Shell Chemical has more plans for Gulf Coast growth, Geismar GM says

Fuel Fix ^ | December 1, 2015 | Jordan Blum

[thackney]

The general manager for a Royal Dutch Shell petrochemical plant in Louisiana said the company is committed to expanding its business along the Gulf Coast, with demand in Asia and the United States projected to continue growing.

Houston-based Shell Chemical said Monday that the company will expand the petrochemical complex in Geismar, Louisiana to produce more chemicals used in plastics, industrial oils and drilling fluids as part of a $717 million investment.

"It's a pretty big deal in our chemicals business. Our view is this project will be very profitable for Shell," Gesimar General Manager Rhoman Hardy said in an interview. "Shell is very committed to the Gulf Coast."

Shell said the addition of a fourth production unit will make the Shell Geismar Chemical Plant the largest producer of alpha olefins in the world. The expansion will add about 468,000 U.S. tons of annual capacity, creating a total capacity of 1.4 million tons.

The Geismar location between Baton Rouge and New Orleans was chosen -- as opposed to Shell's Deer Park complex near Houston -- because the the plant already has three alpha olefins units, Hardy said, after an expansion in 2002. Louisiana and Texas both offer access to cheap natural gas from U.S. shale that serves as a feedstock to the chemical plants, Hardy said, as well as access to ports to ship the chemicals worldwide. The only other location where Shell produces alpha olefins is in the United Kingdom near Liverpool.

The American Chemistry Council counts 256 announced U.S. petrochemical projects with a cumulative investment of $158 billion from 2010 to 2023.

Most are in Texas and Louisiana, and nearly 65 percent of the funding comes from foreign investment. About 60 percent of the projects are still in the planning stages.

Global projected population and economic growth, especially in Asia, is fueling the need for more chemicals to produce plastics for bottling and packaging, Hardy said, while the demand for drilling fluids made from the chemicals is largely in the U.S.

Construction on the Shell expansion will begin in the first quarter of 2016 with an expected startup in 2018, Hardy said. Other companies like BASF and Occidental Chemical Corp. have neighboring petrochemical plants.

Shell employs about 650 people at the Geismar complex, not counting contractors. The expansion will only add about 20 permanent jobs, but there will be a peak of 1,000 temporary construction jobs, Hardy said.

The new growth is a change for Shell in the Geismar area when the Dutch energy giant two years ago abandoned plans for a massive, $20 billion gas-to-liquids plant, citing poor economics for the project. That was obviously much more than the current $717 million commitment. Hardy said each project is essentially its own animal.

"Every project goes through a very structured review," Hardy said.

Hardy said Shell is eyeing more potential growth in the region, but declined to give more details on the company's plans.

"Even with this project we have a significant amount of retail available to us," he said.

[Steely Tom]

Buy HLX, it’s very low.

[MisterArtery]

Around 40 years ago, I went to the Shell Geismar plant to teach the small engineering staff how to access the main-frames in Houston by using a Model 33 KSR Teletype at the blazing speed of 110 baud. they needed to use the engineering programs available on the company’s Houston systems.

While there, I heard an interesting story. Some time earlier the Clint Eastwood movie, “The Beguiled,” was being filmed on location at the restored plantation home next door. Chemical plants are very noisy and a movie muckety-muck showed up at the plant manager’s office and demanded that the plant be “turned off” because the noise was interfering with the the filming.

When he was informed that “turning off” was not an option, the mogul sent a huge crane and a construction crew to build a enormous baffle to defect the sound.