WPC ’15: Chevron Phillips Chemical says weak oil doesn't dampen optimism

By STEPHANY ROMANOW
Editor

GALVESTON, Texas -- “The party is not over for the chemical industry,” according to Peter L. Cella, president and CEO of Chevron Phillips Chemical. 

Speaking at the IHS 30th Annual World Petrochemical Conference, Cella reaffirmed an optimistic future for the petrochemical industry despite the recent lower crude oil prices and subsequent compression in petrochemical margins from a year ago.

Notably, the petrochemical/chemical industry is an essential to creating a strong middle class. Paraphrasing the American Chemistry Council (ACC), Cella says the petrochemical/chemical industry provides better products that improve society and the quality of life and thus leading to an increased demand for products as income levels rise.

Cella used the example of how mobile phones as light-weight devices have radically changed and increased the connectivity of the global population over a very short time. Never before have the number of individuals been so connected. Quality plastics played a huge part in the successful development and manufacturing of mobile phones.

Population changes

Modern plastics have also facilitated increased distribution and storage of foodstuffs, thus greatly improving the quality of life. As developing nations move more of its populations out of poverty to the middle class, consumption of the petrochemical-based products will increases.

Cella used the example of car ownership in China. As China’s middle class population rises, car ownership will increase from the present level of 7 cars per 100 people to 30 cars per 100 over the next 25 years. Part of the success in this trend is the greater use of plastics in the construction of vehicles. New automobiles are nearly 50% modern plastics and polymers in construction materials. 

Yet, plastics only contribute 10% to the total weight of the vehicle. Light-weight materials have enabled higher fuel efficiency.

Future needs

According to an IHS study, approximately 40 world-scale ethylene crackers will be needed to meet future olefins demand over the next 10 years; that same level of growth was previously achieved over a 17-year period. All options of olefins production (steam cracker, coal-to-olefins, methanol-to-olefins, and renewables) will be needed to meet the growing demand for olefins.

Cella also highlighted the shortage of trained workers to construct and operate these new facilities. The “golden collar career” refers to the trained craft workers and plant operators that the downstream will need. These careers do not require four-year university degrees. 

However, with an associates degree or technical training program, golden-collar workers can attain well-paid jobs with benefits, he said.

Positive outlook

Sparked by the shale gas developments, Chevron Phillips has several construction projects under way on the US Gulf Coast. The company is building a 1.5 million metric tpy (3.3 billion lb/yr) ethane cracker at the Cedar Bayou facility in Baytown, Texas, at an estimated cost of $6 billion. Likewise, two 500,000 metric tpy (1.1 billion lb/yr) capacity polyethylene facilities are also under development at the Old Ocean, Texas site.

In closing, Cella reminded the audience, “The music may not be as loud as before, but we (petrochemical industry) are still dancing.”

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