BASF floats idea for massive propylene plant

BASF Corp. announced Friday it is considering an investment in a world-scale methane-to-propylene complex on the U.S. Gulf Coast that if built, would be company’s largest investment in a single plant.

The plant’s location, production capacity and price are still being evaluated.

“This investment would allow BASF to take advantage of very competitive gas prices in the U.S. due to shale gas production, considerably improve our cost position and improve our backward integration in the United States,” said Hans Engel, chairman and chief executive officer.

Propylene is one of the most important basic chemicals in the petrochemical industry and is used in the production of a wide range of higher-value chemicals, according to the company. These chemicals are used to manufacture products such as coatings, detergents or superabsorbent polymers for baby diapers.

Massive gas finds in formations like the Haynesville Shale in north Louisiana or the Marcellus, which covers a large swath of New York, Pensvylvania, Ohio and West Virginia, have lowered prices and created a manufacturing renaissance in the United States. Some forecasts say industrial investment on the Gulf Coast will top $250 billion over the next five to six years.

Chemical and petrochemical companies have announced plans for some $80 billion in projects in Louisiana alone, with the bulk of those in the Baton Rouge-New Orleans corridor.

In October, BASF and Yara, an Oslo-based chemical giant, announced they were looking to build “a world-scale ammonia plant” on the Gulf Coast. Like Friday’s announcement, few details were available.

That plant, if built in Louisiana, would join projects including CF Industries’ $2.1 billion expansion in Donaldsonville; Russian fertilizer company EuroChem’s proposed $1.5 billion plant that will be built in either Carville or St. John the Baptist Parish; and Dyno Nobel America and parent company Incitec Pivot Ltd.’s $850 million anhydrous ammonia production facility in Waggaman.

BASF Corp., whose corporate offices are in Florham Park, New Jersey, is the North American affiliate of BASF SE, Ludwigshafen, Germany. BASF has nearly 17,000 employees in North America, and had sales of $19.3 billion in 2013.