Exxon to Invest $200M in Louisiana

Energy major ExxonMobil Corporation (XOM - Analyst Report) is expanding its Baton Rouge chemical and lubricants plants in Louisiana for an estimated cost of about $200 million. The construction of a high-tech blending center for synthetic aviation oil at the company’s lubricant blending plant in Port Allen, Louisiana, forms a part of the project.

The expansion will augment ExxonMobil’s capacity for synthetic lubricant base stocks manufacturing and lubricants blending, packaging as well as storage. The company’s worldwide capacity of synthetic esters and alkylated naphthalene will rise by over 25% to meet the demand for high-performance lubricants made with these advanced products.

The construction is likely to commence by year-end 2012 on the 8.3 acre facility. The expanded complex will replace ExxonMobil’s existing manufacturing facility in Edison, New Jersey. The commissioning of the project, estimated by 2014, will facilitate production of over 145 lubricant products and boost a throughput of over 90 million gallons per year. The project will generate direct construction related employment for over 400 personnel and new full-time local jobs for 45 workers.

This project is likely to establish ExxonMobil’s Baton Rouge chemical plant as the world’s largest producer of synthetic esters and alkylated naphthalene. The new metallocene polyalpholefins plant, which is under construction at ExxonMobil’s chemical complex in Baytown, Texas, will aid the company to meet the growing demand for high-performance lubricants.

ExxonMobil is fairly active in its investment program and it already operates 32 facilities in Louisiana. The company boasts diversified operations across the world with several new projects expected to come online in 2013. While Exxon functions in all corners of the globe, the main areas of focus for the coming years include the U.S., Canada, Kazakhstan, West Africa, Australia, Russia, Angola and Iraq for new volumes.

ExxonMobil, the largest natural gas producer in the U.S. ahead of Chesapeake Energy Corporation (CHK - Analyst Report), carries a Zacks #3 Rank (short-term Hold rating). Longer term, we maintain our Neutral recommendation.