Chevron Phillips Chemical Co. LP became the first petrochemical manufacturer to announce definitive plans to build a new worldscale ethylene cracker in the Gulf Coast in response to the increased U.S. production of ethane. The facility is to be located at the company's existing Cedar Bayou facility in Baytown, Texas and will have the capacity to producer 3.3 billion pounds per year of ethylene.

The cracker will be designed by Shaw Energy & Chemicals and will also include two new polyethylene facilities, each with an annual capacity of 1.1 billion pounds, at either the Cedar Bayou facility or the nearby Sweeny facility in Old Ocean, Texas. A decision on the location is expected during Q1 2012.

Chevron Phillips anticipates receiving final approval for its air permit applications with the U.S. Environmental Protection Agency in 2013 with the project coming online in 2017.

"The owners and management of Chevron Phillips Chemical are pleased to have taken these critical steps, and believe that executing this project will benefit our customers, suppliers, local communities and existing and future employees," Peter Cella, the company's president and chief executive, said at the Gulf Petrochemicals and Chemicals Association (GPCA) conference in Dubai, United Arab Emirates. "It is our opinion that this project offers unique advantages, including co-location of the cracker with our Cedar Bayou facility and other ancillary assets such as our broad feedstock and ethylene pipeline and storage cavern networks, proximity to the expanding natural gas liquids hub in Mont Belvieu and utilization of proprietary technology to meet the growing demand of our customers."