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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A Phenol Plant Comes Home
May18

A Phenol Plant Comes Home

Sunoco is selling its billion lb phenol plant in Philadelphia to Honeywell for $85 million. It will take a charge of $125 million to $150 million because of the sale. Sunoco sold its polypropylene business last year to Braskem. It still makes phenol, acetone, and bisphenol-A in Haverhill, Ohio. No word on the fate of that plant yet. Here’s an interesting bit of history: Sunoco bought the Philadelphia unit from Honeywell to begin with. In 1998, Honeywell, then known as AlliedSignal, sold the plant to Sunoco. Honeywell still buys about 750 million lb of phenol per year from Sunoco to make caprolactam. At the time, Sunoco wanted to integrate downstream from its cumene operations. AlliedSignal wanted to focus on nylon. (Dave Weidman, the current Celanese CEO, was running AlliedSignal’s chemical unit back then.) I do tend to remember things like this. However, this story has special meaning for me. I wrote the story of the Sunoco purchase of the plant while I was working for the Chemical Market Reporter. I had been a reporter for less than a year. I confused Sun Company with Sun Chemical, the Japanese pigments firm. In fact, I figured that the chemical business of Sun must be called Sun Chemical. Why wouldn’t it be? “Charles Valutas, Sun Chemical’s vice president…”I wrote. Turns out, Sunoco officials went bananas. They were a CMR advertiser. A special meeting of editors was called on the importance of accuracy. I wasn’t mentioned by name, but people kept on giving me uncomfortable glances. I thought I was toast. I wasn’t and it was a good learning experience. Interestingly the mistake still exists in the online version of the story to this...

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