An abundance of U.S.-produced natural gas is contributing to a major expansion at the Williams petrochemical plant in Geismar.
Williams expects to spend $350 million to $400 million in 2012 and 2013 on an expansion that will allow it to increase its production of ethylene, a common feedstock for a number of petrochemical processes, the company said in a statement on Tuesday from its Tulsa, Okla., headquarters.
Company officials could not say for certain on Tuesday how many jobs might be added with the expansion.
“We do expect that this expansion will necessitate adding employees, but we’re still evaluating to determine exactly how many,” said Jeff Pounds, a spokesman for Williams.
Records filed by Williams with the Louisiana Department of Economic Development indicate the expansion will add five jobs.
The company employs about 100 full-time workers and about 100 contract workers at the Geismar facility.
Natural gas discoveries in shale deposits in northwest Louisiana and other locations across the country seem to be a direct driver of large capital projects like this one.
“The shale gas revolution in the United States, coupled with continued strong crude oil prices, has given U.S.-based ethylene manufacturing a tremendous cost advantage over many other supply regions,” Rory Miller, president of Williams’ midstream business, said in a statement Tuesday. “The results are a revitalized North American petrochemical business and a U.S. ethylene market short of supply.”
Ethylene can be produced from both natural gas and crude oil. However, with today’s substantial and steady supply of natural gas, derived from shale deposits, prices are relatively low compared to crude prices, said Pounds.
“So it’s much cheaper to produce ethylene from natural gas liquids here in North America, than it is to produce ethylene from crude oil derivatives,” he added. “So obviously, the petrochemical world loves that because it’s a cheaper input for them.”
Also, a shortage in ethylene supplies has made that product more in demand, say Williams officials.
“This expansion will serve petrochemical companies by adding 600 million pounds per year of new ethylene supply to the market,” Miller said. “It will also add to Williams’ growing large-scale infrastructure serving the petrochemical industry in the Gulf Coast region and help balance our lengthening ethane position.”
Williams stock closed Tuesday at $26.86 per share, down 37 cents, or 1.4 percent.