Total, NOVA, Borealis Form Venture for US Gulf Coast Projects

French oil major Total, Canada's NOVA Chemicals and Austria's Borealis have formed a joint venture announced nearly a year ago to build a steam cracker and affiliated polyethylene plant on the Texas coast, the companies said Monday. The companies said they signed definitive agreements to form the venture, which split ownership of Total's new 1...

French oil major Total, Canada's NOVA Chemicals and Austria's Borealis have formed a joint venture announced nearly a year ago to build a steam cracker and affiliated polyethylene plant on the Texas coast, the companies said Monday. The companies said they signed definitive agreements to form the venture, which split ownership of Total's new 1 million mt/year steam cracker in Port Arthur, its current 400,000 mt/year polyethylene plant 78 miles away in Bayport, Texas, near the mouth of the Houston Ship Channel, and NOVA and Borealis' new 625,000 mt/year polyethylene plant at the same Bayport site.

Total will own half of the venture, while a joint venture of NOVA and Borealis, Novealis Holdings, will own the other half, pending regulatory approvals and closing conditions. Total is building the $1.7 billion, 1 million mt/year steam cracker at its refining and chemical complex in Port Arthur, which is slated to start up in 2020. The company made its final investment decision (FID) on the cracker in 2017. NOVA and Borealis have not announced an FID on the Bayport PE plant, and Monday's statement said the joint venture would include that facility "following a decision on the outcome of an acceptable" engineering, procurement and construction contract. The venture expands both Total's and NOVA's US petrochemical presence while giving Borealis a foothold in the US. NOVA in 2017 also bought Williams Partners' 88.46% interest in an 885,000 mt/year steam cracker in Geismar, Louisiana, and adjacent undeveloped land. The company has indicated interest in building derivative plants on that available land rather than operating the cracker as a merchant facility as Williams did. "A key component of NOVA Chemicals' growth strategy is to expand beyond our traditionally Canadian footprint by extending our presence in the US Gulf Coast," NOVA CEO Todd Karran said in a statement Monday. Borealis CEO Mark Garrett told S&P Global Platts last week he expects US demand for pipe-grade polyethylene using the Borealis Borstar technology that will be produced at the Bayport plant will be high enough that less than half of the output will be exported. "Our whole project with Total is based on export economics," Garrett told Platts. "I would doubt that it would even be 50% that would have to be exported." More than 6.3 million mt/year of polyethylene capacity is coming online in Texas and Louisiana from 2017 through 2019. Of that, 3.5 million mt/year has started up or is undergoing commissioning. The North American polyethylene market is already oversupplied, so most if not all of the additional production is expected to be exported. Garrett said he saw enough US demand for the type of PE that will be produced at the joint Borealis-NOVA plant to steer the North American pipe market toward standardized grades used elsewhere in the world. Eight new steam crackers also have started up or will start up 2017 through 2019 in Texas and Louisiana to feed the extra PE plants. More such infrastructure in Texas, Louisiana and Pennsylvania -- including the venture between Total, NOVA and Borealis -- is expected after 2019.

Source: www.platts.com