LyondellBasell Industries NV (LYB), the largest producer of polypropylene, may spend as much as $1 billion through 2016 to boost output of chemicals and plastics to take better advantage of low-cost U.S. natural gas.
New projects costing $900 million to $1 billion will increase annual pretax earnings by $500 million to $600 million, the Rotterdam-based company said today in a webcast presentation from New York. The projects are in addition to previously announced expansions that will add as much as $1 billion to earnings by 2016.
Chairman and Chief Executive Officer Jim Gallogly is expanding existing facilities rather than building new factories to more rapidly take advantage of inexpensive gas. The strategy also cuts the cost of new ethylene capacity to 50 cents, compared with 75 cents to 80 cents for new plants pursued by competitors, Gallogly said in the webcast.
The biggest new investment would expand ethylene production in Corpus Christi, Texas, by 800 million pounds (362 million kilograms) a year at a cost of $420 million, according to a slide presentation on the company’s website. An expansion at Channelview, Texas, would add 250 million pounds of ethylene capacity for $170 million.
Ethylene is the most common petrochemical and is used to make plastics such as polyethylene, found in garbage bags and packaging. Both projects would be completed in 2015.
The company also is considering adding 1.22 billion pounds of polyethylene, including the possibility of adding a new production line.
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