CPChem employees Becky Rickett and Jesse Perez review natural gas liquids status reports at CPChem’s Sweeny facility in Old Ocean, Texas. The Sweeny facility manufactures 4.1 million pounds of ethylene and 1.1 million pounds of propylene per year, used to make polymers and other products from which many common consumer goods are manufactured.

Though Chemicals’ earnings improved somewhat from 2001, the worldwide chemicals business remains depressed due to weak economic conditions resulting in a net loss for CPChem.

Chemicals
Chevron Phillips Chemical
Company Improves Results

ConocoPhillips’ joint-venture chemical company, Chevron Phillips Chemical Company LLC (CPChem), is successfully pursuing its goals of improving results and becoming the safety pacesetter in the chemicals industry. 

CPChem President and Chief Executive Officer Jim Gallogly attributes the company’s improved results to a focus on operational excellence, cost reduction, capital stewardship, profitable growth and an organizational commitment to continuous improvement. 

Outstanding Safety Performance Aids in Operational Excellence
CPChem is continuing its efforts to lead the chemicals industry in safe and reliable operations. It posted a 30 percent improvement in its 2002 safety record and dramatically improved plant reliability. Based on the Occupational Safety and Health Administration recordable incident rate, as benchmarked by the American Chemistry Council, CPChem is now among the industry’s elite in safety. Approximately one-third of CPChem’s manufacturing facilities had no employee recordable injuries during the year. “Every employee has demonstrated a personal commitment to safety,” says Gallogly. “When safety improves, reliability also improves.”

Synergy Savings and Cost Reductions Continue
Since its creation in mid-2000, CPChem has continued to realize significant savings. Cost reductions and capital discipline are an ongoing focus of CPChem. The sustained effort has captured in excess of $200 million of net recurring annual synergies and cost savings, surpassing the target of $150 million originally estimated when CPChem was formed. “We have taken nothing for granted in addressing our cost competitiveness,” says Gallogly. “Our employees have enthusiastically embraced this emphasis.”

Foundation For Growth
Laying a solid foundation for growth is key to CPChem’s global strategy. Internationally, CPChem’s global reach has been significantly extended by the recent dedication of a world-scale petrochemical complex in Mesaieed Industrial City, Qatar. The facility is designed to produce 1.1 billion pounds of ethylene, 1 billion pounds of polyethylene and 100 million pounds of 1-hexene annually. The facility will be operated by Qatar Chemical Company Ltd. (Q-Chem), a joint venture of Qatar Petroleum (51 percent) and CPChem (49 percent).

A second project, called Q-Chem II, will involve two additional joint ventures in the State of Qatar. The first venture, in which Qatar Petroleum holds a 51 percent interest and CPChem has a 49 percent interest, includes the construction of two ethylene derivative units adjacent to the existing Q-Chem complex in Mesaieed Industrial City. These polyethylene and normal alpha olefins facilities will utilize proprietary CPChem technology. The second joint venture, owned by Q-Chem II and Qatofin (a joint venture of Atofina SA and Qapco) will involve the construction of an ethane cracker to be located in Ras Laffan Industrial City. The cracker will provide ethylene feedstock to the derivative units. Final approval of the project is anticipated in 2004, with startup expected in 2007. Together, the Qatar projects typify CPChem’s strategy to secure advantaged feedstocks and achieve greater global diversity.

CPChem has other expansion projects under way. The Jubail Chevron Phillips (JCP) project is a joint venture with the Saudi Industrial Investment Group to produce styrene and propylene. JCP will be owned 50 percent by CPChem and will be located adjacent to the existing Saudi Chevron Phillips (SCP) Aromax® facility in Al Jubail, Saudi Arabia. Plans call for the SCP plant to provide benzene feedstock to the closely integrated JCP facility. Final approval of the project is anticipated in late 2003, with startup expected in 2006.

CPChem is realizing significant results in its domestic business as well. A modernization project of CPChem’s styrene production facilities in St. James, La., was completed in 2002. This plant expansion increased capacity by approximately 25 percent and further enhanced its cost position.

In a 50/50 partnership with BP Solvay, CPChem is commissioning a 700 million-pound-per-year high-density polyethylene plant at its Cedar Bayou facility in Baytown, Texas. The new facility will use CPChem’s proprietary loop slurry technology, and both companies will equally share the capacity. It will be the largest single-loop production system ever built. 

In October 2002, CPChem announced plans to build a new cyclohexane production facility at its Port Arthur, Texas, plant. This project has received final approval and will increase the cyclohexane capacity of the facility by 587 million pounds per year. Construction is slated to begin in early 2003 with completion and startup scheduled for early 2004.

“Going forward, these and other capacity expansions, combined with continued attention to safety, reliability and costs, position CPChem well for the future,” adds Gallogly.