PetroLogistics Applies to Double Propylene Output in Houston

PetroLogistics LP (PDH), operator of the only dedicated U.S. propylene plant, is seeking permission to double the Houston factory’s output as supplies fall and competitors including Dow Chemical Co. (DOW) plan similar facilities.

PetroLogistics wants to add six combustion units to the five currently producing propylene, an ingredient in plastics, nylon and detergents, the Houston-based company said in an application to the Environmental Protection Agency.

PetroLogistics hasn’t made a final decision on whether to invest in the project, Chief Executive Officer Nathan Ticatch said today in a telephone interview. He declined to say when a decision could be made.

“We are in fact investigating the opportunity,” Ticatch said. “Others clearly are also looking at the addition of propylene production capacity.”

PetroLogistics, which raised $595 million in an initial public offering on May 3, has been making propylene from propane, a component of natural gas, in Houston since 2010. Dow and Enterprise Products Partners LP (EPD) are among companies planning to open similar facilities by mid-decade because of relatively low U.S. gas prices and tighter supplies of propylene.

Annual U.S. propylene output has declined as much as 5 billion pounds since 2005 when ethylene makers began switching from oil to cheaper gas-based feedstocks that yield less propylene as a byproduct, Charles Neivert, an analyst at Dahlman Rose & Co. in New York, said in a Sept. 10 report. He rates PetroLogistics a buy.

To contact the reporter on this story: Jack Kaskey in Houston at jkaskey@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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