Borealis expects domestic US demand for high quality polyethylene to absorb the majority of the output from a new cracker and polyethylene joint venture with Total in Bayport, Texas, the CEO Mark Garrett said Monday.
"Our whole project with Total is based on export economics," Borealis CEO said in an interview with S&P Global Platts. "I would doubt that it would even be 50% that would have to be exported," he said.
The company last year announced the preliminary agreement of the joint venture, which will produce pipe-grade polyethylene using the Borealis Borstar technology at Total's existing Bayport polyethylene facility.
"We thought it was better to build the plant there, rather than build the plant [in Europe] and ship the ethylene," he said.
Ethylene supplies are expected to be abundant in the US in the next five years based on S&P Global Platts Analytics data, as capacity additions that were delayed due to storms in 2017, begin to come online in 2018 and beyond.
The Bayport project would still be viable if all of the output has to be exported as supplies become abundant in the US in the coming years, Garrett said.
"It's not an export terminal in terms of shipping ethylene out, but the polyethylene," he said. "We have to able to base it on 100% export economics."
"There will be local demand in the local market, particularly because we are producing unique product grades," he said, pointing to the company's Borstar product.
"I think there's enough [demand], if we can move the North America pipe market towards the standardized grades that other continents use," Garrett said.
