Study: Shale Offers Hope For Sunoco Pa. Refinery
Jun28

Study: Shale Offers Hope For Sunoco Pa. Refinery

The advent of natural gas from shale could potentially resurrect an old 175,000 bpd Sunoco refinery in Marcus Hook, Pa., near Philadelphia, according to a new report issued by the consulting firm IHS. The report brainstorms redevelopment concepts and was commissioned by the Delaware County Council, which wants to recover some of the 500 jobs lost when the refinery closed back in December. The Council and IHS came up with ideas that were a lot more creative than what I have usually seen driving by old industrial properties in New Jersey: 1) Leave it to rust until Mother Nature reclaims it. 2) Tear it down and build retail on it. All of the report's proposals involve hydrocarbon processing of one kind of another. Several of the ideas singled out in the report as having high market viability are relevant to chemicals. These are: 1) Propane Dehydrogenation: Braskem has a polypropylene plant downstream from the refinery and, as I have explained before, is likely on the hunt for feedstock. 2) Integrated ethane cracker complex: ANOTHER cracker? 3) Natural gas liquids processing. Out of these my favorite is the dehydrogenation idea. Though, I have always preferred Philadelphia to Pittsburgh as a location for a Northeast cracker. (Better hydrocarbon infrastructure, plus I can look at it when I pass by on Amtrak on the way back from HQ). NGL processing is promising, too. But why stop there and not create a market for the liquids nearby? The report looked at other options, too. Refined petroleum products storage (boring!), natural gas power generation (bleh!), LNG export terminal (yeah, THAT will happen so close to Philly), gas-to-liquids production (that could cost up to $6 billion, so forget it). Cool report. Kudos to IHS and Delaware County for a lot of creative...

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Tough Times For Propylene Buyers
Apr10

Tough Times For Propylene Buyers

There is little doubt that the advent of shale is opening the spigots for massive amounts of new ethylene production in North America. However, a consequence of all the additional production of ethylene is much less production of propylene. Chuck Carr, a propylene analyst at IHS Chemical, gave a great overview of the situation at IHS’s petrochemical conference down in Houston late last month. As ethylene makers seek to take advantage of the abundance of ethane by cracking less naphtha, they are producing far less propylene. A naphtha cracker, Carr pointed out, will make about a half ton of propylene for each ton of ethylene produced. An ethane cracker will only put out about 20 kilograms of propylene for each metric ton of ethylene made. The amount of propylene coming from steam crackers has declined by 30% in only a few years. Overall, after reaching a peak of about 16 million metric tons in 2007, North American polypropylene production has declined to about 14 million metric tons. Some 54% of propylene is made in oil refineries, only about 40% is now made in ethylene crackers. Propylene prices are rising, putting polypropylene makers in a tough position. As I heard over and over again at the IHS conference and then at NPE, a plastics trade show put on in Orlando last week, high polypropylene costs are tempting plastics converters to switch to high density polyethylene when they can. Soft drink bottle caps are a key battleground application. If they have seemed a little different lately, now you know why. One company that jumps out at me as being in a tougher bind than most is Braskem, which recently purchased the polypropylene businesses of Sunoco and Dow Chemical. According to Carr’s presentation, the company has the largest deficit of propylene in North America. In fact, Braskem has no production of propylene in the region. The company’s Marcus Hook, Pa., plant is downstream from Sunoco’s Marcus Hook refinery. Or at least it was. Sunoco idled the refinery in December and looks to permanently shutter the unit over the summer. It is ending a supply agreement with Braskem in June. The supply agreement covers about 60% of the facility’s 350,000 metric tons of annual polypropylene capacity. A contract with another supplier in the region covers 19% of the capacity. In its 20-F regulatory filing put out this week, Braskem says it being supplied by Sunoco out of Sunoco’s Philadelphia refinery and from other sources. The polypropylene unit is still operating at normal levels. The company is also in discussions for long-term supplies of propylene from other refineries in the Northeast. “At this time,...

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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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Eastman Not Closing Ethylene After All
Jun22

Eastman Not Closing Ethylene After All

Here’s a sign that the U.S. petrochemical industry is becoming more competitive: Eastman Chemical has reversed a decision to close ethylene capacity at its Longview, Texas, complex. Eastman had been running four ethylene units at its Longview complex: one with about a billion lb of annual capacity of olefins; another two with a half million lb of capacity apiece; and another cracker, older and smaller than the others. In 2007, following the sale of its polyethylene business to Westlake Chemical, which remains a customer of Eastman’s Longview ethylene, Eastman decided to shut down the three smaller units at the site. It closed the smallest unit in 2007 and one of the half-million-lb units in 2008. However, it never closed the other half million lb unit and it now plans to bring the cracker that it closed in 2008 back in service by the first quarter of 2011. Earlier this month at the JP Morgan Diversified Industries Conference, CFO Curt Espeland said that fortunes have turned around for the Longview units. These plants use mostly propane as a feedstock and turn out a lot of coproduct propylene. The plants have benefitted from the abundance of shale gas in North America, which has kept prices for light, natural gas feedstocks low. “Propane in North America is expected to be pretty available and advantaged on a cost basis compared to the naphtha crackers,” he said. Also, Espeland expects the propylene market to remain tight. North American crackers are favoring lighter feedstocks, namely ethane, and are thus producing less propylene. Refineries, which have been running at low rates because of a cruddy gasoline market, have also been putting out less propylene. Now, I am not 100% certain about whether Espeland means that propane is available because of abundant supply as a natural gas liquid or because other ethylene crackers are opting to go as light as they can, using ethane instead of propane as a feedstock. In either case, other companies are going after propane/propylene arbitrage as well. For example, pipeline firm PetroLogistics is repurposing an ExxonMobil ethylene cracker it purchased a couple of years back into a propane dehydrogenation plant. It plans to start up this...

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