Chemical giant LyondellBasell (LYB – Analyst Report) said that it is evaluating further expansion at its Channelview plant in Texas that would potentially add ethylene capacity by up to 550 million pounds annually. The company is currently conducting preliminary engineering works at the site to evaluate expansion feasibility.
The planned expansion is in addition to the construction work currently in progress (expected completion in early 2015) at the Channelview facility that is expected to increase production by 250 million pounds annually. If the additional expansion project proceeds, the expected time frame for completion will be 2017.
LyondellBasell remains on track with its ethylene expansion projects. The company’s multi-plant ethylene expansion program, which started last year, represents a total investment of roughly $1.3 billion across its Channelview, La Porte and Corpus Christi facilities in Texas which benefit from shale gas production.
LyondellBasell has already completed an 800 million pound per year expansion at its La Porte site and expects the addition of 800 million pounds of capacity at the Corpus Christi plant to complete by late 2015.
With the completion of the three expansion projects, annual ethylene capacity is expected to increase by an estimated 1.85 billion pounds in North America. The additional expansion project at Channelview, if finalized, will further increase the annual ethylene capacity to 2.4 billion.
LyondellBasell’s shares rose 1.5% Wednesday to close at $111.95. The stock is up roughly 40% so far this year, outperforming the S&P 500’s corresponding return of 8%.
LyondellBasell continues to gain from favorable North American natural gas environment and is executing its expansion projects to leverage the U.S. natural gas liquids (NGLs) advantage.
LyondellBasell, last month, said that it is planning to construct a world scale plant on the U.S. Gulf Coast for producing propylene oxide (PO) and tertiary butyl alcohol (TBA), leveraging the shale gas boom in the region. The plant, which is expected to go on stream in 2019, will have annual capacity of 900 million pounds of PO and 2 billion pounds of TBA and its derivatives.
The U.S. Gulf Coast is an advantaged feedstock region due to the abundance of shale-derived NGLs. The new project integrates LyondellBasell’s proprietary PO/TBA technology with cheap feedstock advantage.
LyondellBasell is a Zacks Rank #1 (Strong Buy) stock.
Other companies in the chemicals space worth a look include PPG Industries Inc. (PPG – Analyst Report), Valhi, Inc. (VHI) and Akzo Nobel NV (AKZOY), all holding a Zacks Rank #2 (Buy).