LyondellBasell LYB has revealed its plans to beef up Tri-ethylene Glycol (TEG) production capacity at its existing ethylene oxide and ethylene glycol plant in Pasadena, TX.
TEG is a glycol that is utilized to dehydrate natural gas and as an additive in hydraulic and brake fluids. LyondellBasell’s Bayport Underwood plant in Pasadena makes ethylene oxide, ethylene glycol, glycol ethers and other products. Glycol ethers are used to make brake fluid, dyes, paint, solvents, detergents, commercial cleaners and waxes, among other things.
Engineering is currently underway on the new facility, which is expected to come on stream in late 2016. The unit is expected to be among the largest on-purpose TEG production plants globally. TEG will be made, at the facility, by design and not as a by-product of another manufacturing process.
LyondellBasell said that the additional annual capacity of 50 million pounds would more than double its existing production capacity. The expansion is based on long-term demand of TEG in North American oil-field, construction and automotive markets.
LyondellBasell is executing its expansion projects to leverage the U.S. natural gas liquids (NGLs) advantage. It remains on track with its ethylene expansion projects.
LyondellBasell’s multi-plant ethylene expansion program 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. The company plans to advance roughly 1 billion pounds of ethylene expansion projects during 2015 and improve operations at its methanol facility.
However, LyondellBasell faces volatility in raw material and energy costs that account for a major portion of its operating costs. Lower oil prices are also expected to hurt its U.S. ethylene margins in 2015, thereby affecting its profitability.
LyondellBasell is a Zacks Rank #3 (Hold) stock.
Better-ranked stocks in the diversified chemical space include Asahi Kasei Corp. AHKSY, Innospec Inc. IOSP and Air Products & Chemicals Inc. APD. While Asahi Kasei holds a Zacks Rank #1 (Strong Buy), Innospec and Air Products retain a Zacks Rank #2 (Buy).
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