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New $1.7 Billion Steam Cracker Going Up In Freeport


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Dow Chemical's plans to build a world-scale steam cracker in Freeport, Texas, are part of a US Gulf Coast expansion strategy estimated to represent $4 billion in investment, the company said Thursday after announcing the site of the new ethylene plant.

Dow's plans call for the construction of a 1.5 million mt/year cracker at its sprawling Texas Operations complex some 60 miles south of Houston at a cost estimated at $1.7 billion, a company spokesman said.

Linky: http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Petrochemicals/6202631

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  • 3 months later...

Looks like before it's even built all of the capacity of this new plant has been spoken for. It's all going to Japan.

Press release:


FREEPORT LNG SIGNS 20-YEAR LIQUEFACTION TOLLING AGREEMENTS WITH OSAKA GAS AND CHUBU ELECTRIC

. Osaka Gas and Chubu Electric contract for 100% of initial train of liquefaction project (approx. 4.4 million tonnes per annum)

. Definitive agreements for second and third trains expected in late 2012

. Final investment decision expected in the second half of 2013

HOUSTON, July 31, 2012 - Freeport LNG Expansion, L.P. (Freeport LNG) today announced that it had executed 20-year liquefaction tolling agreements with Osaka Gas Co., Ltd. (Osaka Gas) and Chubu Electric Power Co., Inc. (Chubu Electric) covering 100% of the liquefaction capacity of the first train of Freeport LNG's proposed natural gas liquefaction and LNG loading facility near Freeport, Texas. The initial 3-train facility will be capable of liquefying approximately 13.2 million tons per annum (mtpa) of natural gas. Freeport LNG expects that all three trains will be fully subscribed by the end of 2012.

Osaka Gas / Chubu Electric Agreements

Pursuant to the agreements with Osaka Gas and Chubu Electric, the Japanese utilities have acquired rights to the 4.4 mtpa production capacity of the first train at Freeport over an initial 20-year term. "We welcome the unparalleled LNG industry expertise and experience that Osaka Gas and Chubu Electric bring to the Freeport LNG project," said Michael S. Smith, Freeport LNG's Chief Executive Officer. "As two of the largest natural gas and electric utility service providers in Japan, having liquefaction tolling agreements with Osaka Gas and Chubu Electric provides the strong end-user credit support necessary to fully finance the initial train of the liquefaction project."

Trains 2 and 3

Freeport LNG is also under exclusive negotiations with respect to the second and third trains of the liquefaction project. Definitive agreements with respect to the second and third trains are expected to be completed before year-end. It is anticipated that, upon final investment decision, the first three trains will be constructed as the initial phase of the liquefaction project. The new liquefaction facilities will be integrated into the existing regasification facilities and operated as an integrated plant.

Project Update

Commencement of construction of Freeport LNG's liquefaction project is subject to receipt of regulatory approvals and final investment decision by Freeport LNG. Key regulatory approvals include Federal Energy Regulatory Commission (FERC) authorization to commence construction and Department of Energy (DOE) approval to export LNG to countries with which the United States has not entered into a free trade agreement (FTA). Freeport LNG anticipates to receive all regulatory approvals by mid-2013, and to begin construction in the third quarter of 2013. The first train is anticipated to commence operations approximately 48 months from start of construction, with each subsequent train in operation 6-9 months after the previous train. Freeport LNG has contracted with Chicago Bridge & Iron and Zachry Construction to engineer, design and build the liquefaction project. Macquarie Capital is serving as Freeport LNG's financial advisor with respect to the proposed financing. Documen

tation pertaining to the liquefaction project, including regulatory applications and related materials, is available on Freeport LNG's website located at www.freeportlng.com.

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Your mixing up Freeport projects.

The first one is Dow Chemical expanding part of their monster complex down there. They are taking advantage of cheap natural gas (one of the biggest cost inputs) to ramp up production of ethylene and propylene which go into just about everything made of plastic.

The second one is Freeport LNG which is a terminal at the port that was built a few years ago when natural gas was really high. It is a regasification terminal which takes liquified natural gas imported from overseas (I think they were going to bring it from Qatar) where it was cheaper and then turns it back into a gas and puts it in a pipeline for US distribution.

Now that the US has gone fracking crazy, natural gas prices have crashed and it is cheaper here than abroad - the positions have flipped. And so we are not importing natural gas, but wanting to export it to places like Japan where it is expensive. The only real way to ship it across the ocean is to condense it toa liquide and that is what this second project at Freeport LNG will allow. Basically - Freeport LNG needs to reverse the flow of what they were originally built to do.

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And much to the surprise of the local conservative republicans in that area, most of the construction jobs generated by these expansion projects will be filled with travelling skilled labor, mostly union. Materials will be purchased from suppliers nationwide, although some economic spill over will happen during construction, but afterwards, the locals can go back to their peaceful lives, and keep electing Ron Paul types to congress.

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And much to the surprise of the local conservative republicans in that area, most of the construction jobs generated by these expansion projects will be filled with travelling skilled labor, mostly union. Materials will be purchased from suppliers nationwide, although some economic spill over will happen during construction, but afterwards, the locals can go back to their peaceful lives, and keep electing Ron Paul types to congress.

I don't think that anybody would be particularly surprised by that. Most people understand that heavy construction jobs are often just temporary. And they likely don't much care whether its union or non-union labor so long as their town gets a new facility.

Unless unions are trying to make a big push into their town, most folks down in the Brazosport area (to the extent that they're informed on the issue) are probably just a bit resentful of the political machine that unions represent. And if anything, I'd bet that they kind of feel sorry for parts of the country where artificially-high labor costs have stifled entrepreneurship and prompted employers to move jobs into the sunbelt or overseas.

As for Ron Paul types...my interactions with the conservative establishment along the coast seem to indicate that they liked Paul better before he took a turn toward libertarianism at some point. They've had to put up with their incumbent ever since.

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And much to the surprise of the local conservative republicans in that area, most of the construction jobs generated by these expansion projects will be filled with travelling skilled labor, mostly union. Materials will be purchased from suppliers nationwide, although some economic spill over will happen during construction, but afterwards, the locals can go back to their peaceful lives, and keep electing Ron Paul types to congress.

While them there po folks I grew up with down there might not be the sophisticated urbane type you would find in Santa Fe/Hitchcock, I think you might be surprised how many are still employable.

Why a large % of them even had themselves the smarts to fill out a union card and put a "X" in the signature block. Imagine that!

And actually a lot of the people hired for the construction projects will probably come from around there. That is one of the reasons companies locate their facilities in places like this. There is already a pool of knowledge to draw from. The construction will probably end up a mix of both local and non-local labor. And then after the construction is done, the jobs generated by the plants will go to locals. Because amazingly, the people down in that part of the country have been successfully running plants since the 1940's or so. And maintaining them. And adding on to them from time to time.

And they are a mix of both union and non-union. My cousin down in Angleton is a union electrician. He has worked at probably every plant in Brazosport at various times and also worked for years in Bay City when they were building the nuclear plant. All of his sons followed him into being electricians. But not all joined the IBEW. (Makes family get-togethers a lot of fun). And they all have plenty of work down there even though you seem to believe the locals are incapable of anything beyond herding sheep or fishing in the local bayou since they have apparently elected someone whom you don't support. I won't shatter your world-view and tell you which makes the most money (the union or non-union sons), but they all do quite well for being such obvious imbeciles as you have decided based upon the representative from their area.

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In my experience, the non-union guys often make more money. They also have more work, as the companies hiring the contractors (especially the process plants) don't particularly like dealing with union issues and attitudes.

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Wow, a Steam Cracker. Just what in the hell is that? Back in Ireland we have still have steam TV's, but a cracker. I think that we have moved on to Nuclear Crackers.

You are probably being funny, but just in case there's an actual question here, a steam cracker is a piece of process equipment that mixes steam and hydrocarbons, applies more heat and pressure and "cracks" the long hydrocarbon molecules into smaller, more useful molecules that can be used in other processes.

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  • The title was changed to New $1.7 Billion Steam Cracker Going Up In Freeport

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