Celanese Says It Is The Amazon Of Ethanol
Dec17

Celanese Says It Is The Amazon Of Ethanol

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...

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Dow Throws Cold Water On Coal
Aug06

Dow Throws Cold Water On Coal

The talk of the chemical town this week was Dow Chemical’s Q2 earnings. The company’s 54 cents per share—excluding unusual items—fell a little short of the 56 cents that Wall Street was hoping for. Wall Street doesn’t like being disappointed, especially in a good earnings season when other chemical companies are overshooting forecasts. Investors chased Dow’s shares down Exchange Place and beat them up with tire thumpers. On August 3, the day of Dow’s announcement, shares closed down 11% versus August 2, to $25.50. With the earnings, Dow officially admitted it is moving its project with Saudi Aramco from Ras Tanura to Al Jubail. Rumors saying as much have been around since early spring. Dow says it will wrap up front end engineering in 2011. It seems like the company would rather use existing infrastructure in Al Jubail rather than start from scratch in Ras Tanura. I wonder if it is being scaled down with the change in venue. Back in 2007, estimates for the construction were running as high as $20 billion and Andrew Liveris was promising it would be the “The Freeport, Texas, of the emerging world.” In the conference call, Liveris said propylene oxide and epichlorohydrin were part of the project slate. Dow was saying as much back in 2007. During the conference call he also mentioned acrylic acid. That might be a sign that its acquisition of Rohm and Haas is influencing the scope of the project. One Liveris statement from the conference call worth parsing is this: “We’ll get the Aramco project, the Jubail project, up and running in the mid-part of the decade, and the China project will come in the latter part of the decade.” There is nothing surprising about the Aramco project timing. Four to five years after engineering is completed is a reasonable timeframe for a project of its magnitude in Saudi Arabia, which has a good track record for getting energy and chemical projects done. Dow has been talking about the Aramco complex since about 2006. One can call a mulligan on the delays. A little birdie once told me that the Saudi's weren't particularly enthusiastic about Dow’s proposed—and subsequently failed—attempt to sell the half of its commodity chemicals business to the Kuwaitis. That might have slowed the project a little. And Rohm and Haas and the financial downturn certainly did as well. If Dow does get the project off in less than ten years after it first talked about the project publically, that would be a solid accomplishment. The other part of Liveris' remark was about its proposed coal-to-chemicals project with Shenhua in Shaanxi Province, China. He was...

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