the end of March with it achieving full production by mid-2018.[16]

September 14, 2017: Texas Homeowners Sue Phillips 66 over Flooded Homes near Sweeny Refinery

ABC Channel 13 reported on September 14, 2017 that homeowners in Brazoria County have filed a lawsuit against Phillips 66 alleging that Phillips intentionally dammed the area around Sweeny Refinery with concrete and boxcars, directing the flow of water into residential areas in Sweeny and nearby Magnolia during Harvey. Plaintiffs also claim the water was contaminated with chemicals from the refinery and are asking for cash damages.

Phillips 66 released the following statement to ABC13 regarding the lawsuit: "Phillips 66 is committed to protecting the health and safety of the people involved in our operations and in the communities where we operate. During severe weather events like Hurricane Harvey, we have plans in place to protect our employees, our facilities and our communities. We are aware of concerns from the community suggesting that our actions to protect the refinery contributed to additional flooding in the area. We do not believe that to be the case, however, we are investigating the issue and have been working with local authorities. Although we experienced significant flooding in the refinery, our actions minimized the potential for release of feedstocks and products that could have negatively impacted the community and the environment."[17]

June 27, 2017: Chevron Phillips Chemical Announces President and CEO Leadership Succession

Businesswire reported on June 27, 2017 that that Peter Cella, president and chief executive officer (CEO) of Chevron Phillips Chemical Company, intends to retire from the company, effective August 1, 2017. Additionally, the company announced that Mark Lashier, currently executive vice president, Commercial, will succeed Mr. Cella as president and CEO upon Mr. Cella’s retirement. “Pete Cella’s strategic vision, his commitment to leadership development, and his relentless pursuit of operating the company’s global facilities safely and profitably will remain hallmarks of his distinguished career at Chevron Phillips Chemical,” said Timothy G. Taylor, president, Phillips 66 and member of the Chevron Phillips Chemical Board of Directors. “In addition, Pete was a guiding influence in advancing the company’s transformational $6 billion U.S. Gulf Coast Petrochemicals Project (USGC PP). On behalf of the Board of Directors and the company, we thank Pete for his contributions to reinforce Chevron Phillips Chemical’s footing as a world-leader in the industry.”

Mr. Lashier has nearly 30 years of experience in the chemicals industry, beginning his career as an engineer with the Phillips Petroleum Company, now Phillips 66 (NYSE: PSX), at its Bartlesville, Oklahoma, facility. By 1997 he had assumed management responsibility for Phillips Petroleum’s Olefins business. In 2000, he joined Chevron Phillips Chemical as Chevron (NYSE: CVX) and Phillips Petroleum combined their chemical businesses to create Chevron Phillips Chemical. Since that time, he has held numerous positions of increasing responsibility, including the Asia Region manager, senior vice president, Specialties, Aromatics, & Styrenics, and executive vice president, Olefins and Polyolefins. Mr. Lashier holds a bachelor’s degree and doctorate in chemical engineering from Iowa State University.[18]

June 5, 2017: Chevron Phillips Announces Expansion at Cedar Bayou Plant

Businesswire reported on June 5, 2017 that Chevron Phillips Chemical Company LP has successfully completed a low viscosity polyalphaolefins (PAO) capacity expansion at its Cedar Bayou plant in Baytown, Texas. The 20 percent capacity expansion enables the company to meet the increasing demand for high-performance lubricants in automotive and industrial applications. The project improves process safety and overall unit efficiencies while reducing waste generation for Cedar Bayou’s PAO unit. The feedstock for the new unit will be provided from Cedar Bayou’s recent 100,000-metric-tons-per-year expansion of its normal alpha olefins capacity. Construction began in April 2016 and supported up to 135 construction and engineering jobs.[19]

May 23, 2017: Chevron Phillips Chemical Increases Organosulfur Capacity at Tessenderlo Facility

Businesswire reported on May 23, 2017 that Chevron Phillips Chemical Company LLC (Chevron Phillips Chemical) has expanded its Tessenderlo, Belgium plant by debottlenecking its production unit for Ethyl Mercaptan (EM) and Tetrahydrothiophene (THT). Chevron Phillips Chemical’s Tessenderlo facility produces sulfur chemical intermediates, including mercaptans, sulfides, and polysulfides. Tessenderlo products are used in a wide range of end-use applications such as polymer modifiers, agricultural chemicals, mining and ore processing, gas odorization, water purification, pharmaceuticals, lubricant additives, and the reduction of coke formation. “Demand for EM and THT continues to grow around the world. This debottleneck builds on our already well-established production platform at Tessenderlo, allowing this Chevron Phillips Chemical site to continue to be a premier manufacturing location for organosulfur products, along with our Borger, Texas plant,” said Stephen Landry, Chevron Phillips Chemical’s Specialty Chemicals Business Manager.[20]

February 24, 2016: $6 Billion expansion Underway at Phillips 66’s JV at Cedar Bayou

Plastemart reported on February 24, 2016 that Phillips 66’s joint venture, Chevron Phillips Chemical, is in the middle of a US$6 bln expansion in Baytown at its Cedar Bayou plant east of Houston. The joint venture has said additional expansion could follow. Apart from chemicals, Phillips 66 has grown its pipeline and terminals business. While the midstream space is currently “taking a pause” because of weak oil and gas prices, CEO Garland said at the IHS Energy CERAWeek conference, the sector is bound to rebound. He hinted that Phillips 66 could be a potential buyer of any such assets that hit the market. “I think consolidation will be the name of the game in the midstream space,” Garland said. “We think supply and demand will re-balance and North American producers will be in the best position.”[21]

February 9, 2015: Chevron Phillips Chemical Co. Continues to Grow in Bartlesville

The Bartlesville Examiner-Enterprise reported on February 9, 2016 that Steve Satterlee, facility and operations manager for Chevron Phillips’ Bartlesville location, told the Bartlesville Rotary Club that Chevron Phillips employees 5,000 people worldwide, with approximately 200 employees at the Research Center in west Bartlesville. In May 2015, the company held a groundbreaking at the Bartlesville facility for a new test pilot plant that will examine products before they are sent to larger facilities along the Gulf Coast. Satterlee said the pilot plant should be operational later this year. “This is a significant investment in the infrastructure in Bartlesville,” Satterlee said. “We plan on being here for a long time.” Satterlee added that the company continues to do very well and has not been greatly impacted by the dramatic drop in oil prices. “We have good assets, good partners across the world and we will always be here (in Bartlesville)."[22]

November 20, 2015: Chevron Phillips Chemical Named Employer of the Year at Texas Workforce Conference

The Vindicator reported on November 20, 2015 that Chevron Phillips Chemical Company was named the Employer of the Year at the Texas Workforce Commission’s (TWC) 19th Annual Texas Workforce Conference held Nov. 18-20 in Dallas, winning among five exemplary finalists, and out of 26 private-sector employers. “Through its innovative partnership with local schools and Workforce Solutions, the Chevron Phillips Chemical Company’s powerful, local approach to workforce development supports a highly skilled workforce while creating jobs for their region,” said TWC Chairman Andres Alcantar. “I commend Chevron Phillips Chemical for its leadership and contributions to the Texas economy. I extend my sincere congratulations.” Together with its 50 percent owner, Phillips 66, Chevron Phillips Chemical with Sweeny ISD developed a petrochemical academy in Brazoria County in 2014. With an initial combined contribution of $1.6 million, the educational academy allows high school students to take dual-credit technical college-level courses while attending high school. “It is an honor for Chevron Phillips Chemical to be recognized as the 2015 Texas Workforce Solutions Employer of the Year. Workforce Solutions is a valuable partner who helps us get the message out that there are excellent career opportunities in the chemical industry,” said Chevron Phillips Chemical Vice President of Human Resources Greg Wagner.[23]

October 16, 2015: Phillips 66 Delays Sweeny Fractionator Startup after Mechanical Failure

FuelFix reported on October 16, 2015 that a temporary mechanical failure caused Phillips 66 to delay the startup of its new natural gas liquids fractionator at the Sweeny Complex. The 100,000-barrel-a-day Fractionator One project at Phillips 66’s Sweeny complex is part of a $3 billion capital expansion project. A fractionator takes natural gas liquids and separates them out into individual component products like ethane, butane and propane. “We experienced a mechanical issue with a furnace during startup of the Sweeny Fractionator One,” said spokesman Dennis Nuss. “We are working on repairs and expect to start up by the end of the fourth quarter. The associated storage caverns and pipelines have been completed and are ready to support the fractionator.”[24]

July 31, 2015: Phillips Chemical Business Segment Posts Earnings of $295 million for Second Quarter

Businesswire reported on July 31, 2015 that Phillips announced second-quarter earnings of $1,012 million, compared with earnings of $987 million in the first quarter of 2015. Adjusted earnings were $1,002 million, an increase of $168 million from the last quarter. “Our Refining, Chemicals, and M&S businesses delivered a strong quarter, providing solid earnings and cash flow,” said Greg Garland, chairman and CEO of Phillips 66. "We operated well, executed major turnaround activity and progressed our capital projects. We also returned more than $600 million to shareholders through dividends and share repurchases."

The Chemicals segment reflects Phillips 66's equity investment in Chevron Phillips Chemical Company LLC (CPChem). Second-quarter Chemicals earnings were $295 million, compared with earnings of $203 million in the first quarter of 2015. During the second quarter, CPChem's Olefins and Polyolefins business contributed $267 million to Phillips 66's Chemicals earnings. The $84 million improvement from the prior quarter was mainly due to increased polyethylene sales volumes on strong product demand and improved O&P cash chain margins, driven by lower ethylene feedstock costs and higher polyethylene sales prices. CPChem's equity affiliate earnings also improved as a result of higher sales prices, as well as increased volumes due to the completion of turnaround activity in the first quarter. Global utilization for O&P was 91 percent during the quarter, up from 87 percent in the first quarter, primarily reflecting reduced turnaround activity. Final insurance recoveries related to CPChem's 2014 Port Arthur ethylene plant outage increased earnings in the second quarter. CPChem's Specialties, Aromatics and Styrenics business contributed $38 million of earnings in the second quarter, an increase of $12 million from the prior quarter. The increase was primarily due to improved margins at CPChem's SA&S equity affiliates.[25]

June 2, 2015: CPChem May Have A Second Natural Gas “Megaproject” In The Works

FuelFix reported on June 2, 2015 that CPChem is considering a second “megaproject” in the U.S. that would take advantage of low natural gas prices for making plastics and other materials. “We are certainly looking seriously about the possibility of another project in the U.S.,” said Chief Executive Officer Peter Cella. “This is the right time to get serious about the next project.” The company is on schedule to begin producing ethylene in mid-2017 at its $6 billion project outside Houston, Cella said in an interview at the American Chemistry Council annual meeting in Colorado Springs, Colorado. He’s looking globally for where to build the next ethylene and derivatives plants, given the multiyear timeline to complete major projects.[26]

April 30, 2015: Garland Says Sweeny Fractionator One is Over 70% Complete

Greg Garland told analysts during the 2015 first quarter earnings conference on April 30, 2015 call that Sweeny Fractionator One is now over 70% complete. "Our midstream growth projects continue to be well-executed. Sweeny Fractionator One is now over 70% complete. And the Freeport LPG export terminal is about a third done. Both projects are on schedule and on budget with startups expected in the second half of 2015 and 2016 respectively."[27]

December 5, 2014: Chevron Phillips Chemical Completes Sale of its Ryton® PPS Business to Solvay

Businesswire reported on December 5, 2015 that Chevron Phillips Chemical Company has completed the sale of its Ryton® polyphenylene sulfide (PPS) business to Solvay’s Global Business Unit (GBU) Specialty Polymers (Solvay) for $220 million. As part of the transaction, Solvay purchased the Ryton® PPS unit in Chevron Phillips Chemical’s plant in Borger, Texas; the pilot plant along with the PPS research and development assets in Bartlesville, Oklahoma; the compounding plant in Kallo-Beveren, Belgium; and certain intellectual property relating to the Ryton® PPS business. While the Ryton® PPS business is a better strategic fit for Solvay, we remain committed to our sites in Borger, Texas and Bartlesville, Oklahoma,” said Ron Corn, senior vice president of specialties, aromatics and styrenics for Chevron Phillips Chemical. Chevron Phillips Chemical recently announced plans to build a new polyethylene pilot plant at its research center in Bartlesville.[28]

December 19, 2014: CP Chemical to Build New Polyethylene Pilot Plant in Bartlesville

The Tulsa World reported on December 19, 2014 that Chevron Phillips Chemical Co. LP plans to build a polyethylene pilot plant at its research and technology facility in Bartlesville that should be completed in 2017. The new facility will replace the current site, which has been focused on “developing improvements in current resins or new polymer kind of innovations” since the 1970s. “As a global producer of polyethylene, we strive to support our customers with the latest technological advances and process improvements through the efforts of our research and development personnel,” said Don Lycette, vice president of research and technology for Chevron Phillips Chemical, in a written statement. “Chevron Phillips Chemical continues to build on a long history of scientific discoveries, particularly at our facility in Bartlesville, which was originally built in 1950 by Phillips Petroleum Co.” The new pilot plant will incorporate Chevron Phillips Chemical’s proprietary MarTech process for polyethylene production and technology that enables production of bimodal polyethylene resins for advanced applications.[29]

Philips CEO Greg Garland previously made mention of the expansion at the Research Center when he spoke to the Bartlesville Chamber of Commerce in August 2014.[30]

December 11, 2014: CP Chemical Completes Ethylene Expansion at Sweeny Complex

Businesswire reported on December 11, 2014 that CP chemical announced completion of an ethylene expansion at its Sweeny complex that was started in 2013. With the addition of a tenth furnace to ethylene unit 33 at the Sweeny complex, the expansion is expected to increase annual production by 200 million pounds giving the Sweeny facility the capability of producing roughly 12 million pounds of ethylene per day, or 4.3 billion pounds annually. This represents the next increment of expansion to our ethylene business. We’re building toward the startup of the U.S. Gulf Coast Petrochemicals Project in 2017 and supporting incremental growth of our olefins derivative businesses,” said Dave Smith, olefins & natural gas liquids vice president for Chevron Phillips Chemical.[31]

December 5, 2014: Phillips to Invest $1.4 Billion in 2015 in Chemical Business Segment

Phillips 66 announced on December 5, 2014 that in Chemicals, CPChem, a 50-50 joint venture with Chevron, is investing in projects aimed at capturing cost-advantaged petrochemical feedstocks on the U.S. Gulf Coast. Phillips 66’s share of CPChem’s 2015 capital expenditures is expected to be $1.4 billion. Funding supports advancement of CPChem’s 3.3 billion-pound-per-year ethane cracker and two 1.1 billion-pound-per-year polyethylene facilities. The expected start-up for these facilities is mid-2017. In addition, the 220 million-pound-per-year expansion of CPChem’s normal alpha olefins production capacity at Cedar Bayou continues, with estimated completion in mid-2015.[32]

October 29, 2014: Chevron Phillips Considers New Ethylene Cracker

Argus reported on October 29, 2014 that Chevron Phillips continues to consider new US construction projects, including whether to build a new ethylene cracker, but those discussions are still early in the process and no decisions have been made. "We still think the US Gulf coast is still the best place to invest, and we wouldn't hesitate to go forward with a second cracker. But the challenge is where do you put it and what are you going to feed it," said chief executive Greg Garland.[33]

October 29, 2014: Port Arthur Olefins Unit Will Restart by the End of 2014

Argus reported on October 29, 2014 that Chevron Phillips Chemical's Port Arthur, Texas olefins unit will restart by the end of the year, Phillips 66 executives stated on the company's earnings call today. The Port Arthur plant can produce up to 807,000 t/yr of ethylene.[34]

October 29, 2014: Earnings Were Strong Despite Downtime at Port Arthur

Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that CPChem earnings were strong despit downtime at Port Arthur. " In our Chemicals business, despite downtime at the CPChem Port Arthur facility, earnings were strong, also reflecting favorable market conditions."

"In Chemicals, CPChem's global Olefins and Polyolefins capacity utilization rate for the quarter was 83%. This reflects downtime at the Port Arthur facility, resulting from the fire the impacted their ethylene furnaces early in the third quarter," added Garland. "In Olefins and Polyolefins, the decrease of $51 million is largely due to the CPChem's Port Arthur ethylene cracker being down. Although Port Arthur represents approximately 11% of CPChem's total O&P production capacity, the impacts from it being off-line were lessened as CPChem was ableto pull down inventory."[35]

October 29, 2014: Phillips Expects Port Arthur Olefins Units to Restart in November

Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that Phillips expects the Port Arthur Olefins Units to restart in November. "The global O&P utilization rate in the fourth quarter is expected to be in the low-80%s, as we anticipate CPChem's Port Arthur facility to begin the process of restarting its olefins units in November, with some portions of the plant remaining down until year-end."[36]

October 29, 2014: Port Arthur Had a Five Month Outage Because of Fire

Tim Taylor told analysts during the third quarter earnings conference call on October 29, 2014 that Port Arthur probably had a five month outage because of the fire. " I think when we look at it, I like to think about it that we've probably got about a five-month outage when we think about Port Arthur. So that's roughly in the range of say 750 million, 800 million pounds of lost production, and then you can put the margin on that."[37]

October 29, 2014: The Fire at Port Arthur Will Not Impact the Hexene Facility

Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that the fire at Port Arthur will not prevent the Hexene Facility from being able to sell full volumes. "I don't think that Port Arthur is going to impact the run rate on hexene-1. As it ramps up into 2015, Port Arthur is going to be back up and running. And so I don't think Port Arthur is going to enter into the equation in terms of the run rate. In terms of fully ramping the facility, I don't know, Tim,it will probably ramp over 2015 and 2016 would be my guess."[38]

October 29, 2014: CPChem continues to Ramp Up Production at 1-hexene Facility at Cedar Bayou

Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that CPChem continues to ramp up its 250,000 metric ton per year 1-hexene facility at Cedar Bayou. "In Chemicals, CPChem continues to ramp up its 250,000 metric ton per year 1-hexene facility at Cedar Bayou, which began operations in the second quarter. The global O&P utilization rate in the fourth quarter is expected to be in the low-80%s, as we anticipate CPChem's Port Arthur facility to begin the process of restarting its olefins units in November, with some portions of the plant remaining down until year-end."[39]

September 4, 2014: Chevron Phillips to Sell Performance Polymers Business for $220 Million

Bloomberg reported on September 4, 2014 that Chevron Phillips has agreed to sell Ryton polyphenylene sulphide plants, a performance polymers business, to Belgian chemical maker Solvay for $220 million to expand its offering of lightweight plastics for replacing heavier metal parts in cars. “Ryton PPS fits neatly with our unique specialty polymers portfolio and reinforces our unrivalled capabilities to provide solutions to our customers in dynamic innovative end-markets,” said Augusto Di Donfrancesco, president of Solvay Specialty Polymers. Solvay will gain Ryton PPS sites in Texas and Oklahoma, and a plant in Belgium. Solvay plans to invest in a PPS production technology developed by Chevron Phillips that hasn’t “achieved its full potential,” the company said. Completion of the deal is expected in the fourth quarter.[40]

August 7, 2014: Chevron Phillips to Raise Prices in September

Platts reported on August 7, 2014 that Chevron Phillips Chemical joined the growing list of US polyethylene producers planning to raise resin prices in September raising prices for all grades of polyethylene by 3 cents/lb effective September 1. Sources have described the US polyethylene market as tight, pointing in part to a number of feedstock and production-related issues. Feedstock prices have also moved higher, with ethylene contract prices for July fully settled at a 1.75 cents/lb increase, sources said this week.[41]

July 30, 2014: Chevron Phillips Chemical Plant in Port Arthur Remains Closed After Fire

The Houston Chronicle reported on July 30, 2014 that during the second quarter conference call, company officials at Phillips said that the Chevron Phillips Chemical plant in Port Arthur remains closed after a fire injured several workers on July 7 and that it's too early to know when it might reopen.[42]

July 15, 2014: Chevron Phillips Declares Force Majeure Production Limits After Fire at Port Arthur

Plastics News reported on July 15, 2014 that Chevron Phillips has declared force majeure production limits on that material after the fire at the Chemical Plant at Port arthur. Phillips Chevron officials said that reviews are underway to determine when the unaffected areas of the plant can be restarted, and that no timetable has been set for restart of the area affected by the incident. The Port Arthur plant has almost 1.8 billion pounds of annual ethylene capacity and 1.1 billion pounds of annual propylene capacity. [43]

July 7, 2014: Two Workers Injured in Fire at Port Arthur Chemical Plant

Plastics News reported on July 15, 2014 that two workers were injured in a fire in a ethylene/propylene unit at the at a Chevron Phillips Chemical Plant in Port Arthur. No cause for the fire was given in a July 9 statement from Chevron Phillips. The statement added that the injured workers remained hospitalized.[44]

Mary Meaux reported at The Port Arthur News on July 8, 2014 that an investigation into the cause of the fire at Chevron Phillips Chemical Company that injured two workers is underway less than 24 hours after the incident. “A team of experts from other Chevron Phillips Chemical facilities has been assembled and has begun the investigation to determine the root cause of the incident,” according to a press release from David Hastings, public affairs manager at Chevron Phillips. The localized fire occurred at the Port Arthur facility at about 8 pm on July 7. The chemical company’s fire response team handled the fire while Port Arthur Fire Department remained on standby with equipment and manpower should it be needed, said Port Arthur Police Maj. John Owens. “The fire chief (Larry Richard) and I went in and were part of their emergency operations center to assist them in decision making and operations should they need outside assistance and to ensure the public and community that we had someone inside the EOC to look at it from the community’s side,” Owens said.[45]

Independent air monitoring throughout the night to ensure the community was safe. “The continuous monitoring picked up zero readings,” said Owens. “We do this any time there is an incident. It is protocol for the fire department’s hazardous response team to perform independent monitoring.”[46]

April 2, 2014: Chevron Phillips Chemical Breaks Ground On Ethane Cracker at Baytown Facility

Ryan Holeywell reported in FuelFix on April 2, 2014 that Chevron Phillips Chemical broke ground on a a massive new ethane cracker, the first component of a $6 billion expansion and the first new major facility of its type built in the U.S. in a decade. The ethane cracker is a massive piece of equipment with a footprint the size of nearly 50 football fields used to transform ethane, a component of natural gas, into ethylene, a component used to make plastics. "This is a big deal for us — $6 billion is a big project for a company with $10 billion in assets,” said CEO Peter Cella. The investment, which officials say will contribute to the creation of about 400 jobs. Cella said Chevron Phillips is still “a few years away” from developing contracts with customers for the ethylene it will produce, and polyethylene contracts tend to be developed on a year-to-year basis. He expected most of the ethylene produced by the cracker to be used domestically, including by the company itself.[47] “It’s a huge investment for a company like this,” Cella said, all of which is “catalyzed” by the shale boom that is producing lots of ethane that serve as the “competitive feedstock” for the chemical plants. “We see the supply of ethane being pretty substantial going forward,” Cella said in an interview before the Baytown groundbreaking. “It’s important to point out there’s a surge of investments being contemplated or already in progress like ours in the chemical industry."[48]

The other component of the endeavor, in nearby Old Ocean, consists of two polyethylene units, which convert ethylene into polyethylene pellets that can be sold, melted and formed into a variety of industrial and household plastics. The entire project is slated to come online in 2017. The two polyethylene units will develop two different products: a biomodal resin he described as durable but soft, and a metallocene resin that is clear and can receive printing and is commonly used for packaging in retail stores.[49]

December 6, 2013: Phillips to Invest $1.046 Billion in 2014 in Chemical Business Segment

Phillips reported on December 6, 2013 that they plan to invest $1.046 Billion in their 50/50 joint venture with Chevron, representing a substantial increase over 2013. The increase primarily reflects advancement of CPChem’s 3.3 billion-pound-per-year ethane cracker and two 1.1 billion-pound-per-year polyethylene facilities. The facilities are expected to start up in 2017. Additionally, CPChem plans to complete and start up its 550 million-pound-per-year 1-hexene plant in Baytown, Texas, in the first half of next year.[50]

October 30, 2013: Garland Says CPChem has Necessary Approvals to begin Construction of Ethane Cracker and Two Polyethylene Facilities

Garland told analysts at the third quarter earnings conference on October 30, 2013 that CPChem announced its world-scale Gulf Coast ethane cracker and two new polyethylene facilities earlier this month. "CPChem now has the necessary approvals to begin construction," said Garland. "In addition to the petrochemicals projects CPChem is also completing one hexane unit which is expected to be operational in the first half of 2014 as well at the Sweeny ethylene expansion in 2014. All in CPChem at a 100% basis is expected to spend between $6 million and $8 billion on self-funded capital between now and 2017. They expect to add about $1.5 billion of EBITDA in 2017 once all these growth projects are online."[51]

July 31, 2013: Outages at Sweeny Facility Caused Lost Production of 540 million pounds

Greg Garland told analysts at Phillips 2nd Quarters earnings conference on July 31, 2013 that outages at the Sweeny facility during both the first quarter and the second quarter of 2013 resulted in loss production of approximately 540 million pounds. "The decrease in earnings was primarily in olefins and polyolefins driven by unplanned power outages at CPChem’s Sweeny Complex as well as an extended 91 day turnaround at its Port Arthur facility. In May of this year, CPChem was required to declare force majeure on ethylene and certain derivatives, following these outages," said Garland. "These outages as well as the downtime at Port Arthur resulted in higher manufacturing costs and decreased production sales volumes for ethylene, polyethylene, and normal alpha olefins in the second quarter of 2013. While industry ethylene margins remained strong, CPChem realized lower margins because of these unplanned events."[52]

July 31, 2013: Phillips Completes NGL Fractionator Expansion Project at Sweeny Facility

Greg Garland told analysts at Phillips 2nd Quarters earnings conference on July 31, 2013 that Phillips chemicals joint venture CPChem completed the NGL fractionator expansion project at the Sweeny facility during the second quarter. The project increased capacity by nearly 20%.[53]

July 02, 2013: Phillips to Reduce Polypropylene Deliveries Because of Insufficient Feedstock Supply

Platts reported on July 20, 2013 that Phillips has written a letter to customers announcing that it will be reducing deliveries of polymer-grade propylene because of issues with feedstock supply. "While we are currently producing at full rates with our integrated monomer, this disruption of feedstock supply has forced us to restrict present deliveries," said Phillips 66 the letter to customers. Phillips 66 said it was exploring other sources of feedstock, but that given the circumstances it was "compelled to reduce deliveries of product at this time and apportion the material we have available to our customers in a fair and reasonable manner so that we can build inventory to carry us through the turnaround."[54]

Phillips had planned to use feedstock PGP from Williams Partners, but was left scrambling after Williams suffered an explosion and fire at its Geismar, Louisiana, olefins plant that resulted in two deaths and the disruption of production for an indefinite time frame. Last week, Garyville, Louisiana-based Pinnacle Polymers issued a force majeure declaration on polypropylene, citing feedstock supply issues that market sources said also resulted from the Williams disruption. "It's getting tough to find material," said a source with a distributor.[55]

June 3, 2013: Phillips to Add Furnace at Sweeny Petrochemical Complex

The Oil and Gas Journal reported on June 3, 2013 that Chevron Phillips Chemical Co. LP will add a furnace at its Sweeny petrochemical complex that will expand ethylene production by 200 million lb/year. Construction of the furnace will begin within three months and the start-up is expected in 2014. The new furnace will not add to nameplate capacity of the facility, the company said, explaining, “the increased operating factor should result in net increase of 200 million lb of ethylene availability to provide additional operation flexibility and reliability.”[56]

April 27, 2013: Fire at Chevron Phillips Port Arthur Chemical Plant Sends Eight to Hospital

The Port Arthur News reported on April 27, 2013 that an early morning fire at Chevron Phillips Chemical Company in Port Arthur sent eight contract workers to two hospitals on April 27, 2013. Company officials confirmed that a localized fire occurred at its Port Arthur facility at approximately 4 a.m. during a turnaround period, which resulted in several contractor employees being transported to the local hospital. The fire was quickly extinguished, and there was no impact to the community, according to a press release from Melanie Samuelson with Chevron Phillips corporate communication. “The safety of our employees is our highest priority,” Margie Conway, plant manager at the Port Arthur facility, said in a press release. “We regret very much that this incident has occurred, and are thankful that most of the contractor employees were treated and released from the hospital.”[57]

January 30, 2013: Garland Says Phillips ROCE on Chemical Business Segment Was 31% for 2012

Greg Garland told analysts at the 4th quarter earnings conference on January 30, 2013 that 2012 return on capital employed from Phillips Chemicals segment increased to 31%, up form 28% last year and Phillips ended the quarter with $3.6 billion in capital employed. "Overall, CPChem achieved a 90% capacity utilization rate and its O&P segment in the fourth quarter," said Garland. "This was down somewhat from the third quarter due to unplanned downtime at the Saudi Polymers petrochemical facility. If we exclude this downtime in SPCo, CPChem’s utilization rate was near capacity for the quarter."[58]

December 13, 2012: Phillips to Invest $1.149 Billion in 2013 in Chemical Business Segment

Phillips 66 reported at their inaugural Analyst Meeting on December 13, 2013 that CPChem plans $1.1 billion of investment including several growth projects planned or under construction, such as its U.S. Gulf Coast petrochemicals complex and 1-hexene plant.[59]

November 11, 2012: Chevron Phillips Chemical Says the Company is Expanding

Fuel Fix reported on November 11, 2012 that Chevron Phllips Chemical, with about 4,700 employees worldwide, is adding new facilities and employees and expects the number of employees to continue growing over time through projects in North America.. “I am confident we can stack up with just about anybody by delivering new products, our marketing capabilities, and our strategy,” said Dan Coombs, the company’s senior vice president of specialties, aromatics and styrenics.[60]

September 5, 2012: The Chemicals Business is Pursuing Advantaged Feedstock

Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that the chemicals business is pursuing advantaged feedstock. "We think the shale plays in the US present a new opportunity for advantaged feedstocks here in the US. Most of our US capacity is ethane based. That's a big advantage that we see going forward."[61]

September 5, 2012: Chemicals is Increasing Capacity

Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that Phillips is increasing its chemicals capacity. "So, one of the things that we're doing, we're increasing fractionation capacity at CPChem's facility at Sweeny, about a 20% increase in frac. We're also investing in a 1-hexene plant, 200,000 ton a day facility. Think of that as a specialty chemical, very nice returns in that business. Then we've announced a $5 billion new grassroots facility at -- well actually split. The cracker will be at our Cedar Bayou facility. The derivatives, which primarily are polyethylene, will be at our Sweeny facility in Old Ocean, Texas. We expect that the cracker will be up in 2017. We think we'll be one of the first of the new grassroot crackers to be up in 2017."[62]

September 2, 2012: Low Natural Gas Prices Are a Plus for Phillips' Chemical Business Segment

Emily Pickrell wrote in Fuel Fix on September 2, 2012 that Phillips 66's Midstream Business Segment took a hit in the second quarter along with many companies in the natural gas sector as natural gas prices are at decade lows, reducing the company's second-quarter net profit from $55 million in 2011 to $35 million in 2012 but Phillips 66 uses some of DCP’s natural gas liquids as feedstock for its chemical plants. “For Phillips 66, the low prices are a plus, not a negative. It almost mitigates the negative impacts of NGL prices,” says Fadel Gheit, an analyst with Oppenheimer & Co. “They are one of the largest chemical producers in the country.”[63]

August 10, 2012: Chevron Phillips CEO Pete Cella Says Company Gets More Attention from Phillips 66

The Houston Business Journal reported on August 10, 2012 in a profile of Chevron Phillips CEO Pete Cella that with the ConocoPhillips split of its upstream and downstream business in May, Chevron Phillips makes up a more prominent part of the Phillips 66 business, which is good because the company gets more attention, said Cella. Cella also said that Chevron Phillips is more than a chemical company, it is a manufacturing company. “There is a newfound optimism in manufacturing that goes beyond chemicals,” said Cella, adding that with the recent chemical industry resurgence, there are more opportunities for U.S. companies to manufacture plastic products and chemical-related products that can boost the overall economy.[64]

June 14, 2012: New 1-hexene Plant Under Construction at Chevron Phillips Chemical's Cedar Bayou complex Will be the World's Largest

Emily Pickrell wrote in San Antonio Express on June 13, 2012 that Phillips 66 executives gathered for a ceremonial groundbreaking on June 12, 2012 at Chevron Phillips Chemical's Cedar Bayou complex that will use ethylene to create 1-hexene, an essential ingredient for a range of plastic products. “The facility that we are groundbreaking is an outcome of this new natural gas resource base,” said Pete Cella, CEO of Chevron Phillips Chemical. “Five years ago, the expectation was that the U.S. would become a net importer of ethylene. Now we are expecting that we will not only meet U.S. demand domestically, but will become a major exporter.” The company plans to hire 1,000 workers to build the plant, which is expected to be online in early 2014.[65]

Chevron Phillips Chemical also plans to build a new ethane cracker at Cedar Bayou; two new polyethylene units at a site 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.[66]

June 12, 2012: In Three Years, Phillips 66 may invest in a Second New Chemical Plant in the U.S. Gulf Region

Fox Business reported on June 12, 2012 that reg Garland told the Financial Times that Phillips 66 may invest in a second new chemical plant in the U.S. Gulf region to take advantage of the cheap feedstock in North America that was released by the shale revolution, a decision that could be made in three years' time. "After the Middle East, the U.S. is the next best place to make petrochemicals, because of the advanced feedstock, and we see that continuing for some time," said Garland.[67] Garland said US chemicals manufacturers could buy ethane at about $5 per million British thermal units of energy content, compared to about $18 per mBTU for crude oil and that the US petrochemicals industry, stands at the dawn of a long-term upturn, and Phillips 66 stands to benefit through Chevron Phillips Chemical, its 50/50 joint venture with Chevron. The cheap feedstock persuaded CP Chem to announce last year that it would build a new “cracker” in Baytown, Texas, to convert ethane into ethylene. The Baytown cracker, expected to come into operation in 2017, will employ 10,000 people while under construction, and about 400 when it is running. [68]

June 4, 2012: Chevron Phillips Chemical Looking into Developing Iraq Plant

Olivia Pulsinelli reported in the Houston Business Journal on June 4, 2012 that Chevron Phillips signed a letter of intent with Iraq to examine the feasibility of building a new plant and upgrading an existing petrochemicals facility owned by Iraq. "Data from BP Plc (NYSE: BP) shows Iraq has the fifth-largest crude reserves in the world and the fifth-largest natural gas deposits in the Middle East, Bloomberg reports. While the Iraq wants to diversify into chemicals productions and other industries, the country currently lacks infrastructure to use natural gas as a fuel for electricity plants or feedstock for petrochemicals."[69]

May 17, 2012: Phillips 66 Exec says Glut of Natural Gas will last 4 to 5 Years

Peter Cella, Chief Executive of Chevron Phillips Chemical, a joint venture between Phillips 66 and Chevron, said on May 17, 2012 that the oversupply of natural gas liquids (NGLs)that feed its US plants is likely to last for another four or five years. "The supply source has gotten ahead of the demand need. I think we're doing our share to elevate the capacity to consume," Cella told the Reuters Global Energy & Environment Summit in Houston. "You can drill a well in a month or two, and it takes us five years to build a new cracker, so you've got this mismatch in timelines." Chevron Phillips Chemical, which was formed in 2000 and employs about 4,700 people, is the world's fourth-largest producer of high density polyethylene, used to make everything from food containers to plastic furniture. Cella expects that three or four new crackers will be needed over the next ten years to meet US plastic demand, especially packaging but also a variety of products like lipstick and trash bags, since demand grows with the economy. Chevron Phillips Chemical is spending $5 billion on new ethylene facilities in Texas.[70]

May 10, 2012: Simon Moore says Chemical is doing well Because it has Access to Cheap US Natural Gas

Simon Moore wrote at Seeking Alpha on May 10, 2012 that the Chemical Business Segment is doing well because it has access to extremely cheap US natural gas, which it uses in the manufacturing process and because the margins on certain chemicals, such as ethylene, are much higher when they are manufactured from NGLs versus naphtha (oil derived). "Ethane derived ethylene has a cash margin of more than $600/ton currently. Naptha derived (oil derived) ethylene has a cash margin of only $100-$200 per ton," writes Moore. "PSX has a great supply of cheap NGLs (ethane among them) in the US."[71]

Andrew Bary wrote in the WSJ on May 12, 2012 that the Chemical Business Segment is so profitable, earning $1.4 billion in 2011, because 80% of its capacity is in the US, where low gas prices hold down input costs. "Phillips' petrochemical business will benefit in a disproportionate way from the growth in the production of natural-gas and natural-gas liquids," says ISI Group analyst Doug Terreson.[72]

May 2, 2012: Phillips to Build two new polyethylene plants Near Sweeny Petrochemical Complex

The Oil and Gas Journal reported on May 2, 2013 that Chevron Phillips Chemical Co. LP has selected a site near its Sweeny petrochemical complex for two new polyethylene plants with capacities of 1.1 billion lb/year each. Jacobs Engineering Group will design the polyethylene plants which are part of a major Gulf Coast Expansion.[73]

April 9, 2012: According to ConocoPhillips CPChem has a strong history of Successfully Executing Growth Projects

According to the ConocoPhillips Investors Presentation on April 9, 2012 "CPChem has a strong history of successfully executing growth projects. They've executed five mega projects in the Middle East over the past 10 years.They continue to work new opportunities in the Middle East region. They're currently building the world's largest 1-hexene plant at Cedar Bayou.They're actively pursuing a new Gulf Coast cracker.We think it will start up in 2017.This will be the first new cracker to start up on the Gulf Coast."[74][75][76]

Latest News and Views from Port Arthur Chemical Plant

Chevron Phillips Port Arthur Chemical Plant. Photo Credit: Glass Door

October 29, 2014: Port Arthur Olefins Unit Will Restart by the End of 2014

Argus reported on October 29, 2014 that Chevron Phillips Chemical's Port Arthur, Texas olefins unit will restart by the end of the year, Phillips 66 executives stated on the company's earnings call today. The Port Arthur plant can produce up to 807,000 t/yr of ethylene.[77]

October 29, 2014: Earnings Were Strong Despite Downtime at Port Arthur

Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that CPChem earnings were strong despit downtime at Port Arthur. " In our Chemicals business, despite downtime at the CPChem Port Arthur facility, earnings were strong, also reflecting favorable market conditions."

"In Chemicals, CPChem's global Olefins and Polyolefins capacity utilization rate for the quarter was 83%. This reflects downtime at the Port Arthur facility, resulting from the fire the impacted their ethylene furnaces early in the third quarter," added Garland. "In Olefins and Polyolefins, the decrease of $51 million is largely due to the CPChem's Port Arthur ethylene cracker being down. Although Port Arthur represents approximately 11% of CPChem's total O&P production capacity, the impacts from it being off-line were lessened as CPChem was ableto pull down inventory."[78]

October 29, 2014: Phillips Expects Port Arthur Olefins Units to Restart in November

Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that Phillips expects the Port Arthur Olefins Units to restart in November. "The global O&P utilization rate in the fourth quarter is expected to be in the low-80%s, as we anticipate CPChem's Port Arthur facility to begin the process of restarting its olefins units in November, with some portions of the plant remaining down until year-end."[79]

October 29, 2014: Port Arthur Had a Five Month Outage Because of Fire

Tim Taylor told analysts during the third quarter earnings conference call on October 29, 2014 that Port Arthur probably had a five month outage because of the fire. " I think when we look at it, I like to think about it that we've probably got about a five-month outage when we think about Port Arthur. So that's roughly in the range of say 750 million, 800 million pounds of lost production, and then you can put the margin on that."[80]

October 29, 2014: The Fire at Port Arthur Will Not Impact the Hexene Facility

Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that the fire at Port Arthur will not prevent the Hexene Facility from being able to sell full volumes. "I don't think that Port Arthur is going to impact the run rate on hexene-1. As it ramps up into 2015, Port Arthur is going to be back up and running. And so I don't think Port Arthur is going to enter into the equation in terms of the run rate. In terms of fully ramping the facility, I don't know, Tim,it will probably ramp over 2015 and 2016 would be my guess."[81]

July 30, 2014: Chevron Phillips Chemical Plant in Port Arthur Remains Closed After Fire

The Houston Chronicle reported on July 30, 2014 that during the second quarter conference call, company officials at Phillips said that the Chevron Phillips Chemical plant in Port Arthur remains closed after a fire injured several workers on July 7 and that it's too early to know when it might reopen. Garland did not elaborate on a recent fire in July at a Chevron Phillips Chemical Company LLC plant in Port Arthur that involved injuries, but he did say the facility should not be shut down for much longer. "There's no reason for that unit to be down for a prolonged period of time," said Garland.[82]

July 15, 2014: Chevron Phillips Declares Force Majeure Production Limits After Fire at Port Arthur

Plastics News reported on July 15, 2014 that Chevron Phillips has declared force majeure production limits on that material after the fire at the Chemical Plant at Port arthur. Phillips Chevron officials said that reviews are underway to determine when the unaffected areas of the plant can be restarted, and that no timetable has been set for restart of the area affected by the incident. The Port Arthur plant has almost 1.8 billion pounds of annual ethylene capacity and 1.1 billion pounds of annual propylene capacity. [83]

July 7, 2014: Two Workers Injured in Fire at Port Arthur Chemical Plant

Plastics News reported on July 15, 2014 that two workers were injured in a fire in a ethylene/propylene unit at the at a Chevron Phillips Chemical Plant in Port Arthur. No cause for the fire was given in a July 9 statement from Chevron Phillips. The statement added that the injured workers remained hospitalized.[84]

Mary Meaux reported at The Port Arthur News on July 8, 2014 that an investigation into the cause of the fire at Chevron Phillips Chemical Company that injured two workers is underway less than 24 hours after the incident. “A team of experts from other Chevron Phillips Chemical facilities has been assembled and has begun the investigation to determine the root cause of the incident,” according to a press release from David Hastings, public affairs manager at Chevron Phillips. The localized fire occurred at the Port Arthur facility at about 8 pm on July 7. The chemical company’s fire response team handled the fire while Port Arthur Fire Department remained on standby with equipment and manpower should it be needed, said Port Arthur Police Maj. John Owens. “The fire chief (Larry Richard) and I went in and were part of their emergency operations center to assist them in decision making and operations should they need outside assistance and to ensure the public and community that we had someone inside the EOC to look at it from the community’s side,” Owens said.[85]

Independent air monitoring throughout the night to ensure the community was safe. “The continuous monitoring picked up zero readings,” said Owens. “We do this any time there is an incident. It is protocol for the fire department’s hazardous response team to perform independent monitoring.”[86]

April 27, 2013: Fire at Chevron Phillips Port Arthur Chemical Plant Sends Eight to Hospital

The Port Arthur News reported on April 27, 2013 that an early morning fire at Chevron Phillips Chemical Company in Port Arthur sent eight contract workers to two hospitals on April 27, 2013. Company officials confirmed that a localized fire occurred at its Port Arthur facility at approximately 4 a.m. during a turnaround period, which resulted in several contractor employees being transported to the local hospital. The fire was quickly extinguished, and there was no impact to the community, according to a press release from Melanie Samuelson with Chevron Phillips corporate communication. “The safety of our employees is our highest priority,” Margie Conway, plant manager at the Port Arthur facility, said in a press release. “We regret very much that this incident has occurred, and are thankful that most of the contractor employees were treated and released from the hospital.”[87]

Latest News and Views from Cedar Bayou Chemical Plant

September 14, 2017: Chevron Phillips Chemical Anticipates a Delay in Startup of its New 1.5 million tonne-per-year Ethane Cracker in Cedar Bayou

Chemistry World reported n September 14, 2017 that Chevron Phillips Chemical anticipates a delay in startup of its new 1.5 million tonne-per-year ethane cracker in Cedar Bayou because of damage by Harvey. The cracker was expected to be completed this year, but rains left parts of the facility under five to eight feet of water. "We’re just now getting back into the facility to evaluate the recovery efforts there, and I don’t have a forecast yet,’ Phillips 66 chairman Greg Garland told the Barclays conference. Garland said the cracker itself faced ‘very limited damage,’ but the contractors working on the project have been off for weeks since the storm."[88]

June 5, 2017: Chevron Phillips Announces Expansion at Cedar Bayou Plant

Businesswire reported on June 5, 2017 that Chevron Phillips Chemical Company LP has successfully completed a low viscosity polyalphaolefins (PAO) capacity expansion at its Cedar Bayou plant in Baytown, Texas. The 20 percent capacity expansion enables the company to meet the increasing demand for high-performance lubricants in automotive and industrial applications. The project improves process safety and overall unit efficiencies while reducing waste generation for Cedar Bayou’s PAO unit. The feedstock for the new unit will be provided from Cedar Bayou’s recent 100,000-metric-tons-per-year expansion of its normal alpha olefins capacity. Construction began in April 2016 and supported up to 135 construction and engineering jobs.[89]

November 3, 2016: Chevron Phillips Chemical’s Ethane Cracker Likely Will Cost Another $250 million to $500 million

Platts reported on November 3, 2016 that Chevron Phillips Chemical’s ethane cracker, a 50/50 JV of Phillips 66 and Chevron Corp., likely will cost another $250 million to $500 million because a months-long delay has pushed its target startup to the second half of 2017. Phillips 66 Chief Executive Greg Garland told analysts last week that the delay will probably raise the cost of the project in Baytown, Texas, by 5%-10% “just due to delays we are seeing in construction,” though two associated polyethylene plants 86 miles away in Sweeny, Texas, are expected to be mechanically complete in the second quarter and start up by mid-2017 as planned. About $5 billion of the combined $6 billion project is related to the cracker. Phillips 66 President Tim Taylor said the main push behind the delay is construction amid a tight craft labor squeeze.[90]

November 3, 2016: Fluor takes $154 million Hit on Delayed Chevron Phillips Petrochemical Expansion in Baytown

Fuelfix reported on November 3, 2016 that Fluor, which is building Chevron Phillips’ “U.S. Gulf Coast Petrochemicals Project” in a joint venture with Japan-based JGC, said it recorded a $154 million impairment charge for the project in the third quarter. “We are very disappointed in the construction progress on a fixed-price Gulf Coast project that led to a significant charge this quarter,” said David Seaton, Fluor chairman and CEO. Seaton confirmed Fluor will take a net loss on the entirety of the project. He cited weather delays, which were caused by Houston-area flooding in the spring, as well as problems with “piping performance” during the construction process. There was also one fatality in May when a Fluor contractor died after an on-site accident. Last month, Chevron Phillips acknowledged some minor delays caused by weather and additional retraining needed for some craft workers.[91]

October 10, 2016: Chevron Phillips' $6 billion Houston Expansion at Baytown Nears Completion

The Houston Chronicle reported on October 10, 2016 that Chevron Phillips Chemical, a joint venture between Chevron and Phillips 66, is nearing completion of their $6 billion expansion at Baytown. The project involves a massive ethane cracker - on a plot the size of 44 football fields - that will separate a component of natural gas called ethane, which will provide the feedstock for some 1.5 million metric tons a year of ethylene, a common building block of plastics. The project adds to a petrochemical boom primarily along the Gulf Coast, where chemical and plastic makers can take advantage of cheap and ample natural gas, the feedstock for their products. The growing demand for plastics is mostly coming from Asia, primarily China, but also India and Indonesia, where rising incomes are fueling appetites for consumer goods, said Ron Corn, a Chevron Phillips senior vice president. Chevron Phillips also built what is called a low-profile flare to release fewer emissions more discreetly - as opposed to the typical tall flare that looks a ball of fire in the sky."[92]

April 29, 2016: FCC Modernization is on Schedule at Cedar Bayou

Greg Garland told analysts during the 2016 first quarter earnings conference call on April 29, 2016 that work on the FCC modernization is on schedule at Cedar Bayou.[93]

March 29, 2016: Chevron Phillips Expands Polyalphaolefins Capacity at Cedar Bayou Plant

Chevron Phillips Chemical Plant at Cedar Bayou.Chevron Phillips Chemical Company LP, a joint venture between Chevron and Phillips 66, has announced that it has their decision to expand the low viscosity polyalphaolefins (PAO) capacity at its Cedar Bayou plant in Baytown, Texas by 10,000 metric tons per year or about 20 percent. Construction will begin in April 2016 with completion and startup expected by mid-2017. Photo: Fuelfix.

Businesswire reported on March 29, 2016 that Chevron Phillips Chemical Company LP, a joint venture between Chevron and Phillips 66, has announced that it has their decision to expand the low viscosity polyalphaolefins (PAO) capacity at its Cedar Bayou plant in Baytown, Texas by 10,000 metric tons per year or about 20 percent. Construction will begin in April 2016 with completion and startup expected by mid-2017. "The expansion will allow the company to meet the increasing demand for high-performance lubricants in automotive and industrial applications, as demand for higher energy efficiency and high-quality basestocks continues to grow. This additional capacity enables us to expand with our customer base to meet the future requirements of the industry," said Global PAO Business Manager for Chevron Phillips Chemical Miles Oberton. Chevron Phillips Chemical is a leader in the development and production of PAOs, marketed under the brand name Synfluid® PAO, which are used for a variety of automotive and industrial applications including engine oils, gear oils and greases.

February 24, 2016: $6 Billion expansion Underway at Phillips 66’s JV at Cedar Bayou

Plastemart reported on February 24, 2016 that Phillips 66’s joint venture, Chevron Phillips Chemical, is in the middle of a US$6 bln expansion in Baytown at its Cedar Bayou plant east of Houston. The joint venture has said additional expansion could follow. Apart from chemicals, Phillips 66 has grown its pipeline and terminals business. While the midstream space is currently “taking a pause” because of weak oil and gas prices, CEO Garland said at the IHS Energy CERAWeek conference, the sector is bound to rebound. He hinted that Phillips 66 could be a potential buyer of any such assets that hit the market. “I think consolidation will be the name of the game in the midstream space,” Garland said. “We think supply and demand will re-balance and North American producers will be in the best position.”[94]

July 31, 2015: Normal Alpha Olefins (NAO) Expansion Project Began Operating at its Cedar Bayou Facility in June 2015

Businesswire reported on July 31, 2015 that CPChem began operating its 220 million-pound-per-year normal alpha olefins (NAO) expansion project at its Cedar Bayou facility in June 2015. The NAO unit continues to ramp up and is expected to achieve target production in the third quarter of 2015. Additionally, construction of CPChem's world-scale U.S. Gulf Coast Petrochemicals Project is approximately 50 percent complete, with startup expected in mid-2017. This $6 billion project consists of an ethane cracker and related polyethylene facilities that will increase CPChem's U.S. olefins and polyolefins capacity by approximately one-third. Specialties businesses generated earnings of $48 million during the second quarter, in line with the first quarter.[95]

April 30, 2015: Cedar Bayou Normal Alpha Olefins Expansion Project Is on Schedule for Completion in mid-2015

Greg Garland told analysts during the 2015 first quarter earnings conference call on April 30, 2015 that CPChem’s normal alpha olefins expansion project at its Cedar Bayou facility is on schedule for completion in mid-2015. "In chemicals, CPChem’s normal alpha olefins expansion project at its Cedar Bayou facility is on schedule for completion in mid-2015. Also, construction continues on a world-scale U.S. Gulf Coast petrochemicals project which is now about 40% complete with the startup in mid-2017. We expect both projects to come in on budget."[96]

November 6, 2014: Chevron Phillips Considers Further Expansion at Cedar Bayou

Seeking Alpha reported on November 5, 2014 that Chevron-Phillips is considering adding another expansion to its Baytown plant, joining a wave of other petrochemical companies scrambling to take advantage of cheap raw materials unleashed by the U.S. shale boom and is studying how to further increase the plant’s capacity. Rather than build a new unit, the JV is studying the possibility of boosting polyalphaolefins capacity by one-fifth to 58K metric tons/year by adding improvements to make the existing plant more efficient; the potential cost of the expansion has not been disclosed. “There’s a pretty strong demand for that and fairly limited supply worldwide,” Mark Lashier, executive vice president of olefins and polyolefins, said in an interview with Fuel Fix. “It’s a specialty product and the feedstocks to produce it are in short supply now.[97][98]

Construction started in April at the ethane cracker at the Baytown plant, which Chevron Phillips Chemical has said would be the first new major facility of its type built in the U.S. in a decade. Rather than build a new unit, the company is studying the possibility of boosting polyalphaolefins capacity by one-fifth to 58,000 metric tons per year by adding improvements to make the existing plant more efficient, Lashier said. The company did not disclose how much the expansion could cost. A decision is expected late next year. “We’re pretty comfortable with the market demand piece but we really have to understand what the capital cost will be to make this investment in the expansion,” Lashier said. “We don’t want to make an investment that’s not going to provide a favorable return for our shareholders.”[99]

November 5, 2014: 1-Hexene Plant at Cedar Bayou Earns 2014 ABC Houston Chapter Prestigious Excellence in Construction Award

Businesswire reported on November 5, 2014 that the 1-Hexene plant at Cedar Bayou received the top Excellence in Construction “ICE” award in the heavy industrial category and first runner up for "Best of Houston" by the Associated Builders and Contractors, Inc. (ABC) of Greater Houston at its annual gala on Oct. 30. The awards recognize outstanding projects that exemplify innovative design, precise craftsmanship and superior safety performance and practices. “It’s an honor to have our 1-Hexene plant be recognized for its excellence in construction,” said Scott Sharp, Chevron Phillips Chemical’s senior vice president, projects. “S & B worked diligently, effectively and safely to successfully build and help us start up this important project.” Chevron Phillips Chemical announced start-up of the 1-Hexene plant at its Cedar Bayou plant in Baytown, Texas, in June, and with nearly 1.7 million work hours completed, there were no Occupational Safety and Health Administration (OSHA) recordable injuries reported during the construction of the project.[100]

October 29, 2014: CPChem continues to Ramp Up Production at 1-hexene Facility at Cedar Bayou

Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that CPChem continues to ramp up its 250,000 metric ton per year 1-hexene facility at Cedar Bayou. "In Chemicals, CPChem continues to ramp up its 250,000 metric ton per year 1-hexene facility at Cedar Bayou, which began operations in the second quarter. The global O&P utilization rate in the fourth quarter is expected to be in the low-80%s, as we anticipate CPChem's Port Arthur facility to begin the process of restarting its olefins units in November, with some portions of the plant remaining down until year-end."[101]

April 2, 2014: Chevron Phillips Chemical Breaks Ground On Ethane Cracker at Baytown Facility

Ryan Holeywell reported in FuelFix on April 2, 2014 that Chevron Phillips Chemical broke ground on a a massive new ethane cracker, the first component of a $6 billion expansion and the first new major facility of its type built in the U.S. in a decade. The ethane cracker is a massive piece of equipment with a footprint the size of nearly 50 football fields used to transform ethane, a component of natural gas, into ethylene, a component used to make plastics. "This is a big deal for us — $6 billion is a big project for a company with $10 billion in assets,” said CEO Peter Cella. The investment, which officials say will contribute to the creation of about 400 jobs. Cella said Chevron Phillips is still “a few years away” from developing contracts with customers for the ethylene it will produce, and polyethylene contracts tend to be developed on a year-to-year basis. He expected most of the ethylene produced by the cracker to be used domestically, including by the company itself.[102] “It’s a huge investment for a company like this,” Cella said, all of which is “catalyzed” by the shale boom that is producing lots of ethane that serve as the “competitive feedstock” for the chemical plants. “We see the supply of ethane being pretty substantial going forward,” Cella said in an interview before the Baytown groundbreaking. “It’s important to point out there’s a surge of investments being contemplated or already in progress like ours in the chemical industry."[103]

The other component of the endeavor, in nearby Old Ocean, consists of two polyethylene units, which convert ethylene into polyethylene pellets that can be sold, melted and formed into a variety of industrial and household plastics. The entire project is slated to come online in 2017. The two polyethylene units will develop two different products: a biomodal resin he described as durable but soft, and a metallocene resin that is clear and can receive printing and is commonly used for packaging in retail stores.[104]

December 6, 2013: Phillips Plans to Start up 1-hexene plant in Baytown in 2014

Phillips reported on December 6, 2013 that they plan to invest $1.046 Billion in their 50/50 joint venture with Chevron, representing a substantial increase over 2013. The increase primarily reflects advancement of CPChem’s 3.3 billion-pound-per-year ethane cracker and two 1.1 billion-pound-per-year polyethylene facilities. The facilities are expected to start up in 2017. Additionally, CPChem plans to complete and start up its 550 million-pound-per-year 1-hexene plant in Baytown, Texas, in the first half of next year.[105]

September 5, 2012: Garland Announces $5 Billion Facility at Cedar Bayou

Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that Phillips is increasing its chemicals capacity. "So, one of the things that we're doing, we're increasing fractionation capacity at CPChem's facility at Sweeny, about a 20% increase in frac. We're also investing in a 1-hexene plant, 200,000 ton a day facility. Think of that as a specialty chemical, very nice returns in that business. Then we've announced a $5 billion new grassroots facility at -- well actually split. The cracker will be at our Cedar Bayou facility. The derivatives, which primarily are polyethylene, will be at our Sweeny facility in Old Ocean, Texas. We expect that the cracker will be up in 2017. We think we'll be one of the first of the new grassroot crackers to be up in 2017."[106]===June 14, 2012: New 1-hexene Plant Under Construction at Chevron Phillips Chemical's Cedar Bayou complex Will be the World's Largest=== Emily Pickrell wrote in San Antonio Express on June 13, 2012 that Phillips 66 executives gathered for a ceremonial groundbreaking on June 12, 2012 at Chevron Phillips Chemical's Cedar Bayou complex that will use ethylene to create 1-hexene, an essential ingredient for a range of plastic products. “The facility that we are groundbreaking is an outcome of this new natural gas resource base,” said Pete Cella, CEO of Chevron Phillips Chemical. “Five years ago, the expectation was that the U.S. would become a net importer of ethylene. Now we are expecting that we will not only meet U.S. demand domestically, but will become a major exporter.” The company plans to hire 1,000 workers to build the plant, which is expected to be online in early 2014.[107]

Chevron Phillips Chemical also plans to build a new ethane cracker at Cedar Bayou; two new polyethylene units at a site 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.[108]

June 12, 2012: Garland Says the Baytown Facility Will Come Into Operation in 2017

Fox Business reported on June 12, 2012 that reg Garland told the Financial Times that Phillips 66 may invest in a second new chemical plant in the U.S. Gulf region to take advantage of the cheap feedstock in North America that was released by the shale revolution, a decision that could be made in three years' time. "After the Middle East, the U.S. is the next best place to make petrochemicals, because of the advanced feedstock, and we see that continuing for some time," said Garland.[109] Garland said US chemicals manufacturers could buy ethane at about $5 per million British thermal units of energy content, compared to about $18 per mBTU for crude oil and that the US petrochemicals industry, stands at the dawn of a long-term upturn, and Phillips 66 stands to benefit through Chevron Phillips Chemical, its 50/50 joint venture with Chevron. The cheap feedstock persuaded CP Chem to announce last year that it would build a new “cracker” in Baytown, Texas, to convert ethane into ethylene. The Baytown cracker, expected to come into operation in 2017, will employ 10,000 people while under construction, and about 400 when it is running. [110]

Latest News and Views from Sweeny Petrochemical Complex

Chevron Phillips Chemical Plant in Sweeny, Texas. Photo: Photo: Glass Door Only original, non-copyrighted images.

September 29, 2017: Sweeny Homeowner's Lawsuit Says Phillips 66 and Chevron Phillips Knowingly Forced Floodwaters into their Neighborhood

Phillips 66 Built Dams "in the dark of night" Causing Homes to Flood Says Lawsuit by 350 Sweeny Residents. The Army Corps of Engineers is investigating claims by residents of Sweeny, Texas, that floodwaters were knowingly forced into their neighborhoods when Phillips 66 and Chevron Phillips dammed up two bayous. A lawsuit filed by about 150 families claims that by damming two nearby bayous without warning, the companies knowingly pushed floodwater away from the plant and into neighborhoods.

CBS News reported on September 29, 2017 that the Army Corps of Engineers is investigating claims by residents of Sweeny, Texas, that floodwaters were knowingly forced into their neighborhoods when Phillips 66 and Chevron Phillips dammed up two bayous. A lawsuit filed by about 324 families claims that by damming two nearby bayous without warning, the companies knowingly pushed floodwater away from the plant and into neighborhoods. Video shows how the plant stayed dry – and left homes under water. "It was full. I mean, it was almost to the top of where we're standing right now," said lawyer Josh Bowlin. Bowlin represents the families now suing the Phillips 66 and Chevron Phillips. He showed one spot that was dammed and a video of the backhoe that was used to remove the blockage. "I've talked to so many people that if they just had a little bit of notice they could have saved so much," Bowlin said.

Chevron Phillips did not respond to repeated requests for comment. But in a statement, Phillips 66 said, "Our priorities during the flood were to protect people and the environment...we do not believe these actions on one side of our property impacted the ongoing flooding event adjacent to the refinery or in the community." "I apologize for the profanity but that's a bunch of bull**** straight up. They made a conscious decision to save their plant but those actions have consequences and they need to be held responsible for those actions," said David Harquist. Residents say disaster struck after the storm had moved on. Floodwaters stopped receding and began rising again -- this time, into the house. "I was shocked. I was like what in the world is going on and then all of the sudden the water came up and it started coming up quickly," Harquist said.[111]

According to the Brazaport Facts, the petition alleges Phillips 66, Chevron Phillips and Chevron Phillips Chemical Co. caused flooding in areas near Phillips 66’s Old Ocean refinery by erecting dams on the Linville Bayou and Little Linville Bayou “in the dark of night,” starting August 30, 2017. “These dams gave the water flowing downstream nowhere to flow, except to flood the land and its people surrounding the Sweeny Refinery,” the petition states. Refinery employees “never warned a single Sweeny resident of the imminent danger upon them,” the petition states. The petition also claims “multiple chemical and petroleum spills occurred in Sweeny Refinery and were threatening contamination in the flowing waters.” Bowlin said the contaminants included the carcinogen benzene and wastewater, though analyses of the contaminants still are ongoing. Bowlin said he witnessed the blocked bayous first-hand and is confident evidence will show the refinery’s managers to have been at fault. The dams constructed by refinery workers contributed to flooding in an area that stretched as far north as FM 1301 and as far south as FM 521, Bowlin said. More than 350 residents and businesses have joined in a lawsuit claiming the actions at a Sweeny-area industrial site caused their properties to flood, and that number likely will grow, said Bowlin .[112]

The plaintiffs claim Phillips 66 employees erected temporary dams at the Linnville and Little Linnville bayous to prevent petroleum and chemical leaks at its Sweeny refining and petrochemical complex. The lawsuit alleges the Houston-based energy giant knew the efforts would cause nearby homes to flood, but that they did so anyway without notifying local communities. The lawsuit alleges that Harvey passed through the Sweeny area without causing any significant flooding, leaving residents to believe their properties survived intact. "They were wrong," the suit asserts. Phillips 66 built dams "in the dark of night" on August 30 to protect its massive refining complex. The suit contends that, because of the dams, the water level in Sweeny kept rising and flooded many homes, trapping people inside of their houses. "Unforgivably, defendants never warned a single Sweeny resident of the imminent danger upon them," the lawsuit claims. "Instead, defendants sat quietly even though their hydrologists had told them the town was going to flood because of the dams."[113]

September 20, 2017: Hurricane Harvey Delays Large Part of $6 billion Chevron Phillips Expansion at Sweeny Complex

My San Antonio reported on September that a large portion of Chevron Phillips' $6 billion expansion at Sweeny Complex is being delayed until next year after Hurricane Harvey's floodwaters created additional problems. The larger Baytown portion of the expansion project, which was originally expected to be finished by now, won't be completed until next year, Chevron Phillips said. The project involves a massive ethane cracker - on a plot the size of 44 football fields - that will separate a component of natural gas called ethane, which will provide the feedstock for some 1.5 million metric tons a year of ethylene, a common building block of plastics. Chevron Phillips said it is now on track to be finished by the end of March with it achieving full production by mid-2018.[114]

March 2, 2017: Brazoria County Commissioners Approve 10-year, 100 percent Property Tax Abatement for Proposed $1.3 billion Complex at Phillips 66 Sweeny Site

The Brazosport Facts reported on March 2, 2017 that Brazoria County commissioners unanimously approved a 10-year, 100 percent property tax abatement if a proposed $1.3 billion complex is placed at the Phillips 66 Sweeny site. The natural liquid gas fractionator will divide natural gas liquids into marketable purity products. Officials have begun preliminary economic and engineering analyses for at least one fractionation and associated pipelines to meet a growing domestic and international demand for natural gas liquids supplied by the United States, Phillips 66 spokesman Rich Johnson said in an emailed statement. Construction is projected to begin in February 2019 if the company selects the Brazoria County site, with a targeted completion date of April 2020, the application states. The project will create 1,300 jobs at peak construction, finishing with 300 construction jobs and 12 permanent jobs. “We’re really excited to be engaging in a project that’s going to be part of the community, employ people in the community, be an economic benefit to folks in the community in Brazoria County,” Phillips 66 Real Estate Services Senior Advisor Chris Cisneros said. “As other projects come along, we’re hoping to consider Brazoria County. We’re looking forward to potentially being right here in Brazoria County close to our refinery and close to people we know and people we care about.”[115]

November 14, 2016: Phillips 66 Loads First Cargo From Billion Dollar Freeport LPG Terminal

Houston Business Journal reported on November 14, 2016 that the first cargo of propane and butane out of Phillips 66's new liquefied petroleum gas export terminal in Freeport, Texas, has been loaded and departed — ahead of the facility’s full-start in December. When it enters full operation in mid-December, the Freeport LPG terminal will have an export capacity of about 4.4 million barrels per month. The entire Gulf Coast region exported 20.34 million barrels of LPGs in August, according to the most recent data released by the U.S. Energy Information Administration. Phillips 66 broke ground on the Freeport LPG terminal in August 2014, when it was expected to cost about $1 billion. The new LPG export terminal is at Phillips 66's existing marine terminal in Freeport, south of Houston. The company will get the fuel from its Sweeny complex in Old Ocean and its Gulf Coast Fractionators facility in Mont Belvieu.[116]

July 29, 2016: The Sweeny Hub is Nearing Completion

Greg Garland told analysts during the 2016 second quarter earnings conference call on July 29, 2016 that "in the Gulf, development of the first phase of the Sweeny hub is nearing completion. Sweeny Fractionator One is operating well, however, volume mix across all of our fractionators remains impacted by heavier NGL feedstock as a result of continued ethane rejection."[117]

Greg Garland told analysts during the 2016 second quarter earnings conference call on July 29, 2016 that Phillips still thinks that that the Sweeny Hub is a great project and we see value creation opportunity there.

"If you think about NGL pipes coming out of the Permian and West Texas and the Eagle Ford and going by Sweeny. You think about world-class refining, world-class petrochemicals. We have the largest single site ethylene facility at Sweeny, we're building 1.2 million tons of polyethylene capacity, building the fractionator, we're building the caverns, we're building the interconnecting pipes to Bellevue and on to Freeport and then the 150,000 barrel a day LPG Export facility. So, we still like that concept and what we are creating there. I think short-term what you're seeing in the market, there's going to be stress in the LPG side of it. The frac is running well, it's running to design limits. We're seeing certainly heavier feed than what we premised. And so, we're running about 80 a day at the frac today versus 100%, but it's completely loaded in the backend of the frac. The other thing I would say is, as this project is coming up, we have a lot of project expenses that are hitting us beyond just the frac. So, think about the pipes and the caverns and the commissioning and the start-up of the LPG Export facility. So you should expect to see those costs continue through the end of 2016. But when you talk about the frac itself, we dropped it, all of it, it's at PSXP today. The EBITDA is about $100 million, so $25 million a quarter. There's a little bit of leakage that goes to the non-controlling interest, so then you take that and bring it to the net income level. And that was more than offset by the project expenses we had and the seasonal trading activities that we had in our NGL business. We're not worried about this whole NGL complex that we're building at Sweeny in terms of it coming up. And we're looking forward to getting the LPG Export up later this year, we'll start commissioning activities actually in the next couple weeks as we start thinking about that. So, I just want to say that we still really like this project a lot. And Tim, if you want to fill in anything I missed, you're welcome to do that."[118]

July 29, 2016: The Cracker Project at Sweeny and Baytown Look to Be Complete in the Second Half of 2017

Greg Garland told analysts during the 2016 second quarter earnings conference call on July 29, 2016 that "here's two pieces of the cracker project. One is the derivatives project, the polyethylene plants at Sweeny and the second is the cracker at Baytown, which is just east of Houston. So, the derivatives plant, those projects are still online, they come online actually before the second half of 2017 to be complete, the cracker is now looking like it's going to complete in the second half of 2017. And that's really the change that we're seeing, primarily related to productivity and the complexity of that project we're seeing several month's delay. So, continue to progress on both of those very well, but the cracker is behind where we're seeing the derivatives project at this point."[119]

July 29, 2016: The LPG Terminal at the Freeport Export Facility is 97% Complete

Timothy Taylor told analysts during the 2016 second quarter earnings conference call on July 29, 2016 that the LPG Terminal at the Freeport Export Facility is about 97% complete. "There's different pieces, so we're actually right at the front end of our commissioning and drying out process, getting it ready. So, we anticipate that will be operational toward the end of the year, but we are actually essentially completing construction and now working into the commissioning piece of that business, so that's about to become operational. On the market side, and you asked about the contracts. We continue to work the contracts, as Greg said, the commodity environment is challenged today. So, I think that the commercial arm or opportunity is narrower than what we had originally planned in the short term, but we still fundamentally see that strength. And as I said, it's got to clear the market here somewhere to really make everything balanced just based on the demand side. So, we feel pretty good about the longer-term fundamentals there with some stress short-term I think on the commercial side of that. But the load across that looks really solid to us. And we continue to work that.[120]

June 11, 2016: Phillips 66 Donates $25,000 to Sweeny Petrochemical Academy

The Brazoport Facts reported on June 11, 2016 that Phillips 66 is making a $25,000 grant to the Sweeny Petrochemcial Academy locared in Sweeny, Texas, home of Phillips Sweeny Refinery and Petrochemical complex. “The petrochemical academy will ensure a trained workforce to staff the industrial expansion in Sweeny and Freeport as well as replacing employees electing to retire,” said Phillips 66 Spokeswoman Regina Slaydon. Phillips 66 has supported the Sweeny ISD petrochemical academy since its inception in 2014, Slaydon said, and contributing money to allow as many students as possible to attend furthers that partnership.[121]

December 8, 2015: Sweeny Fractionator One Is Now Operational

Businesswire reported on December 8, 2015 that Phillips 66 has begun operations at its new 100,000 barrels-per-day (BPD) natural gas liquids (NGL) fractionator located at the company's Sweeny Complex in Old Ocean, Texas. Sweeny Fractionator One supplies purity ethane and liquefied petroleum gases (LPG) to the petrochemical industry and heating markets. “The startup of Sweeny Fractionator One is a significant milestone in the growth of our Midstream business,” said Bob Herman, executive vice president, Midstream for Phillips 66. “We plan to add more capacity in the future to supply our customers LPGs based on affordable North American natural gas liquids.” Sweeny Fractionator One and the Freeport LPG Export Terminal represent a combined capital investment of more than $3 billion. The new assets are creating more than 70 full-time jobs in addition to 5,500 construction jobs.[122]

October 16, 2015: Phillips 66 Delays Sweeny Fractionator Startup after Mechanical Failure

FuelFix reported on October 16, 2015 that a temporary mechanical failure caused Phillips 66 to delay the startup of its new natural gas liquids fractionator at the Sweeny Complex. The 100,000-barrel-a-day Fractionator One project at Phillips 66’s Sweeny complex is part of a $3 billion capital expansion project. A fractionator takes natural gas liquids and separates them out into individual component products like ethane, butane and propane. “We experienced a mechanical issue with a furnace during startup of the Sweeny Fractionator One,” said spokesman Dennis Nuss. “We are working on repairs and expect to start up by the end of the fourth quarter. The associated storage caverns and pipelines have been completed and are ready to support the fractionator.”[123]

July 31, 2015: Sweeny Fractionator One is Over 90% Complete

Businesswire reported on July 31, 2015 that construction of the 100,000 BPD Sweeny Fractionator One and the 150,000 BPD Freeport LPG Export Terminal continued during the quarter. The fractionator is approximately 90 percent complete, while the LPG Terminal construction is nearly 50 percent complete. Both projects are on schedule and on budget with startup expected in the fall of 2015 and the second half of 2016, respectively.[124]

April 30, 2015: Garland Says Sweeny Fractionator One is Over 70% Complete

Greg Garland told analysts during the 2015 first quarter earnings conference on April 30, 2015 call that Sweeny Fractionator One is now over 70% complete. "Our midstream growth projects continue to be well-executed. Sweeny Fractionator One is now over 70% complete. And the Freeport LPG export terminal is about a third done. Both projects are on schedule and on budget with startups expected in the second half of 2015 and 2016 respectively."[125]

December 11, 2014: CP Chemical Completes Ethylene Expansion at Sweeny Complex

Businesswire reported on December 11, 2014 that CP chemical announced completion of an ethylene expansion at its Sweeny complex that was started in 2013. With the addition of a tenth furnace to ethylene unit 33 at the Sweeny complex, the expansion is expected to increase annual production by 200 million pounds giving the Sweeny facility the capability of producing roughly 12 million pounds of ethylene per day, or 4.3 billion pounds annually. This represents the next increment of expansion to our ethylene business. We’re building toward the startup of the U.S. Gulf Coast Petrochemicals Project in 2017 and supporting incremental growth of our olefins derivative businesses,” said Dave Smith, olefins & natural gas liquids vice president for Chevron Phillips Chemical.[126]

November 30, 2014: County Commissioners Approve Tax Abatement to Improve Chances of Landing Phillips 66’s $1.1 billion Sweeny Expansion

The Facts reported on November 30, 2014 that County commissioners have approved a tax abatement they believe will help Sweeny’s chances of landing Phillips 66’s $1.1 billion expansion to the company’s fractionator plant at Sweeny.[127]

October 30, 2013: Garland Says Sweeny Ethylene Expansion to be Completed in 2014

Garland told analysts at the third quarter earnings conference on October 30, 2013 that CPChem announced its world-scale Gulf Coast ethane cracker and two new polyethylene facilities earlier this month. "CPChem now has the necessary approvals to begin construction," said Garland. "In addition to the petrochemicals projects CPChem is also completing one hexane unit which is expected to be operational in the first half of 2014 as well at the Sweeny ethylene expansion in 2014. All in CPChem at a 100% basis is expected to spend between $6 million and $8 billion on self-funded capital between now and 2017. They expect to add about $1.5 billion of EBITDA in 2017 once all these growth projects are online."[128]

October 29, 2014: Sweeny Fractionater One in Progressing Nicely

Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that Frac One at Sweeny is progressing nicely. "On the picture in front of you, that's a picture of the Sweeny frac one, it's progressing nicely as is the LPG export facility at Freeport. We look forward to giving you frequent updates on these important projects."[129]

October 29, 2014: Phillips is Evaluating Possibility of Another Frac at Sweeny

Greg Garland told analysts during the third quarter earnings conference call on October 29, 2014 that Phillips is evaluating the opportunity for a second frac. "We're also evaluating the opportunity for a second frac, to have the capacity of 110,000 barrels a day. We expect to reach a final investment decision mid-2015. It will be up and operational mid- 2017."[130]

July 31, 2013: Outages at Sweeny Facility Caused Lost Production of 540 million pounds

Greg Garland told analysts at Phillips 2nd Quarters earnings conference on July 31, 2013 that outages at the Sweeny facility during both the first quarter and the second quarter of 2013 resulted in loss production of approximately 540 million pounds. "The decrease in earnings was primarily in olefins and polyolefins driven by unplanned power outages at CPChem’s Sweeny Complex as well as an extended 91 day turnaround at its Port Arthur facility. In May of this year, CPChem was required to declare force majeure on ethylene and certain derivatives, following these outages," said Garland. "These outages as well as the downtime at Port Arthur resulted in higher manufacturing costs and decreased production sales volumes for ethylene, polyethylene, and normal alpha olefins in the second quarter of 2013. While industry ethylene margins remained strong, CPChem realized lower margins because of these unplanned events."[131]

July 31, 2013: Phillips Completes NGL Fractionator Expansion Project at Sweeny Facility

Greg Garland told analysts at Phillips 2nd Quarters earnings conference on July 31, 2013 that Phillips chemicals joint venture CPChem completed the NGL fractionator expansion project at the Sweeny facility during the second quarter. The project increased capacity by nearly 20%.[132]

June 3, 2013: Phillips to Add Furnace at Sweeny Petrochemical Complex

The Oil and Gas Journal reported on June 3, 2013 that Chevron Phillips Chemical Co. LP will add a furnace at its Sweeny petrochemical complex that will expand ethylene production by 200 million lb/year. Construction of the furnace will begin within three months and the start-up is expected in 2014. The new furnace will not add to nameplate capacity of the facility, the company said, explaining, “the increased operating factor should result in net increase of 200 million lb of ethylene availability to provide additional operation flexibility and reliability.”[133]

September 5, 2012: CPChem is Increasing Fractionation Capacity at Sweeny

Greg Garland told investors and securities analysts at the 2012 Barclays CEO Energy-Power Conference in New York on September 5, 2012 that Phillips is increasing its chemicals capacity. "So, one of the things that we're doing, we're increasing fractionation capacity at CPChem's facility at Sweeny, about a 20% increase in frac. We're also investing in a 1-hexene plant, 200,000 ton a day facility. Think of that as a specialty chemical, very nice returns in that business. Then we've announced a $5 billion new grassroots facility at -- well actually split. The cracker will be at our Cedar Bayou facility. The derivatives, which primarily are polyethylene, will be at our Sweeny facility in Old Ocean, Texas. We expect that the cracker will be up in 2017. We think we'll be one of the first of the new grassroot crackers to be up in 2017."[134]

May 2, 2012: Phillips to Build two new polyethylene plants Near Sweeny Petrochemical Complex

The Oil and Gas Journal reported on May 2, 2013 that Chevron Phillips Chemical Co. LP has selected a site near its Sweeny petrochemical complex for two new polyethylene plants with capacities of 1.1 billion lb/year each. Jacobs Engineering Group will design the polyethylene plants which are part of a major Gulf Coast Expansion.[135]

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  132. Seeking Alpha. "Phillips 66's CEO Discusses Q2 2013 Results - Earnings Call Transcript" July 31, 2013.
  133. Oil and Gas Journal. "Chevron Phillips adding furnace at Sweeny" June 3, 2013.
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  135. Oil and Gas Journal. "Old Ocean, Tex., picked for PE plants" May 2, 2012.



Master Index of Articles about Phillips 66

The North Tower and the South Tower, part of Phillips 66's Refinery Complex in Ponca City, contain over 250,000 square feet of Class A office space that is essentially unused. Research West contains another 230,000 square feet of unused Class A office space. Photo: Hugh Pickens
Ponca: A Core Asset. Phillips CEO Greg Garland told members of the Bartlesville Chamber of Commerce on August 27, 2013 that the refinery at Ponca is a 'core asset' of Phillips 66. The refinery in Ponca City "is making very good money for us," Garland told his Bartlesville audience. Garland added that he expects gas demands in the U.S. to decline by 20 percent in the next 10 years, but that demand for refined products in South America and Africa will more than offset that decline.

by Hugh Pickens, Ponca City Oklahoma


The purpose of this report is to provide a comprehensive overview of Phillips 66 that documents and explains the company's business strategy and execution of that strategy.

Major Sections of this report on Phillips 66 include:

Safety, Environment, Legal


Corporate


Strategic and Financial


Business Segments


Stock Market


Reference

Refining Business Segment


Increasing Profitability in Refining Business Segment


Detailed Look at Ponca City Refinery


Other Phillips Refineries


Other Locations

Personal tools