Enterprise planning new 2 mil mt/year steam cracker in Texas: documents

Enterprise Products Partners is planning to build a $5 billion 2 million mt/year steam cracker in southeast Texas, according to documents posted by the Texas Comptroller's Office.

The documents posted June 7 said Enterprise wants to build the unit at its marine site in Beaumont along the Neches River. Enterprise does not own the land at the proposed site, and would buy or lease it if the project is approved in Jefferson County, the documents said.

The steam cracker would be able to process ethane and propane, as it would include both propylene and ethylene refrigeration systems, according to the documents, which include Enterprise's request for tax breaks from the Beaumont school district where the unit would be located.

Enterprise did not immediately respond to requests for comment. However, Enterprise co-CEO Jim Teague and Chris D'Anna, the company's senior vice president of petrochemicals, told S&P Global Commodity Insights in December 2021 that the company had been considering building a steam cracker to supply derivative producers that do not want to build one themselves.

"Our goal for a cracker isn't to compete with our customers that also have crackers," D'Anna had said. "It's to enable people that don't want a whole cracker -- they want 15% or 20% of a cracker to have that same structure and economics as if they build a world-scale themselves."

Teague added that companies were examining capital allocation plans and "maybe there's an opportunity. I will tell you Chris is thinking long and hard about that."

Enterprise in April also announced plans to expand its 1 million mt/year ethylene export terminal in Morgan's Point, Texas, on the Houston Ship Channel. The terminal has been operating at 125% of its nameplate capacity, and the company will increase output capability by 50% in the second half of 2025 and more than double it by 2025.

Energy Transfer also evaluating a new cracker

Enterprise has some competition brewing.

Energy Transfer Partners is evaluating a new steam cracker along the US Gulf Coast as well, company executives said during the company's first-quarter earnings call May 4.

CFO Thomas Long said if the company moves forward with a final investment decision, "we believe that our cracker will be a very unique world-class facility, providing unparalleled access to the lowest-cost feedstock through our pipeline systems, as well as unparalleled access to downstream domestic and international ethylene and propylene market through our pipelines, our storage facilities and our export terminal."

In March, Energy Transfer acquired Caliche Development Partners' underground storage assets in Beaumont, including 5 million barrels of ethylene storage for $325 million. The acquisition included a transportation header system between Mont Belvieu and Nederland where Energy Transfer operates terminals.

"The header system is connected to multiple ethylene pipeline customers," Long said during the May call. "In addition, it has 2 active storage caverns, 1 cavern under development and the potential to develop at least 4 or 5 more storage caverns."

He said Energy Transfer believes the system could "play a major role" in connecting ethylene supply in markets" along the Texas and Louisiana coasts "as we are seeing significant and unprecedented interest for many of the petchem players in utilizing not only the storage facilities, but also the ethylene header system."

Also in March, KBR announced that it had secured an engineering contract with an "undisclosed midstream company" for a 2.4 million mt/year of light olefins. The plant would use KBR's catalytic olefins and steam cracking technology to process a "wide range" of feedstocks for a high olefins yield and include decarbonization techniques.

Sources familiar with the project said the midstream company is Energy Transfer, which did not immediately respond to a request for comment.