Posts Tagged → ethanol
As you may have heard, Mitsui and Co. has signed on to an integrated joint venture with Dow to make biopolymers in Brazil. Here are a few observations:
1) What Dow is talking about here is the project it has been planning since 2007 to build a 350,000-metric-ton-per-year linear low-density polyethylene plant that is integrated all the way back to the sugarcane field. Dow originally partnered with Brazilian sugar cane processor Crystalsev, but that company pulled out when its parent, Santelisa was purchased by Louis Dreyfus around the end of 2009. However, this remained an active project within Dow, which proceeded for a couple of years on its own.
2) Dow isn’t coming out and saying it is building a 350,000 MTPY LLDPE plant. The exact size depends on engineering, though Luis Cirihal, Dow’s director of renewable alternatives and business development for Latin America (Dow likes long titles), assures me that it would be “world-scale”, which means about 350,000 metric tons.
3) Dow really won’t come out and say it is an LLDPE plant, exactly, either. The company rather euphemistically is referring to it as a “differentiated polymers” or a “performance polymers” plant. This is a new habit for the company. What I think the company means is that the plant uses its solution process, which is a platform for not only LLDPE, but also for plastomers and elastomers and the like. Dow’s terminology is meant to exclude the old Union Carbide gas-phase Unipol process.
4) A little more on this. Dow has indicated in the past that it is seeking to divest polypropylene and high-density polyethylene. Obviously a HDPE plant can swing to LLDPE. So what I think that Dow means is that it intends to keep the solution process and divest the Unipol process assets. This might not be an absolute. In any case, I have heard from a couple of people who would know about such things that Dow has only been actively marketing the polypropylene business anyway. This would make sense because shale is likely making HDPE a profitable business at the moment.
5) Dow is growing 17,000 hectares of sugarcane in Minas Gerais, Brazil. (This marks the first time a company from Michigan has EVER established a plantation in Brazil to find an alternative source of raw materials for a polymer. Maybe it doesn’t.)
6) Back to the Brazilian project. Later this year, the JV will begin construction of a 240-million-liter-per-year ethanol plant that will be finished in Q2 2013.
7) Financial details are sketchy. Mitsui says it invested $200 million in the JV thus far. I take it Dow has invested that much, too. And I suppose that amount would include the sugarcane growing and processing as well as the ethanol plant. I would think that it doesn’t include the ethanol dehydration plant (to make the ethylene), cogeneration, and the polymer plant. I reckon this total investment, which Dow is calling its largest ever in Brazil, could reach about $1 billion at the end of the day.
Eight) According to my calculations, the amount of ethanol planned would only yield about 150,000 metric tons of ethylene. And thus it will only integrate about half of the plant.
9) Braskem already makes about 200,000 metric tons of HDPE per year based on ethanol. Dow says its plant will have cost advantages because it will be integrated. It is true that Dow’s plant will be the only integrated plant when it is completed, but it might not be true for long. Braskem is studying a 400,000-metric-ton grassroots plant that would be integrated.
10) Braskem has a monopoly on ethylene production in Brazil. I asked Cirihal if getting around that monopoly was a rationale for the plant. “Absolutely,” he said. “It will serve as a mechanism of enabling the participation in an attracting, growing market in Brazil.”
Celanese can’t seem to plunge into the ethanol business fast enough.
Back in November, the company announced it was building one, and possibly two, 400,000-metric-ton ethanol plants based on its new TCX ethanol technology. It is also planning a 40,000-metric-ton demonstration plant in Clear Lake, Texas.
Now the company says it is installing 200,000 metric tons of ethanol at its Nanjing complex as early as 2013. How? The company’s release merely said it would “modify and enhance its existing integrated acetyl facility.” This doesn’t say anything more about the nature of the technology than the company’s earlier line that TCX was based on its “acetyls technology.”
However, the news promised at least the potential for new clues. The company started the acetic acid complex in 2007 with 600,000 metric tons of acetic acid capacity. It expanded the plant to 1.2 million metric tons using its AO Plus 2 acetic acid process. The company is planning to push that to 1.5 million tons using something called AO Plus 3.
I called the company with a question: Would Celanese lose acetic acid capacity as a result of the ethanol project? This would tell me if a portion of the acetic capacity was being repurposed for ethanol. And that might indicate how closely related TCX technology is to methanol carbonylation into acetic acid.
“We’re not disclosing that information,” Celanese spokesman Travis Jacobsen told me. Rats!
He was kind enough to direct me to a website that Celanese has on the topic. Even that didn’t offer the kind of information I was looking for. My heart thumped a little when I saw a diagram with an ethylene arrow going into a box that said “acetyl technologies” and “ethanol technologies”. I wondered for a second if that meant oxidation, which has long been an alternative technology to carbonylation. Then I realized that the ethylene was probably just a reference the reaction to make vinyl acetate. Plus, Celanese clearly states over and over that the technology is syngas derived, so the building blocks we are looking for are clearly carbon monoxide, hydrogen, and perhaps methanol.
Celanese’s ethanol technology remains a black box. My next step will be checking the patent literature for tidbits.
Celanese and the White House have made announcements regarding ethanol capacity Celanese is planning to build in China using its new technology. I’ve written about this on the blog before. The latest news on the topic is a little baffling, hopefully I’m sorting all that out in this post.
Here’s an excerpt from Celanese’s announcement:
DALLAS, Texas; NANJING and ZHUHAI, China (January 19, 2011) – Celanese Corporation (NYSE: CE), a global technology and specialty materials company, today announced that its wholly owned subsidiary, Celanese Far East Limited, has signed letters of intent to construct and operate industrial ethanol production facilities in Nanjing, China, at the Nanjing Chemical Industrial Park and in Zhuhai, China, at the Gaolan Port Economic Zone.
Pending project approvals, Celanese could begin industrial ethanol production within the next 30 months with an initial nameplate capacity of 400,000 tons per year per plant with an initial investment of approximately USD$300 million per plant. The company is pursuing approval at two locations to ensure its ability to effectively grow with future demand.
Earlier, Celanese had been saying that it was planning to build one or two 400,000 plants for $300 million apiece. It then would then have the choice of doubling capacity at one plant at a cost of less than the original investment. Or, it could build both plants and then expand both of them.
It would seem from this release that it was moving forward with both of them. Not so. As the last sentence above alludes, with the interpretational help of a Celanese spokesman, one or two plants is still the plan. The MOU’s with the industrial parks still leaves open that possibility. In other words, Celanese can move forward at either Nanjing or Zhuhai or at both locations.
It turns out the Chinese projects are among those deals being highlighted to coincide with Chinese president Hu Jintao’s visit. Here’s an excerpt from the White House press release:
Celanese — Wison Group Memorandum of Understanding for Ethanol Production: Celanese Far East Co., a subsidiary of Celanese Corporation headquartered in Dallas, Texas (Celanese), and Wison Group Holding Limited (Wison), will conclude a Memorandum of Understanding for the construction and operation of an industrial ethanol production facility in China. Wison plans to invest in a coal gasification unit based on clean coal technology to produce synthesis gas per Celanese specs, and Celanese plans to invest approximately $650 million in an Ethanol Complex using the output from Wison as feed stock, and Celanese proprietary technology, to produce ethanol for industrial use, and potentially for fuel ethanol. This transaction is valued at approximately $815 million, with $50-80 million in U.S. export content. Celanese estimates project implementation will support an estimated 200-250 U.S. jobs.
Huh? This doesn’t seem to square with the Celanese release. That is due to errors and omitted information. The Celanese spokesman cleared these up. He told me investors have also been confused.
Let’s start from the top and work our way down:
1) This is a memorandum of understanding with Wison. It is different than the letters of intent with the industrial park authorities. Incidentally, Wison supplies carbon monoxide to Celanese’s new acetic acid facility in Nanjing.
2) Wasn’t each plant supposed to be $300 million? Is this $650 million figure a number for both plants combined? No. According to the Celanese spokesman, the $650 million figure is the combined investment of BOTH Wison and Celanese. The White House misattributed the figures to Celanese.
3) Now where does $815 million come from if THAT number isn’t the combined Celanese/Wison investment? That number comes, in part, from something that isn’t directly connected to the Chinese deal at all. Celanese is building a smaller, 40,000-metric-ton ethanol plant in Clear Lake Texas. This $815 million encompasses is that plant plus the $650 million for the Wison/Celanese contributions to the Chinese facility.
This morning, Celanese put out another press release about the project. It talks about the MOU with Wison, but it doesn’t correct the White House’s numbers. The Celanese release even links to the still erroneous White House release.
Yesterday, Celanese hosted a conference call with analysts about its new ethanol technology. On the call were CEO Dave Weidman, CFO Steven Sterin, and senior operations VP Jim Alder.
About a month ago, the company unveiled plans to build one, and possibly two, 400,000-ton-per-year ethanol plants in China based on coal and using its new conversion technology. It is also planning a smaller, 40,000-ton plant in Clear Lake, Texas, based on natural gas.
The conference call didn’t shed a whole lot of light on what the technology is all about. It is pretty obvious that the process is based on gasification. Officials said that the plant can use any hydrocarbon feedstock, including biomass.
Another clue is that Alder said that the technology “integrates elements of Celanese acetyls technology.” What could this mean? Well, acetic acid, also known as ethanoic acid, has two carbons like ethanol. In other words, it is ethanol plus a carbonyl group. Celanese and other companies make it via the carbonylation of methanol using carbon monoxide.
Alder also mentioned that by the time the Clear Lake plant comes onstream in 2012, the company will have some 3,000 patents worldwide covering the technology, many of which are patents covering its existing acetyl chemistry.
Company officials also stressed that the technology is highly selective for ethanol, a point of contrast, they said, between Celanese’s technology and existing processes to get to alcohols via gasification, such as Sasol’s.
The economics, Weidman said, were “very favorable compared to fermentation.” Another advantage is that the technology is very scalable, officials stressed. Celanese can expand a 400,000 plant to 1 million tons at a fraction of the initial cost of building the plant. This seems to explain why Celanese said might build one–or two–plants in China. The options the company is looking at are either building a second plant, presumably at a different location, or expanding its first unit. Either way, Celanese wants to quickly ramp up the technology to about a million tons.
To say that Celanese is excited about the technology is an understatement. I have never once heard a chemical company gloat about a technology more than Celanese has about this ethanol process. “This technology breakthrough is a new platform for earnings growth with the potential to reshape Celanese,” Weidman said.
Weidman said that if Celanese had an operational million ton plant today, it would generate nearly a billion dollars in revenue and ethanol would be the Celanese business with the greatest profit margins. A cash cow is born, lay down some straw and gather the children.
Officials did get a little carried away. One of the principals, I lost track of who, said Celanese entering the ethanol business was “kind of like Amazon entering the book selling business.”
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 glycol.