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Texas Coastal Community Affirms Case for ExxonMobil Cracker

Following months of debate, leaders of a rural Coastal Bend community near Corpus Christi, TX, are making it clear they would welcome the world's largest ethane steam cracker, a $9 billion-plus project proposed by ExxonMobil Corp. and Saudi Arabia Basic Industries Corp. (SABIC).

A final investment decision could be made about whether to move forward on the cracker as soon as May, an ExxonMobil spokesman said. ExxonMobil has about $20 billion worth of petrochemical investments lined up for the Gulf Coast region.

The Gregory-Portland Independent School District Board in San Patricio County last Tuesday voted 6-0 to provide tax abatements for more than 15 years. The vote followed a tax break also agreed to last week by the San Patricio County Commission.

The joint venture (JV) partners are considering a plan to build a cracker on one of four sites, with San Patricio's the only one under advanced study, according to the partners. Another site under consideration is in Victoria County, north of San Patricio, as well as Louisiana's St. James and Ascension parishes.

The San Patricio approvals cleared major hurdles, with representatives of the JV umbrella company Gulf Coast Growth Ventures Plastics Project at the school board and commission meetings to make their cases for tax breaks.

The affirmative votes came following months of contentious debate and citizen protests, including a petition signed by about 1,500 people opposed to the plant. Around 2,000 people live in Gregory and 19,500 live in Portland.

As initially designed, the facility could be online by 2021. The project, which would include a plastics manufacturing plant, could create 600 permanent jobs, along with 11,000 temporary construction jobs.

Gulf Coast Growth Ventures has proposed building roads and upgrading others to accommodate increased traffic. Buffer zones would be provided to reduce environmental and aesthetic issues. Industrial water would be provided by Corpus Christi, while drinking water would be provided by Portland and Gregory.

ExxonMobil and SABIC have worked together for more than 35 years in major chemical joint ventures in Saudi Arabia.

In related news, affiliate ExxonMobil Chemical Co. said it plans to expand its global hydrocarbon fluid asset capacity by more than 250,000 tons/year at its world-scale petrochemical sites east of Houston in Baytown, as well as at its Belgium and Singapore facilities. The capacity expansions would increase volumes for the Exxsolseries of differentiated fluids and a broader portfolio of hydrocarbon fluids including Isopar and Solvesso.

Demand for hydrocarbon fluids is increasing globally because of strong growth in the industrial sector, coupled with the need to comply with health, safety and environmental regulations, ExxonMobil noted. ExxonMobil Chemical offers hydrocarbon fluids for a wide range of applications including drilling mud oil, mining, agricultural chemicals, metal working, polymerization process, water treatment, adhesives, coatings and reprographics.

Meanwhile, ExxonMobil advised stockholders late Friday not to respond to TRC Capital Corp.'s unsolicited mini-tender to purchase up to two million shares, or about 0.05% of shares outstanding. TRC offered $78/share, which was about 4.42% lower than the $81.62 closing price on March 10, the business day before the date of the offer.

"TRC Capital has made many similar mini-tender offers for shares of other companies," ExxonMobil said. "Mini-tender offers seek to acquire less than 5% of a company's shares outstanding, thereby avoiding many disclosure and procedural requirements of the U.S. Securities and Exchange Commission that apply to offers for more than 5% of a company's shares outstanding. As a result, mini-tender offers do not provide investors with the same level of protections as provided by larger tender offers under U.S. securities laws."

The SEC "has cautioned investors" that some mini-tender offers are designed to "catch investors off guard if the investors do not compare the offer price to the current market price."

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