Accsys Technologies is building a wood chip plant on the chemical park which will manufacture Tricoya – a durable wood product that can be used in joinery, decking and structural engineering.
Accsys has formed a consortium, together with BP and MDF producer Medite, to deliver the project which will create up to 130 jobs in the construction phase and a further 30 once the plant is up and running.
Nigel Dunn, vice president of BP global acetyls, said: "The creation of this new consortium provides an exciting new platform for growth for our BP Hull facility.
"The co-location of the Tricoya Ventures UK plant with our acetic acid facility creates natural synergies and the foundation for a great partnership.
"BP has a long history in Hull and we are proud to be able to find new opportunities to support economic growth and diversity in the region."
The pre-construction engineering works and design of the new facility was completed last year.
Accsys yesterday announced it had secured funding for the £58.8m site, meaning construction can now start.
The build is expected to be complete in 2019.
The new facility also received funding through a business investment grant from the Green Port Growth Programme, which is administered by East Riding and Hull City Councils.
Hull City Council leader Steve Brady said: "Manufacturing is a real strength for our local economy, and this will grow even further thanks to the creation of innovative facilities like this."
Councillor Stephen Parnaby, leader of East Riding Council, said: "We are delighted to see further investment in our region, and proud that Green Port Hull has been able to support this through grant funding."
Other financial backers of the project include Business Growth Fund and RBS.
Paul Clegg, chief executive of Accsys, described the project as "transformational".
He said: "Our ongoing relationship with industry leaders, BP, Medite and Solvay Acetow, and new financial backing from BGF, Volantis and RBS, are a strong endorsement of Accsys' unique expertise and technologies."