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NEWS OF THE WEEK
COST CUTTING
December 17, 2001
Volume 79, Number 51
CENEAR 79 51 p. 14
ISSN 0009-2347
[Previous Story] [Next Story]

CHEVRON PHILLIPS SHUTTERS PLANTS
Commodity petrochemical units are latest victims of economic downturn

ALEX TULLO

Chevron Phillips Chemical is making a rare move: It is shutting down an ethylene cracker. In addition, the company is closing benzene, cyclohexane, and polyethylene capacity.

7951plant.ce
UNWANTED Too little demand has led Chevron Phillips to close this ethylene cracker in Sweeny, Texas.
The cracker is a small, 400 million-lb-per-year unit at the firm's Sweeny, Texas, petrochemicals complex that has been idle for a year because of the weak ethylene market. The company is also idling, but not closing, a 650 million-lb ethylene cracker at the complex.

Chevron Phillips isn't alone in slating ethylene closures. Dow Chemical recently told investors that it may close older ethylene units in Seadrift and Texas City, Texas, and replace them with a new cracker in Seadrift (C&EN, Nov. 19, page 17). In addition, Equistar has had an 850 million-lb cracker in Lake Charles, La., idle since February.

Earl H. Armstrong, director of olefins and derivatives for consultancy DeWitt & Co., says crackers like the Chevron Phillips unit that were built in the 1960s and '70s are not competitive with newer units. "Producers would just as soon put the cost of upgrading into a new plant," he adds.

In addition, Armstrong says profitability and demand in the industry have been particularly poor this year. Operating rates, he says, are barely more than 80%. "Those are the lowest I've seen in the last 15 or 16 years."

Chevron Phillips is also shutting indefinitely benzene and cyclohexane plants in Guayama, P.R., that have been idle since March. And it is delaying the restart of o-xylene and p-xylene units at the site that were due back on-line early next year.

The company is also closing two loop polyethylene reactors at its Orange, Texas, complex over the next couple of months. This will reduce polyethylene capacity at the site by 25%, to 900 million lb per year.

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