Exxon Building Texas Chemical Plant

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.

A company spokeswoman declined to provide the precise cost of the multi-billion dollar project, describing it as proprietary information.

Exxon estimates the Houston-area projects will require about 10,000 workers to construct and create 4,000 jobs in the local economy. About 350 permanent jobs will be created at the plant, Exxon said.

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 (MHVYF) have been awarded contracts for various phases of the projects.

(Reporting by Ernest Scheyder; Editing by Marguerita Choy)