ExxonMobil Chemical benefits from integration to the well

Houston — While some plastics suppliers have buckled under the pressure of higher oil, gas, and feedstock prices, fully integrated plastics supplier ExxonMobil Chemical Co., whose parent—ExxonMobil—is the largest public oil and gas producer in the world, has thrived, earning $4.4 billion in profits in 2006 off of $49 billion in revenue. Addressing approximately 1000 attendees at Chemical Market Associates Inc.’s (CMAI) World Petrochemical Conference (March 20-22; Hilton Americas, Houston), Sherman Glass Jr., senior VP of ExxonMobil Chemical, cited the flexibility of using different feedstocks, reduction of energy use, application of new technologies, and an overall focus on costs and efficiency as reasons for his company’s success in his keynote address, but admitted in an interview afterwards with MPW that sourcing the vast majority of its oil and natural gas internally has its perks.

“We see value in having a fully integrated value chain,” Glass said, adding that when one part of the business is down, another can be up. “If you can participate in all parts of the value chain, you can compete better than others.” Other oil and gas giants, including Shell and British Petroleum, moved away from this model in recent years, spinning off all or part of their plastics businesses.

Glass said ExxonMobil Chemical anticipates chemical demand globally to grow at 5-6%, three times the growth of energy, with 60% of that growth and 50% of chemical demand coming in Asia, as the U.S. transitions to being a net importer of chemicals. Glass said ExxonMobil has four “significant” projects in Asia right now, including bid evaluation for a worldscale parallel train at its Singapore site, and its previously announced venture with Saudia Aramco and the Chinese government for a worldscale polyolefins and gas refining plant in Fujian province (see March 1, 2007 e-Weekly for initial report).

In addition to targeting emerging markets, Glass said the company has grown by expanding the amount of raw materials it can process, including cheaper, heavier feedstocks, as it qualified 100 new streams in 2006. The majority of its sites in North America can switch from processing liquid to gas streams, depending on the predominant forces at play in global crude and gas markets, and the company can chemically characterize an oil tanker’s contents while its still on the water. ExxonMobil also applies cogeneration technology to reduce the energy usage of its refining steamcrackers by 10% so that steam and power are simultaneously produced, and heat is recaptured and reused.

In spite of rapid growth in renewable energy and materials, albeit from a small base, Glass said the future of the chemicals and energy industries are “inextricably linked” to those of oil and gas, pointing out that currently 99% of chemical feedstocks come from hydrocarbons and 80% of the world’s energy needs will be answered by oil, gas, and coal in spite of double-digit growth for areas like wind and solar.

With regards to biobased resins, Glass said, “At this point in time, our focus is to take advantage of the traditional hydrocarbon feedstock that are available.”—[email protected]