Exxon Mobil Corp said on Thursday it has started construction on a new chemical plant in Baytown, Texas, and begun expanding a nearby plant, part of a plan to use shale-derived natural gas to make plastics and other material.

 

The Baytown plant, known within the industry as a cracker, will be able to produce 1.5 million tonnes of ethylene per year.

 

Exxon, the largest U.S. producer of natural gas, is simultaneously expanding a Mont Belvieu plant to be able to process the ethylene into polyethylene. Polyethylene, a basic plastic, is used to make bags, bottles and other common consumer goods.

 

Natural gas production in the United States has spiked in the past five years thanks to the development of shale formations in Texas, Pennsylvania and other states. Exxon and other major chemical producers, including Dow Chemical Co , have responded to the trend by announcing plans to build massive new chemical plants.

 

Exxon's plant, one of the first to break ground, is expected to be online by 2017.

 

Bechtel, Linde, Mitsui Engineering & Shipbuilding and Mitsubishi Heavy Industries have been awarded contracts for various phases of the projects.

 

(downstreamtoday Edited by Topco)