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Houston-headquartered global chemical major LyondellBasell Industries N.V. is planning to expand its propylene production capacity at its Channelview, Texas, petrochemical complex to enhance market penetration with additional output. Without disclosing specific figures, the company stated that it would allocate the necessary capital expenditure for setting up the new plant. LyondellBasell recently announced the closure of its Houston refinery.
Ground-breaking and construction of the expanded capacity plant are expected to begin in the third quarter of 2025, with a projected startup in late 2028. The unit will have an annual propylene production capacity of approximately 400,000 metric tonnes and is anticipated to employ 750 skilled and unskilled workers during peak construction. Once operational, the project is expected to add 25 permanent jobs with maximum capacity utilization. Reports indicate that the complex currently has a production capacity of 2.5 million tonnes per annum.
“This capacity expansion strengthens our ability to meet increasing customer demand and improve our self-sufficiency as we grow and upgrade a core business line for LyondellBasell. Additionally, it reduces our exposure to market volatility, positioning LYB to provide consistent returns for our shareholders,” said Kim Foley, Executive Vice President, Global Olefins & Polyolefins and Refining, LyondellBasell.
The new metathesis unit will convert ethylene into propylene, which will be used to produce polypropylene and propylene oxide. These are essential building blocks for materials used in everyday life, including food packaging, medical devices, automotive components, aircraft de-icing fluid, building insulation, cushions for home furnishings, and telecommunications equipment.
Project identification
The company declined to comment on whether the proposed expansion is the same metathesis unit project described in a 2022 Chapter 313 application. Chapter 313 reporting requirements apply to each agreement, with forms required to be submitted to the Comptroller’s office on an annual and biennial basis. All companies with active agreements must comply with these submission requirements.
Notably, a subsidiary of LyondellBasell applied for Chapter 313 tax incentives in 2022 for a US$ 427 million propylene plant on the Houston Ship Channel. According to the application, that project would have the capacity to produce 950 million pounds per year of polymer-grade propylene, equivalent to approximately 431,000 tonnes per annum. Since then, the Chapter 313 program has been replaced by the Texas Jobs, Energy, Technology, and Innovation program.
In 2022, LyondellBasell was in the process of starting commercial production at its new propylene oxide and tertiary butyl alcohol unit in Channelview. This facility was the company’s largest of its kind globally and part of a US$ 3.5 billion investment project, which was LyondellBasell’s largest investment at the time.
Ups and downs
Recently, LyondellBasell announced plans to lay off 345 workers at its Houston refinery starting April 17 due to the refinery’s closure at the end of the first quarter. Reports indicate that the affected employees account for about 86 percent of the total workforce at Houston Refining LP, a subsidiary of LyondellBasell. It was reported that the company completed the refinery's shutdown on February 7. However, it remains unclear whether some of the retrenched employees will be accommodated in the new propylene project or if the company will hire new staff for the facility.
LyondellBasell originally announced plans to close the refinery by the end of 2023. However, the closure was delayed to the first quarter of 2025 to ensure a smoother transition. This closure marks LyondellBasell’s exit from the refinery business. It is worth noting that the company initially attempted to sell the refinery but was unable to find a buyer. Subsequently, LyondellBasell decided to convert the facility into an advanced recycling center, a business the company has increasingly focused on in recent years. In 2023, LyondellBasell’s annual revenue stood at US$ 41.11 billion.
DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com
