ExxonMobil slashed capital expenditures for 2021 but despite such massive cuts it has pushed forward its ethane cracker, polyethylene and mono-ethylene glycol chemical complex in Corpus Christi, Texas set to be ready before the end of the year, ahead of the 2022 originally scheduled date.

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The Irving, Texas-based company provided on Feb. 2 its 2021 capital spending guidance in a range from $16 billion to $19 billion, with the flexibility meant to accommodate oil revenue variations. That is down from $21 billion in 2020 and from $31 billion in 2019. The pre-Covid capital investment plan for 2020 originally called for $33 billion capital spending.

The Corpus Christi project stands out as an exception out of a Gulf Coast project portfolio for the early 2020s described in 2019 as a $20 billion effort. That was before Covid-19 forced not just capital and operating expenditures cuts, but the layoff of 15% of ExxonMobil’s global workforce including contractors, about 14,000 people, as oil prices plunged and eroded profit.

Exxon Mobil managed to complete in the second half of the past decade large polyethylene expansions in Texas that allowed the company to report over nine million tons of polyethylene sales last year record, an all-time high.

Looking into 2025, the company will favor investment into “chemical performance products,” according to information provided along with its earnings. Annual capital expenditures contemplated for the 2022-2025 period may range from $20 billion to $25 billion annually.

As the company contemplates potential acquisition opportunities during the next few years, a period that may see margins lower than long-term averages, ExxonMobil will compare any potential returns on investment from any possible acquisition against its own project portfolio.

Corpus Christi set for completion in 2021

“The company's Corpus Christi chemical complex joint venture is approximately 80% complete, with start-up activities expected to commence in the fourth quarter of 2021,” the company said at the end of October along with its third quarter financial statements.

ExxonMobil and Saudi Basic Industries Corp., known as SABIC, announced on June 2019 plans to build a 1.8-million- tonnes/year ethane cracker and three derivative units in the project know as Gulf Coast Growth Ventures (GCGV). Chief Executive Darren Woods had said then it would become the world’s biggest steam cracker, and positioned to benefit from Permian production.

Besides the cracker, the project also includes two polyethylene units with a combined 1.3-million-tonnes-per-year capacity, an ethylene oxide unit, and a 1.1-million-tonnes-per-year-capacity monoethylene glycol unit. Construction started in 2019.

“While GCGV will make ethylene oxide in our manufacturing process, it will be consumed in the production of glycol. GCGV will not make, ship nor sell EO product,” an ExxonMobil spokeswoman said by email in early February. She did not provide the ethylene oxide planned capacity.

Why moving faster in Corpus Christi

ExxonMobil is “taking advantage of the more favorable cost environment to progress the Corpus Christi chemical project and deliver it ahead of schedule and under budget,” Jack Williams, ExxonMobil’s senior vice president, said during a conference call on Oct. 31, according to a Motley Fool transcript.

“And then, we have these other projects that are paused, but certainly not canceled; the polypropylene expansions and then especially the chemical expansions, Baytown,” Williams said.

“But as we get into the that next, kind of, top of cycle conditions, I would expect us to be at or above, quite frankly above, where we've been back in the 2016-2017 time period,” he added.

The facility will produce materials used in the manufacturing of agricultural film, automotive coolants, building materials, clothing and packaging. The project is SABIC’s third joint venture with ExxonMobil, and the first outside Saudi Arabia.

Completed Investments, Project Portfolio

ExxonMobil completed in July 2019 its Beaumont, Texas polyethylene plant expansion that increased capacity by 65% to bring the total to nearly 1.7 million tonnes/year.

Exxon said on Feb. 2019 its plans for the U.S. Gulf Coast included $20 billion in investment, over a decade, to build or expand 11 manufacturing facilities. There has not been an update with new tentative dates.

That project portfolio contemplated construction of a new Vistamax performance polymer unit with 400,000 tonnes/year capacity and startup by 2022, as well as a project to produce 350,000 tonnes/year of linear alpha olefins. Exxon Mobil also announced in 2019 a 450,000 tonnes/year polypropylene expansion in Baton Rouge by 2021.

“We are evaluating all appropriate steps to significantly reduce capital and operating expenses in the near term and will provide updates as appropriate,” a spokeswoman said by email on Sept. 25.

“Timing of expansion plans for select downstream and chemical facilities across the company's portfolio will be adjusted to capture efficiencies, slow spending pace and better align with a return in commodity demand. We are not commenting on specific projects at this time,” she said at the time in reply to a request on the polypropylene project.

A request for an update on all Gulf Coast projects was sent to ExxonMobil on Feb. 4.

Value opportunities vs. portfolio

The company’s CEO Darren Woods said on Feb. 3 that ExxonMobil will look for “value opportunities where there's another company that we can leverage synergies, leverage differences in portfolios that basically complement one another.”

“We continue to be active to look for opportunities to grow value, unique value, and that's kind of what drives in our mind, the opportunity,” Woods said, according to the transcript.

The other thing “is the fact it has to compete against our existing portfolio of projects,” said Stephen Littleton, vice president of investor relations.

“When we look at any type of potential acquisition, we look to compare it relative to some of our other investment opportunities, notably in the upstream and chemical space,” he said.

By Renzo Pipoli