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Chevron Phillips Chemical Company LP – a joint venture (JV) between U.S. energy major Chevron Corporation (CVX - Analyst Report) and energy manufacturing and logistics firm Phillips 66 (PSX - Analyst Report) – declared the receipt of approval from the board of directors to increase the normal alpha olefins (NAO) production capacity at the Baytown, TX-based Cedar Bayou plant by 100,000 metric tons per year.

The capacity at the facility will be expanded using the proprietary NAO technology of Chevron Phillips Chemical Company and will likely be completed by Jul 2015.

Normal alpha olefins are mainly utilized as polyethylene co-monomers, synthetic motor oils, lubricants, automotive additives and for several other purposes. Management revealed that the production capacity at the plant is being enhanced primarily to meet the mounting alpha olefins demand.  

In a separate development, Chevron Phillips JV announced the start up of 1-hexene facility with a production capacity of 250,000 metric tons. Notably, the plant is likely to be the largest hexane plant in the world. The company also intends to manufacture a world-class ethane cracker at Baytown, TX.

San Ramon, CA-based Chevron is one of the largest publicly traded oil and gas companies in the world, based on proved reserves. It is engaged in exploration and production of oil and gas, refining and marketing of petroleum products, manufacturing of chemicals, and other energy-related businesses. On the other hand, situated in Houston, TX, Phillips 66 is an energy manufacturing and logistics company with midstream, chemicals, refining, and marketing and specialties businesses.

Both Chevron and Phillips 66 currently carry a Zacks Rank #3 (Hold), implying that the companies are expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can consider better-ranked players in the energy sector like QEP Resources Inc. (QEP - Analyst Report) and Encana Corporation (ECA - Analyst Report). Both the stocks sport a Zacks Rank #1 (Strong Buy).

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