Chemicals and polymers maker LyondellBasell Industries ( LYB ) has secured a major permit needed for its North American ethylene expansion program. The Netherlands-based company said that it has received a final greenhouse gas permit from the U.S. Environmental Protection Agency (EPA) for its Corpus Christi project in Texas.
The permit, issued on Apr 16, represents the first to be drafted by the Texas Commission on Environmental Quality (TCEQ) and issued by the EPA under a new program aimed at improving permitting efficiency and productivity for applicants in Texas.
The multi-plant ethylene expansion program, which started last year, represents a total investment of roughly $1.3 billion in LyondellBasell's Channelview, La Porte and Corpus Christi, TX facilities which benefit from shale gas production.
The expansion program, when in full swing, is expected to expand annual ethylene capacity by an estimated 1.85 billion pounds for an aggregate projected capacity of 11.8 billion pounds in North America.
With the receipt of the required permit, LyondellBasell expects its ethylene expansion program to be fully operational by end-2015. Necessary plant modification works are currently in progress at the La Porte facility with an expected completion in the summer of 2014.
Moreover, start-up at the Channelview facility has been planned for early next year. The company expects construction at the Corpus Christi plant to commence during second-half 2014 with a start-up expected in late 2015.
LyondellBasell saw a roughly 5% rise in its consolidated profit in first-quarter 2014 as it recorded gains across most of its business segments. The improvement came despite headwinds from weather-related raw material cost volatility and shipping delays.
LyondellBasell is executing its expansion projects to leverage the U.S. natural gas liquids advantage. The company restarted its methanol plant at Channelview, TX, in fourth-quarter 2013 to benefit from low-cost natural gas from shale formations. The facility had been out of operation since 2004 as a result of rising natural gas costs.
The methanol facility along with the company's other major expansion projects are expected to bring in new capacity at considerably lower cost than building new facilities.
LyondellBasell is a Zacks Rank #3 (Hold) stock.
Other companies in the chemical industry worth considering include Compass Minerals International Inc. ( CMP ), Eastman Chemical Co. ( EMN ) and Kronos Worldwide, Inc. ( KRO ). While Compass Minerals carries a Zacks Rank #1 (Strong Buy), both Eastman Chemical and Kronos Worldwide hold a Zacks Rank #2 (Buy).