Now There Are Three Crackers!
Jun06

Now There Are Three Crackers!

Shell Chemicals has announced plans for a world-scale ethylene cracker in Appalachia.* It intends to tap into ethane from the natural gas producing Marcellus Shale region. Chevron Phillips and Dow have already unveiled their plans to build world-scale crackers on the U.S. Gulf Coast, both in the 2017 timeframe. (World-scale crackers are a little more than 1 million metric ton per year.) Here are a few things that I wonder about Shell’s announcement: 1) Shell says its “leading option” for derivatives is polyethylene. This is a very curious statement. For one thing, Shell doesn’t have a polyethylene business. It divested that when it and BASF sold their Basell joint venture to Access Industries. Now that venture is a part of LyondellBasell. I find it hard to believe that Shell would build a polyethylene plant by itself. It is possible, but I think that a joint venture or another company to build the polyethylene plant is a more likely scenario. 2) Shell is a large producer of alpha-olefins and ethylene oxide. The Midwest, with all the detergents makers, is a large consumer of both chemicals. Yet those don’t seem to be part of the plan. 3) Bayer MaterialScience has said that it would like to host a cracker at one of its sites in West Virginia. I wonder if Shell is choosing among these locations. (I think that is highly probable.) * (Correction: I originally said West Virginia in the first sentence. Shell didn't say that. I was jumping the gun a little bit on...

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The Busy Bees of LyondellBasell Expand Their Hives
May05

The Busy Bees of LyondellBasell Expand Their Hives

Out of bankruptcy for about a year, LyondellBasell is starting to find its stride. It is calling itself “the busiest chemical company in the world”. (This reminds me of “the hardest working man in show business”.) And to hammer that theme home, the cover of its annual report is covered in bees. This strikes me as a good idea for a broader corporate branding initiative. Indeed, the company has been busy. This week, executives rang the opening bell at NYSE, shareholders elected a few independent directors to its board (it calls it a “supervisory board”, how very European), and they also approved a dividend. LyondellBasell also had its Q1 earnings conference call, presided over by King Bee Jim Gallogly. The most interesting topic, and the one that got the most questions from analysts, was about how it would take advantage of the shale gas boom. Here are highlights: 1) The company has an 18-month plan to shift to lighter feedstocks at its Channelview, Texas, site. (It has already doubled ethane cracking capacity at Channelview and Corpus Christi.) This project will yield about 500 million lb more ethylene from ethane per year. 2) The company is conducting engineering for debottlenecks at La Porte and Channelview. These projects will yield more than 500 million lb of new ethylene capacity. 3) Gallogly said he was open to investing in a cracker joint venture, specifically to a “condo cracker”. This is an idea that Lyondell has been bouncing around for a very long time, since not long after it formed Equistar. It would involve two or more partners with offtake agreements in a cracker. However, Gallogly said that expansions of existing crackers are a higher priority because such projects get better returns. 4) LyondellBasell’s crackers in Morris, Ill., and Clinton, Iowa, are setting production records. They enjoy a cost advantage over ethane crackers on the USGC because they are tied into a different grid. (I’m curious about what the influence of reduced border flows from Canada might have been on these crackers. But seems like there is plenty of feedstock in the neighborhood.) 5) Small capital projects has increased HDPE production in Victoria, Texas, by 10%. It is also getting a 10% increase in production rates from ethylene oxide, a strong market right now. 6) “Newer projects in the Middle East may not be as competitive as some of the new projects in the U.S., depending on the availability of ethane,” Gallogly said. This speaks volumes. While he was the head of Chevron Phillips, Gallogly built many petrochemical plants in the Middle East as part of the last wave of new capacity...

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Braskem Mulling U.S. Cracker
Apr19

Braskem Mulling U.S. Cracker

Braskem’s new CEO Carlos Fadigas held a press roundtable at the New York Stock Exchange. Here are the main themes: 1) Braskem is considering building an ethylene cracker and polyethylene plant in the U.S. Mr. Carlos said he wants to tap into U.S. shale resources. He also reiterated Braskem’s designs to make an acquisition in the U.S. (I haven’t heard them say that for a while.) I’ll likely write a feature story on Braskem in an upcoming issue, so I don’t want to taint my objectivity. That said, I really can go either way on this. On the one hand, with its Sunoco and Quattor integrations and projects in Mexico and Peru, as well as other expansions and plans at home in Brazil, Braskem as a lot on its plate. (Also it would have two new crackers in the NAFTA region, counting Mexico.) A U.S. cracker is a tall order. On the other hand, Braskem is not to be underestimated. And Braskem executives have always struck me as capable. Moreover, Fadigas used to be CEO of Braskem Americas, where he oversaw the Sunoco acquisition. Finally, Braskem has polypropylene plants in West Virginia and Pennsylvania. So it is nicely positioned in the Marcellus region. 2) I pressed Mr. Carlos on whether he would build a plant in the U.S. without having an existing polyethylene business in the U.S. He acknowledged that it would be nice, though not necessary, to have such a presence. After the conference, we discussed how it is hard finding a polyethylene acquisition in North America nowadays because of all the interest in U.S. gas. He said he was willing to spend a little more than he would have a few years ago. I think we have a good candidate for Dow’s HDPE/PP business. Though, I doubt we’ll see Dow sell that until it wraps up its arbitration with PIC of Kuwait. The Dow business might be a little steep for Braskem, but I think it would find a way to make that happen. Don’t forget that we would likely be talking about a JV here, so Braskem would only have to buy half the business. 3) Braskem is interested in participating in Comperj, the proposed Petrobras refinery and petrochemical complex in the state of Rio de Janeiro. No surprise there. However, Mr. Carlos indicated it would invest in a gas-based ethylene cracker and polyethylene complex. This is a big detour from how the complex was originally conceived. It was supposed to be a high-severity fluidized catalytic cracker that would convert heavy oil directly into ethylene and propylene and onto derivatives. We are seeing the mitosis of...

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Chevron Phillips Studies Cracker, Plus Scary Publishing News
Mar28

Chevron Phillips Studies Cracker, Plus Scary Publishing News

I was completely wrong about who would build a new cracker in the U.S. It wasn’t a “foreign” firm at all. Chevron Phillips--based in the Woodlands, Texas--announced it is studying a new ethane cracker at one of its Gulf Coast facilities. The company already makes ethylene at Sweeny, Port Arthur, and Cedar Bayou, Texas. It also makes styrene in Louisiana and has an aromatics plant in Mississippi. Let me illustrate how surprised I was by this announcement. While sitting in a ballroom at the Hilton last week waiting for the conference to begin, I actually made a list of every ethylene maker in North America and the pro’s and con’s of each building a cracker. (I was preparing a post on this blog, though I do that kind of thing for fun as well) Chevron Phillips was dismissed out of hand (I’m using the passive voice to make this less embarrassing to me.) My reasoning was that they just restarted an idle unit in Sweeny. (I’m really glad I didn’t publish that list.) Also, I seemed to have overlooked CP Chem's announcement last year that it was building a 200 ktpa hexene plant in Cedar Bayou. I suppose there might be room for another cracker, especially somewhere in the Northeast, that would sip ethane from the Marcellus shale. And of course, there will likely be some incremental expansions and other investments related to ethylene. (Silver lining.) Scary Publishing News: Modern Plastics’ will publish its last print edition in April. I got an e-mail today from its publisher about folding everything into its website: As part of the restructuring, the last print editions of Injection Molding Magazine and Modern Plastics Worldwide will be published in April. Injection Molding and Modern Plastics Worldwide will continue to deliver content via branded e-newsletters and the PlasticsToday.com website. Modern Plastics isn’t just some trade paper. It is an institution in the plastics industry. The magazine has 33,078 audited print subscribers and 10,462 qualified digital subscribers. The current print issue has 40 pages. This is down from a few years ago, which were perfect bound and 60+ pages. There seems to still be a decent amount of paying advertisers. I really do hope that the transition works out well. It looks like the odds are in its...

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Braskem To Make Propylene From Ethanol
Oct29

Braskem To Make Propylene From Ethanol

Brazil’s Braskem is taking another step in its efforts to derive chemicals from sugar cane. In September, it started up production of a 200,000-metric-ton plant in Brazil to make ethylene for subsequent conversion into  “green“ polyethene. Now the company plans to invest $100 million to make 30,000 metric tons per year of propylene from ethanol by the end of 2013. The company will use the propylene to make polypropylene that will have same properties as conventional hydrocarbon-derived propylene. Late last year, Braskem signed a deal with Novozymes to develop a biotech route to propylene. However, the 30,000-metric-ton plant will not be based on this technology. At a press conference at the K 2010 plastics fair, the company called the plant‘s technology “proprietary“ and would give few details. However, a possible route that company officials have alluded to in the past is to use ethanol derived ethylene to make butylene, and then through metathesis, convert ethylene and butylene into propylene. The cost of the plant is staggering for a what amounts to semi-works scale production of polypropylene. However, Rui Chammas, executive vice president for polymers at Braskem, says that bio-based polymers have a completely different value proposition than regular polymers. “We are not in competition with fossil polymers,“ he says. He is also quick to add that 70% of the output from the polyethylene is already under contract. Manoel Carnauba Cortez, vice president of Braskem’s based chemical unit, says the company also has its its sights set on another ethanol derivative, ethylene glycol. “We may be an ethylene supplier for EO production in the near future,“ he said. There is strong interest in bio-based ethylene glycol. Coca Cola is beginning to use ethylene glycol as a co-monomer in its PET bottles, likely sourced from Asia. Japanese trading firm Toyota Tsusho, which incidentally is a green polyethylene distributor for Braskem, recently formed a Taiwanese joint venture to make ethanol-based ethylene...

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