Weekly News Round Up

This week's round-up of news and updates on previous stories

• Speculation over the future of LyondellBasell continues. Following the reported $10-12 billion offer from Reliance Industries, a spokesperson for Sinopec has denied that they were considering a joint bid with equity firm TPG.

• Speaking at the Indian Petrochem 2009 Conference in Mumbia. Roland Walzi of Linde talked of the difficulties of 'mega cracker' projects. Mr Walzi exppressed his view that ethylene plants of greater than 2million tonnes/year capacity were unlikely due to 'technical challenges and economies of scale'.

• An investigation has started into two explosions at the SNF Group's factory, located in Andrézieux in France. Four people were injured in the incidents, two seriously, believed to be caused by the mixing of incompatible substances. The incident is believed to be due to human error.

• Moody's Investors Services has updated its outlook for the chemical industry. The view is pessimistic, given limited volume growth, overcapacity and concerns over rising raw materials prices.

• The Qatar-based Qatofin, a joint venture between Total and QAPCO, has inaugurated a new 450 kT LLDPE plant in Mesaieed. Commercial production is expected in January next year.

• ICIS has updated its estimate of the total number of job losses in the chemical industry since the start of the financial crisis. ICIS now estimates that more than 83,000 jobs have been lost so far.

Outcome of Teesside Study - Ten Point Plan Annouced

photo : BBC

The proposed study into the future of the Chemical Industry on Teesside (UK) has been announced.

The plan was pulled together following the spate of closures on Teesside in recent months, with closures announced by Dow Chemical, Croda, Artenius, Elementis and Invista as well as the Petroplus Refinery announcing that refining would stop and the site would be converted to a terminal.

Industry champions will lead the various points in the plan covering

Innovation

Carbon capture and storage (CCS)
The future of the EO/glycols plant
Energy efficiency
Training
Supply chain development
Feedstocks
Teesside infrastructure for new investment
Marketing Tees Valley for future investment
Improved partnership working

My view is that these are all valid points. I also believe that securing the future of the Wilton cracker is essential for the long term survival of the process industry on Teesside, but as this is owned and operated by SABIC, it is impossible to cover directly in such a plan. My hope is that by addressing the other elements (particularly the future of the EO/MEG plant), the team will help to achieve this aim.

The skills that exist on Teesside are of the highest quality and could be used to develop new and green technologies, giving the UK a competitive edge in the market, but to do this, it is essential to retain the industrial core.

The plan has to succeed in order to secure the future of the process industries on Teesside. This will require determination and excellent co-ordination from the implementation team together with strong political support from the UK Government.

Reliance Bid For LyondellBasell To Kick-Start M&A Activity

Now that both Reliance Industries and LyondellBasell have confirmed that an offer has been made for the world's 4th largest chemical company, we can anticipate a significant increase in M&A activity in the chemical industry.

Some industry analysts believe that the reported price, of somewhere between $10M - $12M, is relatively low, given LyondellBasell's recently published EBITDA results and could initiate a bidding war involving a number of prospective suitors.

The news follows hot on the heels of the various reports that IPIC is in talks with as many as 5 potential targets, including Bayer MaterialScience and other companies possessing technologies technologies which would support the development of the ChemaWEyaat project in Abu Dhabi.

There have also been reports that Dow Chemical has been in talks regarding the sale of a number of assets, as well as reports that Sinopec was looking at a number of potential targets in Europe. I've also heard several suggestions that a number of the Middle East majors will be looking to complete further acquisitions in 2010.

It looks certain that 2010 will be a major year of change in the sector, with the emergence of some new superpowers in the industry and further consequent changes to the asset footprint. Time for the site people to start changing the signposts and the letterheads once again!

Total Cleared Over Toulouse Explosion

photo : Lepost.fr

The French oil giant Total has been cleared of responsibility for the explosion at the AZF fertiliser plant in Toulouse. The blast occurred in 2001 and killed 31 people and injured very many more. The explosion was so violent it broke windows in the Toulouse town center several miles away and caused severe damage to neighbouring buildings.

Since the accident, Total has paid out almost €2 billion in compensation to more than 20,000 victims

At a court hearing in Toulouse last week, the judge ruled that there was not enough evidence to prove "beyond reasonable doubt" that negligence by the Total subsidiary Grande Paroisse had caused the blast. As a result, charges against Grande Paroisse and its Site Director have been dropped. French prosecutors have since said that they would appeal against this court ruling

The initial investigation, completed in 2006, concluded that an unusually large quantity of ammonium nitrate stored in a warehouse was responsible for the blast, and accused plant managers of negligence.

Without the full detail of the investigation, it is impossible to comment on the detail of this case. What is clear, though, is that lives have been devastated, the incident has cost Total a huge amount of time and money and reputations have been damaged.

There is absolutely no doubt that incidents such as this one are avoidable. Excellence in all matters health and safety is fully consistent with excellence in business. A strong corporate HSE culture is required, together with effective manufacturing management.

Weekly News Round Up

A little earlier than usual - this week's round-up of news and updates on previous stories

• IPIC has responded to reports that it was in talks with Bayer MaterialScience and four other global petrochemical groups.
  An IPIC spokesman commented: "At present there are no firm plans to do anything with Bayer MaterialScience, or any other chemical company. A number of initiatives are under consideration internally, but nothing has been decided."
  

• Three officials at a subsidiary of the UK mining company Vedanta Resources have been arrested in India following the collapse of a chimney in one of its power stations which killed 41 people.
  The tragic incident occurred in September at Vedanta's Bharat Aluminium Company (Balco) power plant in Chhattisgarh, central India, during heavy storms. After a two-month investigation, local police have arrested Balco's vice-president, who was also the plant's project manager, its associate general manager and a graduate trainee engineer
  

• The chief executive of the UK Chemical Industries Association (CIA) has warned  that the UK runs the risk of losing out to its international competitors if the government does not tackle fundamental issues such as regulation, energy and credit availability. In a CIA survey of business investment attitudes, 68% of British chemical and pharmaceutical business leaders said they had felt overburdensome regulation in the UK would act as a barrier to further investment. The survey also showed that 53% of those questioned said energy security and price would act as a key barrier, while 37% cited the problem of credit availability.
  
  
• The UK Times Newspaper published the results of a poll on the views of the UK public on climate change. According to the Times, only 41% accept as an established scientific fact that global warming is taking place and is largely man-made. 32% believe that the link is not yet proved; 8% say that it is environmentalist propaganda to blame man and 15% say that the world is not warming.

• The US Chemical Safety Board (CSB) has confirmed that that spilled gasoline vaporised and caused a fire and blast in late October that destroyed more than 10 petroleum storage tanks owned by Caribbean Petroleum in Puerto Rico.
  

Clariant Announces Closures in 'Global Asset Optimisation Project'

photo http://www.clariant.com/

Clariant has annouced a number of site closures as an initial conclusion to its Global Asset Optimization Project (GANO).

Sites planned for closure are Huningue, France: Pontypridd, UK; CIVAC, Cuernavaca in Mexico; and parts of two plants at Clariant sites in Germany, at Gendorf and Frankfurt. In addition, Clariant will now initiate an evaluation of all strategic options for its site in Onsan, South Korea.

According to Clariant "Project GANO is part of a wider restructuring program at Clariant aimed at closing the gap the company has compared to peers regarding several key performance indicators. The Project addresses the structural deficits of Clariant’s production network as well as long term overcapacity issues. It will continue to identify further optimization potential."

Whilst such a move is tough, 570 job losses in total, it represents only the first stage in Clariant's optimisation programme. Clariant has hinted that further changes can be expected between now and 2013, as it "continues to identify further optimisation potential".

Such structural changes are necessary, however. As noted in the previous post on the new reality for petchems, highly efficient and flexible manufacturing assets will be required to survive in the post-recession world. Clariant is taking bold steps, we can expect many more to follow.

Bayer Outlines Energy Saving Measures

photo : Dimplex

Bayer MaterialScience has taken a very proactive stance in highlighting a number of the measures that it is taking to meet its goal of cutting specific greenhouse gas emissions per ton of product sold by 25% by 2020.

To achieve this target, Bayer has announced the following steps

• Implementation of a novel energy management system to cut energy use  throught its manufacturing and supply chain. In particular the company aims to reduce consumption at its 60 most energy-intensive sites 10% by 2012
• Introduction of a new chlorine production process, with the highly energy-efficient oxygen-depolarised cathode process (uses 30% less electricity than equivalent processes)
• Developing and implementing a new approach for supplying materials and technologies for energy-efficient housing
• Designing several company buildings to be ultra-efficient, using significantly less energy than buildings of an equivalent size

This blog has posted several times on the question of anthropogenic global warming. However, whilst this particular debate will rage well beyond Copenhagen, the case for a sustainable approach to business is absolutely clear.

Bayer's approach is to be applauded and makes great business sense, in terms of company image, in terms of sustainability and in terms of long term energy cost saving

PetroRabigh I Inaugurated - Now For Phases 2 and 3

photo : Petrorabigh

On 8th November, the huge Petro Rabigh I project was inaugurated by the Saudi Oil Minister Ali Al Naimi. With Petro Rabigh I now in the start-up phase, attention is now switching to the next phases of the project

Phase I of the project, a joint venture between Saudi Aramco and Sumitomo, comprises an integrated refinery/petrochemicals compex with production capacities of 1250 kT ethylene, 900 kT propylene and downstream PE, PP, PO and MEG.

The memorandum of understanding for the feasibility study for Petro Rabigh II was signed back in April. Phase 2 includes expansion of the cracker, construction of an aromatics unit and various downstream units such as MMA, PMMA, LDPE/EVA, caprolactam, polyols, cumene, phenol/acetone, acrylic acid, SAP and Nylon-6.

It is also being suggested that a phase 3 will be considered, to expand production at the site and achieve further downstream integration.

The development is a part of the the Kingdom's plan to diversify the economy and income resources, and to create new job opportunities for Saudi citizens. Many thousands will be employed, housed, and schooled in Rabigh, which will make it a major city in Saudi Arabia. The Rabigh development is also linked to the development of the nearby King Abdullah University of Science and Technology (KAUST), which opened in September 2009 amd is planned to become a world class university and research centre.

Altogether a stunning project and one which can only enhance the on-going development of Saudi Arabia.

CSB Requests Closure of US Refinery

photo : http://www.ksl.com/

The US Chemical Safety Board (CSB) has requested the closure of the Silver Eagle Refinery located in Utah, USA. According to CSB President, John Bresland, the CSB team found widespread safety problems at the refinery during the investigation into the November 4th explosion at the plant.

According to Mr Bresland, the CSB team had developed a number of serious concerns about the integrity of the piping and equipment at the refinery. The team found a  lack of required documentation to demonstrate fitness for service of various pieces of equipment.

The explosion on 4th November was caused by a release of hydrogen due to a burst in a 10-inch pipe. CSB investigators found that the pipe "showed evidence of significant thinning which had not been detected by the refinery's mechanical integrity program". The explosion, in the diesel hydrotreater unit, caused damage to homes in the surrounding area and was felt several miles away from the facility

The refinery will restart after repairs and safety inspections are completed.

This is yet more evidence that regulators are becoming tougher in dealing with process safety issues. This blog fully supports this tougher stance. Incidents such as this are fully preventable if organisations are proactive in process safety management (PSM) and have a strong PSM strategy and culture throughout the organisation.

Friday News Round Up

Today's round-up of news and updates on previous stories

• Total has today pleaded guilty to charges relating to the explosion at the Buncefield oil depot in Hertfordshire in 2005. A subtantial fine is likely but this will not be set until trials have been held for the other companies charged in relation to the incident. Earlier this year, the court ruled that Total should pay the property damage bills of individual and business claimants, amounting to £750m - an appeal against this decision wil be held next year.

• NOVA Chemicals annouced details of its new board of directors. As expected, the new board will have significantly increased involvement by both the group's owner IPIC and Borealis

• Dow Chemical has said that it plans to sell more assets in 2010 as it continues to work toward paying off debt from its $16.5 billion acquisition of Rohm and Haas in April. The sale will include the Styron business - the deal is expected to close in early 2010 - together with a number of smaller businesses.

• In an interview with ICIS, Peter Young of the US Investment Bank Young and Partners expressed his view that M&A activity in the chemical industry would increase meaningfully in 2010.

• SABIC came at the top of a list the largest 100 publicly traded GCC companies in terms of market value at $ 64 billion

Reliance to Purchase LyondellBasell Assets?

photo : LyondellBasell

Speculation is mounting that Reliance Industries is looking to buy the North American assets of LyondellBasell. Various sources suggest that a price of between $3 billion and $6 billion will be offered for the assets.

LyondellBasell was formed back in July 2007, when Basell acquired Lyondell Chemical Co. for $12.1 billion.

Although it is necessary to take into account the fact that Lyondell had assets outside the US, the price range quoted is still much lower than the original price paid by Basell. It is not clear at this stage whether the deal would include any of LyondellBasell's very strong technology licensing businesses - which cover predominantly polyolefins, polyolefin catalysts, olefins, propylene oxide and derivatives - although I would think this is unlikely.

LyondellBasell does have some very good US assets. If Reliance were to acquire these assets it would significantly strengthen its global position and move significantly higher in the ICIS Top 100 chemical companies, where it currently holds 34th place. LyondellBasell is currently in 4th place. Changing times!

Cap and Trade Debate Rages in Senate

photo : Greensolutionsmag

As noted last week, the Cap and Trade bill was recently approved by  the US Senate Committee on Environment and Public Works, an important first stage in the approval process. Yesterday it was the turn of industry groups to present testimony to the Senate Finance Committee on the impact of the legislation on refinery and petrochemical jobs in the US.

The National Petrochemical and Refiners Association (NPRA) expressed its view that the total cost to US refiners would exceed $67 billion per year based on the total cost of both refinery and consumer emissions. NPRA believes that this would simply drive refining and petrochemical production overseas, with a huge impact for the US economy, significantly increasing unemployment whilst having little no net impact on global CO2 emissions.

As the world rushes towards Copenhagen, do we need to take a step back and really consider what we are doing here?

Firstly, polls show that very many people remain unconvinced about anthropogenic global warming, despite "the science is settled" statements of many national governments and the alarmist approach taken to promote the need for action. To leave this question unresolved in the minds of so many risks creating major social and economic issues in the future.

Secondly, we need to ensure that whatever course of action is agreed is implemented on a truly global basis, so that the chosen strategy can meet its stated aims, without simply leading to a redistribution of manufacturing assets around the globe.

Shell Uses Twitter to Update on Hurricane Ida

photo : Geology.com

Shell has been using the social networking site Twitter in order to post updates on the progress of Hurricane Ida.

Shell advised that it had safely evacuated some 160 people over the weekend who were not essential to producing and drilling operations in the Gulf of Mexico  and that it was not planning any additional significant personnel movements until Ida has moved through the northern Gulf.

Fantastic use of this on-line tool and an excellent means of communicating and updating to staff and other stakeholders. Communication to impacted parties is always difficult during incidents or situations such as this. Use of a tool such as Twitter would be an excellent way for production sites to communicate to local communities, particularly during major incidents.

Friday News Round Up

Friday again, so time to update on some previous posts and share some other news

• In the UAE, Borouge has announced that preparatory work has started on the site for the Borouge 3 project. The contract for the 1.5 million tonne ethane cracker was awarded to Linde Group back in July. The complex will also include PP, PE, butane and associated infrastructure and marine facilities.

• Evonik has annouced that it will permanently close two plants at the Munchmunster Chemical Park, impacting over 100 jobs. The plants, which produced cyanuric chloride and acetocyanahydrin had been idled since the end of 2008.

• A fire in a PVC unit at Rompetrol Rafinare's Petromida Refinery has killed two workers and injured two others. The cause of the fire are not yet known. The incident follows another fatality at the site in October due to gas intoxication.

• A key US Senate committee has approved the 'cap and trade' bill. The committee approved the vote by 10-1 although opponents have criticised the committee, which is made up entirely of Democrats, for putting US jobs at risk. The bill must pass through 4 further committees before it can go to the Senate for a vote.

• Finally, the UK Daily Telegraph has reported the story of a man, Darren Young, who has become allergic to his wife due to an intolerance to polyethylene glycol. Any contact with the chemical causes swelling and a soaring heart rate. This means that he cannot go near his wife if she is wearing any kind of cream or body lotion. The allergy started after Mr. Young was given a steroid injection to treat a problem with his foot.

Ineos Studies Waste to Bioethanol Plant

According to press reports, Ineos Bio is studying the possibility of a new plant in the UK to produce bioethanol from household waste.

The study will cost some £3.5 million (of which £2m is public money) and will be completed in early 2010 so that a decision can be made on possible a 25kT  plant at the company’s existing Seal Sands’ Site.

The proposed plant would  also produce an estimated 3MW of electricity a year as a by-product.

According to the Ineos press release - the process is a combined thermochemical and biochemical technology for the production of bio-ethanol and renewable power from a wide range of low-cost carbon materials, including biodegradable household and industrial wastes. At the heart of the INEOS Bio technology is an anaerobic fermentation step, through which naturally occurring bacteria convert gases derived directly from biomass into bio-ethanol. The process supports high recycling and high landfill diversion rates.

The bioethanol from the plant will be initially used as a road fuel transport, but ultimately the company hopes to license the process for the production of low-cost chemical intermediates from a range of recycled waste materials.

If this process can economically produce fuel or feedstock, it will be a major step forward. The only stumbling block may be the availability of funding, given the current debt situation at Ineos but if the solution proves to be as attractive as it sounds, we must hope that a solution can be found.

Workplace Accidents - The Odds

photo : book of odds

The Book of Odds is a strangely fascinating read. It is a site where you can read about the odds on all aspects of daily life. The site gives odds on a wide range of events and I can guarantee that you will learn all sorts of interesting statistics on everyday and truly bizarre events. One subject of interest to manufacturers is the section on workplace accidents.

For example, the odds that a workplace death will be caused by exposure to a harmful substance or environment are 1 in 11.25, whilst the odds of a workplace death being caused by a transportation incident are 1 in 2.46. Much less risky, the odds of a person dying from a vending machine incident are 1 in 112,000,000.

No doubt that this data is less useable than standard probability data but it does highlight some of the key risks in the workplace. So whilst this post is somewhat unusual compared to my normal subjects, I hope that you will find this site as interesting as I did.

Latest ISM Report Suggests Recovery in Manufacturing Sector

The October report from the Institute for Supply Management (ISM) has shown that economic activity in the US manufacturing sector expanded in October for the third consecutive month. Conventional wisdon suggests that such a sequence is confirmation of a well established recovery.


The Institute uses its Purchasing Managers' Index (PMI) as an indicator of performance. A PMI score of below 50 indicates that the sector is contracting, whilst a score above 50 indicates that the sector is expanding. The data for the index is collected using a survey of 400 purchasing managers in the manufacturing sector on five elements; production level, new orders from customers, speed of supplier deliveries, inventories and employment level. Previous studies have shown that the PMI gives reasonably good correlation with the state of the economy and GDP growth.

The index has rebounded from a low point of 32.9% in December 2008 and the chart shows that the growth has been steady over the last year.

Chemicals and plastics reported growth as did petroleum and coal products. Respondents were also positive about the employment outlook in manufacturing.

Although these figures are good news there are still concerns about the 'China Effect' in the chemical industry, with much of the extra demand coming from the Chinese government stimulus packages and the easy availability of finance in China. We also still have the effects of US and European local stimulus packages such as 'cash for clunkers'. On the other side of the equation, housing starts remain low, meaning less chemical consumption and unemployment is still rising, which will have an impact on consumer spending.

Mixed news is better than bad news but it is difficult to be certain about whether or not this really is sustained recovery until a clearer picture emerges.

BP Texas City - Strongly Worded Statement From CSB

photo : CSB

Following the recent OSHA announcement alleging 'extensive and serious violations by BP at Texas City, John Bresland, Chairman of US Chemical Safety Board (CSB) has issued a strongly worded statement in which he expresses concerns about BP's safety culture.

In the statement Bresland states "Whilst these OSHA citations are not yet final, they are of great concern to me because they strongly suggest that BP has yet to achieve an effective safety culture with regard to process safety management.

Bresland also expresses concern about on-going problems across the U.S. Refinery Industry "Whilst OSHA reported that a potential for another catastrophic accident remains at B.P. Texas City, the CSB has found that safety problems continue across the U.S. Refinery Industry".

Whilst the CSB is focused on the industry in the U.S. it is fair to say that process safety management concerns exist across the industry and across the globe. Some organisations are doing excellent work in this area, whilst others still need to improve.

Most importantly, organisations need to have clearly defined accountabilities for process safety at board level. This means having someone with real professional expertise in operations and process safety, with the authority and capability to drive an effective PSM programme. Accidents such as Texas City must not be allowed to happen again but as things stand, the risk remains very real.