Chevron Phillips Chemical Co. LP on Wednesday said it will construct a “world-scale” ethane cracker and ethylene derivatives facilities in the Texas Gulf Coast region near Baytown.

The Woodlands, TX-based company, which is jointly owned by Chevron Corp. and ConocoPhillips, launched a feasibility study in March and said then that it anticipated making an announcement about whether to proceed by year’s end.

CEO Peter L. Cella, who made the announcement at a conference in Dubai, United Arab Emirates, credited abundant U.S. natural gas shale resources in helping to make the final decision. No financial details were disclosed.

“We are pleased that the development of shale gas resources in the United States has set the stage for major petrochemical investment and job creation in our own backyard,” he said.

Agreements have been executed with Shaw Energy & Chemicals to design a 1.5 million metric tons/year (3.3 billion pounds/year) ethane cracker at the chemical company’s existing Cedar Bayou facility in Baytown. Two polyethylene facilities, each with an annual capacity of 500,000 metric tons (1.1 billion pounds), are to be built either at the Cedar Bayou facility or at a site nearby in Old Ocean. A final site selection decision for these units is anticipated early next year.

“This project represents a significant change in the ethylene marketplace as no U.S. plants have been added in approximately 10 years,” said Shaw’s James Glass, president of the Energy & Chemicals Group. “The selection of Shaw’s technology for this project followed an evaluation of the top ethylene licensors in the world.”

Shaw has built more than 120 grassroots ethylene units including Chevron Phillips Chemical’s ethylene plants in Port Arthur, TX, as well as in Saudi Arabia.

The undisclosed value of the contract will be included in Shaw’s Energy & Chemicals segment’s backlog of unfilled orders in the first quarter of fiscal year 2012.

Air permit applications for the new cracker are to be filed this week with the U.S. Environmental Protection Agency and the Texas Commission on Environmental Quality. Final approvals are expected in 2013 with estimated completion in 2017.

“The owners and management of Chevron Phillips Chemical…believe that executing this project will benefit our customers, suppliers, local communities and existing and future employees,” said Cella. “It is our opinion that this project offers unique advantages, including co-location of the cracker with our Cedar Bayou facility and other ancillary assets such as our broad feedstock and ethylene pipeline and storage cavern networks, proximity to the expanding natural gas liquids hub in Mont Belvieu and utilization of proprietary technology to meet the growing demand of our customers.”

If approved, the petrochemicals project is expected to create 400 long-term direct jobs and 10,000 engineering and construction jobs.

Dow Chemical Co. earlier this year launched an ambitious plan to increase ethylene and propylene production in the United States because of increasing U.S. gas supplies (see Daily GPI, April 25). Among other things Dow has been working on plans to construct a world-scale ethylene production plant along the Gulf Coast, also with a startup date of 2017. It also plans to restart an ethylene cracker at the St. Charles Operations in Louisiana by the end of 2012 and expand operations in Plaquemine, LA, and at its Dow Texas Operations.

A few weeks ago Sasol Ltd. said it was considering whether to build an ethane cracker and derivatives complex near its existing Lake Charles Chemical Complex in Westlake, LA (see Daily GPI, Dec. 2). In addition, Westlake Chemical Corp. has expressed an interest in building a cracker in Louisiana.

©Copyright 2011Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.