Saudis’ Motiva Eyes Revival of Multibillion-Dollar Plastics Plan

(Bloomberg) -- Motiva Enterprises LLC is eying the revival of a multibillion-dollar expansion project at its Texas Gulf Coast refinery in 2023 that would produce petrochemicals used to make everything from plastic water bottles to grocery bags.

Engineering and excavation work had already been done before the project was halted nearly two years ago. Now, Saudi Aramco’s U.S. refining arm is considering reactivating the expansion, minus an ethane cracker, which it no longer needs, according to people familiar with the plans, who asked not to be identified because the information isn’t public.

Motiva originally intended to construct an ethane cracker that produces ethylene, a key component for making plastics and solvents, as well as other downstream units to process the ethylene. The refiner suspended the project when it bought the adjacent Flint Hills Resources LLC’s chemical plant in late 2019, which gave it an ethane cracker, but not all the downstream units needed to turn the ethylene into plastics and other products.

Motiva is re-evaluating the massive expansion in Texas as consumption of plastics skyrockets. Oil majors including Exxon Mobil Corp. and Royal Dutch Shell Plc are making more money from their petrochemical operations than they have in years. Supply disruptions and pandemic-related demand has bolstered the need for construction, manufacturing and consumer products that heavily rely on the processing of chemicals like ethylene.

Ethylene, which traded at a seven-year high of 59.5 cents a pound in March, is down from the highs but trended upward recently. The spot price Friday was at 52.5 cents a pound, up 11 cents from the prior week, according to ICIS, a data and analytics provider.

An alternative plan in discussion for Port Arthur involves Motiva buying another chemical facility in the area that would give it access to downstream process units without having to build them. Motiva has been sending the ethylene from its ethane cracker to local chemical plants for further processing or selling the ethylene outright.

Motiva officials declined to comment on Monday.

The value of the original project was estimated at $6.6 billion in 2018, according to local media reports, citing information from the Texas Comptroller’s office. The majority of the value was for building the ethane cracker, estimated at about $4.7 billion.

Motiva’s 607,000 barrel-a-day refinery in Port Arthur, Texas, is the largest in the U.S. Its corporate offices are in Houston.

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