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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Dow Selling Polypropylene To Braskem
Jul29

Dow Selling Polypropylene To Braskem

There has been about as much news this week about Dow Chemical as there has been about the debt ceiling. (These two stories have even converged). I almost want to rename this blog The (Dow) Chemical Notebook. In addition to building a ethanol-based polymers plant in Brazil, a massive $20 billion complex in Saudi Arabia, and a strong beat on earnings, Dow is also selling its polypropylene business to Braskem for $340 million--6.7x EBITDA for you deal nerds out there. I do have a few observations: 1) This is the least surprising deal ever. Dow has been vocal about selling the business; Braskem has been public about wanting to make another North American acquisition to follow its purchase of Sunoco’s polypropylene business. 2) Dow’s polypropylene catalyst and licensing business isn’t included in the transaction. Since it bought Union Carbide in 2001, Dow has done some really nice work in advanced donors for polypropylene catalysts, which have given the Unipol PP platform a shot in the arm. I am very curious to see what Dow does with that business. And for that matter, I am curious to see what the future has in store for Dow’s HDPE business—which it has indicated it might divest—and its stake in the Unipol polyethylene licensing firm Univation. 3) Dow’s release implies a sequel. “The two companies will continue to evaluate potential future collaborations on growth opportunities in connection with their strategies,” it said. 4) Nowadays, propylene is hard to come by in North America. I wonder what Braskem is doing about sources of...

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Notes On Dow’s Brazilian Biopolymers Project
Jul22

Notes On Dow’s Brazilian Biopolymers Project

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,...

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Translating Documents Online, An Experiment
May27

Translating Documents Online, An Experiment

One thing that I do fairly often is translate documents on the internet. I normally use Babelfish and usually I am translating Spanish and Portuguese. I do have enough of a working knowledge of both languages that I can muddle through press releases without help. But it saves time and prevents possible human error if I have the translator do most of the heavy lifting and then zero in on the important parts with my own analysis. I did recently translate some documents in Dutch and German in Google and noticed that they were better than some human translations I have seen in those languages. (Dutch and German do seem more straight forward than Romance languages.) Anyway, I decided to do a side by side comparison. I am using a Braskem press release issued earlier this week on an accident at one of its plants. I figured I would share the result because businesspeople, scientists, and curious people of all kinds are using translation services more and more. Braskem’s original Portuguese: Em continuidade aos comunicados divulgados anteriormente, a Braskem esclarece que sua unidade de Cloro Soda de Alagoas permanece inativa por decisão da companhia e nenhum outro vazamento foi detectado desde o primeiro evento. A Braskem prossegue com o trabalho de identificação das causas dos eventos e está colaborando com as autoridades e órgãos competentes no esclarecimento dos fatos. Cinco trabalhadores da Mills, atingidos no início da manhã de hoje pelo rompimento de uma tubulação quando preparavam uma inspeção para identificação das causas do primeiro evento, receberam atendimento médico no Hospital Geral do Estado. Um deles foi liberado ainda pela manhã e os demais continuam sob cuidados médicos. Here’s Braskem’s translation: Complementing the notices to the market published previously, Braskem clarifies that its Chlor-Alkali in Alagoas will remain inactive by decision of the company and that no other leak has been detected since the initial event. Braskem continues to work to identify the causes of the event and is collaborating with the applicable authorities and agencies to clarify the events. Five workers from Mills, who were injured early this morning by the rupturing of a pipe as they were conducting an inspection to identify the causes of the initial event, received medical care at the State General Hospital. One of the workers was released this morning and the other workers remain under the care of physicians. Babelfish: In continuity to the divulged official notices previously, the Braskem clarifies that its unit of Chlorine Soda water of Alagoas remains inactive for decision of the company and none another emptying was detected since the first event. The Braskem continues with the...

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