Motiva Enterprises said Aug. 19 it has signed an agreement to buy the Flint Hills Resources chemical plant adjacent to its Port Arthur, Texas, oil refinery, kicking off a push into petrochemicals.
Motiva, the U.S. refining arm of Saudi Aramco, plans to operate the chemical plant while it builds three giant petrochemical units within its Port Arthur complex as part of an $18 billion expansion of operations along the U.S. Gulf Coast, said three sources familiar with the agreement.
Motiva and Flint Hills confirmed the pending deal after Reuters disclosed it had agreed to buy the operation. Motiva said it expects to deal to close by late 2019.
A Flint Hills spokesman did not reply to requests for comment.
The purchase price was not disclosed. Flint Hills acquired the plant from Huntsman Corp. in 2007 for $770 million.
The Flint Hills plant operates a 1.57 billion-pound-per-year ethylene cracker, a unit producing nylon component cyclohexane, and a network of pipelines and storage caverns, the sources said. Ethylene is a building block for plastics.
Motiva has been investing heavily in the Port Arthur area since becoming the sole owner of the 607,000 barrel per day (bbl/d) refinery, after the 2017 break-up of a partnership with Royal Dutch Shell Plc that created Motiva.
In April, Houston-based Motiva announced it would refurbish two empty, historic buildings in downtown Port Arthur for use as offices. It also has filed documents with the state to build a $5 billion steam cracker that would produce ethylene.
The sources said the Flint Hills chemical plant buys petrochemical feedstock from Motiva's refinery, the largest in the U.S.
The acquisition comes as the market for chemicals is growing faster than for gasoline and other refined products.
Motiva has considered acquiring oil refineries or taking over existing plants, but no deals were struck. In February, it ended talks with the government of Curacao over a request to operate its 335,000-bbl/d Isla refinery and storage terminal.
Before the split with Shell in 2017, Motiva weighed buying Lyondell Basell Industries' 263,776-bbl/d Houston refinery to replace plants it was turning over to Shell.
A 2018 plan to expand Port Arthur’s oil refining operations to make it the largest plant by capacity in the world was shelved over worries of too much processing at one U.S. Gulf Coast site vulnerable to severe storms, like 2017's Hurricane Harvey.
A final investment decision on the petrochemical units is expected to be made between the end of 2019 and the spring of 2020, the sources said.
Motiva had considered building one of the petrochemical units in Anahuac, Texas, but those plans were changed to place all of the units in Port Arthur, the sources said.
Port Arthur is 90 miles (145 km) east of Houston. Anahuac is about halfway between the two.
Motiva plans to finance the proposed petrochemical expansion in part through profits from sales of lower-sulfur marine fuel that will be mandated for shippers by the International Maritime Organization on Jan. 1, 2020, the sources said.
Recommended Reading
Exxon Mobil Advances Massive Hydrogen Plant with Contract Award
2023-01-30 - As part of the Houston area Gulf Coast project, Exxon said it intends to capture and permanently store about 7 million metric tons of CO2 annually.
Eni, Snam JV to Develop Italy's First CCS Project
2022-12-19 - The joint venture's project is anticipated to capture approximately 25,000 tons of CO2 from one of Eni's treatment facilities.
Boosted By Incentives, Carbon Capture Gains Momentum
2023-01-24 - Carbon capture and storage is seen as a solution to wrangling emissions as both challenges and opportunities lay ahead.
Mitsubishi Eyes Carbon Capture Project with Exxon, Nippon Steel
2023-01-25 - Mitsubishi, Exxon Mobil and Nippon Steel signed a memorandum of understanding to discuss creating a carbon capture value chain to store CO2 emitted by Japanese steel plants underground.
Consortium Seeks First Proposals for Carbon Capture Shipping Project
2022-12-06 - The Global Centre for Maritime Decarbonization in Singapore is part of the consortium that will study ways to offload captured CO2 from ships during port calls.