Manufacturing Viewpoint - Andy Gibbins

UAE has 94 Years Oil Production Left?

2012-01-22T08:24:00.000Z

photo: Arabianbusiness.com

According to the Eni World Oil and Gas Review, the UAE now has 94 years of remaining production. This is based on currently estimated reserves and current production levels. Interestingly, the figure has increased in recent times (it was 86 years in 2008). Of course such figures always vary, based on changes in reserve estimates and changes in production levels.

The UAE has done a tremedous job in diversifying its economy. Going back 25 years, the country was almost entirely dependent on revenues from the upstream oil and gas sector but the vision on the ruling family has led to a vibrant and highly diversified economy. Of course oil revenues are still important but other sectors such as transportation, tourism, financial services and of course, construction have been very strong (despite some blips around the time of the global financial crisis).

Following on from my previous blog posts, Iraq could learn a lot from the UAE. Iraq has a reserves/production ratio of 130 years currently. Of course this figure will shift, as new reserves are identified and production levels are ramped up. Iraq effectively has a blank canvas on which to map out the future for the economy. Hydrocarbon wealth has to be the starting point to build a strong and diversified economy but a short glance across the Arabian Gulf can show Iraq just what can be done.

The world currently has a reserves/production ratio of some 45-55 years (depending on the source of the data). However this figure has remained stable for the last 15 years or so. With more oil being discovered and improved oil recovery techniques, the much discussed production peak, has remained in the distance. Similarly, significant discoveries of unconventional oil and gas will also prolong the world's hydrocarbon future. However the Middle East, with its huge reserves and high reserves/production rations, will continue to dominate the world's oil production for many years to come.

Iraq Gas Deal Signed

2011-07-11T11:53:00.000+01:00

Photo : dinarddiscussions.com

Reports in Arabianoilandgas.com have confirmed that Shell and Mitsubishi are set to sign a deal for a huge project to capture the gas that is currently flared in the south of Iraq. The south of Iraq holds some 70% of the country's gas reserves

Iraq desperately needs this gas to provide power, which is chronically short supply at present, with electricity supplies to much of industry being currently rationed down in summer months, in order to ensure that sufficient power is available for domestic customers.

This mammoth project will create huge logistical challenges but is an essential part of Iraq's reconstruction. Initially, the extra gas will be required for electricity generation. However as more gas becomes available, this will also create many opportunities for downstream investment.

The Iraq Government is already giving incentives for foreign investment in the downstream sector, recognising the societal benefits that this investment will bring to the country. This investment will take some time and effort to complete but new refineries with integrated crackers and downstream plants will appear on the horizon.

Iraq - Next Petrochemicals Hot Spot?

2011-06-16T11:35:00.000+01:00

map : http://www.state.gov/r/pa/ei/bgn/6804.htm

Having recently read the excellent analysis of 'The Journey of Post-War Hydrocarbon Development in Iraq' by Ann-Marie Carberry of Contax Partners, I wonder whether Iraq is a likely future hotspot for petrochemicals development.

Iraq has substantial oil reserves, together with very significant amounts of associated gas. Much of the gas is currently flared (estimates indicate that as much as 60% is flared).

Very recently, the International Energy Agency identified Iraq, UAE and Angola as centres of supply growth in oil and gas supplies.

Now the government has recognised and is fully committed to developing the oil and gas industry. This means huge new investment and a complete rebuild of the infrastructure, including ports and transportation networks.

However Iraq also has significant internal needs for petrochemicals as it rebuilds housing and other buildings destroyed during the years of conflict. Current production capacity is limited - the Basrah Petrochemical Complex has a small cracker and associated downstream plants but there is nothing of the same scale as new plants in nearby GCC Countries.

As with other Middle Eastern countries, developing a petrochemicals industry also brings jobs - an essential requirement for post-war stability in the country.

The challenges will be significant. EPC costs will be higher due to the security risk and lack of skilled labour locally. Lack of infrastructure will make projects more difficult to implement.

However with abundant gas and a need to develop, there is clearly potential for those who wish to develop this region and market

DuPont to Design PetroRabigh Safety Strategy

2011-06-12T14:11:00.000+01:00

photo : arabianoilandgas.com

Very encouraging to see this week's news that Petro Rabigh has engaged DuPont Sustainable Solutions (DSS) to assist it on its journey towards world class safety performance.

DSS will initially carry out a baseline audit and will then work with Petro Rabigh to define a detailed implementation plan.

DuPont has always been an acknowledged leader in safety performance and safety culture, so this engagement shows real commitment on the part of Petro Rabigh in achieving world class levels of safety.

As those with experience in the industry know very well, safety culture takes time and significant management effort to develop but understanding current performance and then implementing an action plan is a very effective means of moving forward quickly.

This blog wishes Petro Rabigh much sucess with this positive initiative.

DuPont Continues Focus on Megatrends

2011-06-06T09:36:00.000+01:00

US Speciality Chemicals Major DuPont gave a global media briefing in late 2010 in which it announced the alignment of its strategic themes with future growth trends. These so called Megatrends are seen as the shapers for the future of the industry and DuPont wishes to be taking a leading position. The megatrends are

Increasing Food Production - recognising that the world's population continues to grow and needs to be fed
Decreasing Dependence on Fossil Fuels - recognising that fuel supplies are finite and that many individuals and nations are concerned about the potential for climate change
Protecting People and the Environment - recognising the need and desire to protect lives and preserve environments
Growth in Emerging Markets - recognising the global shift that is taking place at a very rapid pace

Having identified the trends, DuPont is then looking at how it can differentiate itself to deal with the impacts of these megatrends. This means changing the structure of the organisation through acquisition. It means product and process innovation. It means having people of the very highest calibre, who have roles and responsibilities fully aligned with this changing cororate vision.

More recently, in May 2011, DuPont concluded the acquisition of the Danish company Danisco, a company whose product range is a very neat fit with the megatrends outlined above.

For all chemicals and petrochemical producers, it is essential to understand the factors that will shape the future of the business and to plan and manage accordingly. Innovation is the key, whether this be in terms of organisation, in terms of process, in terms of product. Standing still and hoping for the best is not an option.

Saudi Arabia to Move Further Downstream in 2011

2011-05-25T12:15:00.000+01:00

photo : zawya.com

According to the excellent MEED, Saudi Arabia is set to further expand its downstream petrochemicals industry in 2011 with more than $20BN of new investments. With high unemployment rates and a growing young population, the government has recognised the need to provide extra jobs for the local population.

As we move down the petchems chain, many more jobs are created, particularly if consumer goods are produced locally. The country already has a solid cracker and polymers industry with SABIC and Saudi Aramco the major players. Saudi Arabia is not alone in this thinking, with the development of the ADBIC polymer park in Abu Dhabi.

Although plastics consumption per capita is relatively high in the region, the markets are fairly small in terms of population. So to attract international companies and bring in the knowledge and expertise, attractive investment conditions will be required.

However, where there is a will, there is a way. The fact that the Saudi Government recognises the overwhelming need to create employment, means that things will certainly happen. Watch this space!

Middle East Petchems Production Capacity Soars

2011-05-12T14:00:00.000+01:00

photo : arabianoliandgas.com

The Gulf Petrochemicals and Chemicals Association (GPCA) has published a recent report outlining recent investment in the region.

By 2015, the Gulf region will be supplying a fifth of the world's petchems output or 155 million tonnes per annum.

Saudi Arabia remains the region's biggest producer, with some 50% of the above output.

Interestingly much of the new investment results from a political, rather than economic agenda, with governments keen to maximise employment. The logical next step from this is to also move into plastics processing. We can expect to see more polymer parks along the lines of the one being devloped by ADBIC in Abu Dhabi. However the challenge for these parks is attracting investment from industry players. The incentives are good but the parks are relatively remote from the consumer markets.

The end result is uncertain but the region has certainly become a powerful player in petchems, given feedstock availability and the political will to develop employment via petchems manufacturing. With global demand unlikely to absord all of the new capacity, there will have to be rationalisation projects elsewhere.

Employee Engagement in the New Normal

2011-02-09T14:40:00.000Z

In a recent blog I highlighted the factors that are important if manufacturing companies are to thrive in the new normal.

Capability, flexibility, innovation, effectiveness were the keywords used to describe how the highest level of operational capability could be achieved.

In the current climate the focus must be on existing assets, and that of course must include our human assets, the workforce.

When applied to human beings those words spell out an engaged and effective workforce. In his 2009 report to the UK government "Engaging for Success" David MacLeod, no stranger himself to the petrochemical industry, reported that while 90% of businesses believed that engagement impacted on business success only 25% had an engagement plan. So the question is 'Has the impact of the New Normal changed this thinking'?

There is certainly one organisation which believes, and is doing something about it by investing in the capability of their workforce. In winning their recent UK National Training Award for 2010, Warwick International reported soaring morale and a doubling of productivity, proving once again that making progress in a way which engages employees can be good for business.

Employee engagement is not about applying a ubiquitous formula. It's about working things out for your own situation. I came across an excellent paper, written by Eric Thompson. Entitled "Getting Involved" the paper suggests how you can make progress in your own environment.

Achieving employee engagement will not address every issue that petrochemicals manufacturers might face right now but it will certainly be a major factor in achieving success in the New Normal

China to Invest in Petrochemicals from Coal Facility

2010-11-19T11:21:00.000Z

photo : Total

Total and China Power Investment have announced that they will carry out a study into a possible 1 million-metric-ton-per-year polyolefins complex in China’s Inner Mongolia region. The area has abundant supplies of coal, so feedstock will be readily available

Total and China Power aim to complete the plant in around 5 years, with an anticipated cost of up to $4 billion to build.

The facility will use a coal to methanol process, together with the methanol-to-olefins technology and an olefins cracking process that Total has been testing in Feluy, Belgium.

Interesting move and one which reduces China's dependence on imported feedstocks. I don't know how this process compares economically but an abundant supply of low cost coal has to be an advantage, particularly with ethane supply becoming tighter in the Middle East and the link between naphtha and crude oil price.

Petrochemicals Manufacturing Excellence - Are You Ahead of The Competition?

2010-10-22T08:00:00.003+01:00

In being successful, it is important to know just what your competitors are doing.

How well placed are they to deal with the new normal?

- Have they been taking action, like Lanxess, to better position themselves?

- Are they doing things in terms of product or process innovation that will leave them better placed for the future?

I know from my own experience, that it is very easy to become internally focussed, particularly during difficult times – but a level of external focus provides a very useful sense check and challenge to what you are doing.

How do your costs compare?

- Do you have industry benchmark data you can use?
- Do you know what they are doing to address challenges?

There’s a lot of information available and as you would probably expect me to say, you can always enlist the help of consultants to give you that external perspective.

Good luck!

Manufacturing Management in the New Normal

2010-10-21T08:00:00.002+01:00

So we've already discussed the new normal and its consequences, together with covered short and long term success factors, what I propose is a set of challenges, designed to assess just how ready is your organisation to deal with whatever the future holds.

Firstly let’s consider management

1) Do your managers understand the potential implications of the new normal?

By this I mean do they consider the economic outlook and are they identifying the various scenarios that might be created

2) Have your managers identified the things that they must be able to control in order to adapt to a changing situation?

This means having a highly capable AND highly flexible workforce, being strongly focussed on cost effectiveness and systematically eliminating all kinds of waste.

I would like to refer to the example of Lanxess. Last year Lanxess used the strap line ‘continuity meets flexibility’ for its 2008 annual report. Taking a quote from the report “The willingness to critically review our own strategies at regular intervals has played a crucial role in our company’s successful development. In view of the major challenges we now face, our reviews are becoming increasingly stringent.”

What Lanxess did was to actively implement a number of measures designed to give it the flexibility it needed to manage during the downturn.

Looking at the 2009 annual report and the comments of Axel Heitmann, the Lanxess Chairman states “Thanks to the numerous initiatives we implemented worldwide, we succeeded in keeping as many of our highly qualified employees in the group as possible, despite the crisis. We will need them urgently when the economy picks up again.”

He goes on to talk about flexibility of workforce, flexible asset management and reduction of expenditure.
In summary, he says “We are in an excellent position to emerge from the crisis a stronger company.”

I would consider that to be a very significant success.

Long and Short Term Critical Success Factors

2010-10-20T08:00:00.004+01:00

Given the levels of investment in new capacity in recent years, it is apparent that petrochemicals manufacturers need a number of key attributes if they are to achieve long term success

• INTEGRATION

- large, integrated sites with access to advantaged cost feed stocks
- sites with all plant units within close proximity to minimise transport costs
- a unified management structure to minimise overhead
- cost optimisation models to squeeze maximum margin out of every molecule

• LOCATION

- coastal or river location with good access and excellent logistics facilities

• TECHNOLOGY

- reliable technologies
- robust technology with good on-going development support
- low cost (every penny/tonne makes a difference

• SIZE

- for first quartile plants, economies of scale are essential otherwise fixed costs per tonne of product produced are too high

• GLOBAL REACH

- recognising that major markets are shifting, producers need to be able to quickly move products to those markets offering the best returns

However these long term success factors are relatively static and whilst organisations should look to develop in this direction over time, it is also very important to consider short term success factors.

These short term factors all come down to what I would call ‘smart management’.

This means being able to identify potential issues ahead of time and develop strategies to deal with them.

The strategies will vary from one situation to the next, but I believe that all will require the highest levels of operational capability and by this I mean

• Flexibility - the capability to quickly and effectively respond to market volatility e.g. quick, safe and effective shut down, the ability to move turnarounds at short notice, swift rate changes and swift product changes

• Cost effectiveness – everyone in the organisation understanding that every penny matters AND working together to optimise costs

• Competitiveness – knowing what the competition is doing and being better than them e.g. innovation, workforce flexibility, logistics etc

Success in the New Normal

2010-10-19T08:00:00.010+01:00

In my previous post, I referred to the 'New Normal' and what it might mean for petrochemicals producers. Today, I cover the question ‘what will success mean in this New Normal?’

We are very unlikely to see a repeat of the boom years of profitability, high operating rates and substantial capital investment.

So what success will mean is

• Firstly - Being ahead of the competition – across a balanced scorecard of key benchmark indicators as well as less tangible factors such as innovation and people development

• Being profitable and having monies to selectively invest in 'winner' projects

• Finally - Achieving sustainable improvements that leave you well positioned for the future e.g. innovation, organisational improvements, reliability etc.

So having defined success, the next question is 'how do we achieve it?'

Petrochemicals Manufacturing Strategies for the New Normal

2010-10-18T08:00:00.004+01:00

Last week I attended the excellent Petchem Arabia conference, organised by the World Refining Association. The conference was very interesting and most valuable, giving an insight into the major issues affecting the future of the industry in the region.

My own presentation was 'Manufacturing Challenges for the New Normal'. Over the course of this week, I'd like to share some of my key themes.

The term ‘new normal’ was coined back in march 2009 by Bill Gross, founder of PIMCO, the California – based investment solutions provider. PIMCO was one of the few organisations that warned of the risks associated with the sub-prime housing bubble that drove economic boom years.

In terms of the economic recovery, PIMCO discredited the idea of a sharp rebound from recession and a rapid return to the activity levels of the boom years. Instead, they referred to a ‘New Normal’ which would bring lowered living standards, higher unemployment, stagnant company profits, heavy government intervention in the economy and disappointing equity returns.
So the key issues for petrochemicals manufacturers are

• End consumers are shifting from ‘needs’ to ‘wants’ significantly changing spending behaviour

• Financial crises, fears of ‘double-dip’ recession and fear of unemployment are driving these behaviours

• Temporary factors such as government stimulus packages have distorted demand but have not necessarily given a sustainable boost to the economies

So the net effect is increasing volatility and highly variable demand levels. And this is creating a major headache for manufacturers.

How to deal with this headache will be the theme of blog posts this week.

NiTech Solutions Wins ICIS Innovation Award

2010-10-11T12:00:00.002+01:00

NiTech Solutions has won the prestigious ICIS Innovation award in the SME (Small/Medium size Enterprise) category.

As some may know, I do have a particular interest here - in my role as the Engineering Director with NiTech Solutions.

This award is fantastic news for an SME which is looking to make a breakthrough in the equipment market.

The picture shows the plant that won the award - installed with Genzyme, the leading biotech company. This technology essentially replaces a standard stirred-tank batch reactor and offers a major cost reduction - in both capital and operating costs, as well as better product quality, lower carbon footprint and waste reduction.

The technology is applicable to a wide range of applications, such as crystallisation, biodiesel, hydrogenation, polymerisation and pharmaceutical API's.

The mixing in the NiTech Continuously Oscillatory Baffled Reactor (COBR) is much more efficient than the mixing in a standard CSTR. The mixing, combined with high surface area per unit volume, means that steam and cooling water usage is much reduced. Furthermore conditions very near to plug flow can be attained at relatively low flow rates resulting in consistent product quality and yield.

Very much one of the 'green technologies' we hear so much about!

BP Sets Up New Safety and Risk Unit

2010-10-04T09:02:00.001+01:00

photo : Wikipedia

The incoming BP Chief Executive Bob Dudley has announced that the company will set up a new Safety and Operational Risk function.

This change, implemented as a result of the Deepwater Horizon incident, creates a division reporting directly to Dudley and with responsibility "for ensuring that all operations are carried out to common standards, and for auditing compliance with those standards".

Dudley has also announced that BP will also review how it rewards its managers, with the stated aim of encoraging excellence in safety and risk management.

The blog applauds these actions, this is an appropriate response to such a catastrophic incident, putting process safety and risk management to the top of the corporate agenda. The only question is, why was this action not taken after Texas City?

Shell to Close Ethylene Capacity at Wesseling

2010-09-30T12:21:00.002+01:00

photo : eagleburgmann.com

Shell has announced that it will close the 2B Rheinland cracker in Wesseling, Germany, by the end of 2011 and cease benzene and toluene production from the unit before the end of 2012.

So far, European ethylene production has been left relatively intact, given the difficulties associated with its import.

However with Ineos having recently signalled that it may build a 1m tonne ethylene terminal at Antwerp, which would give a significant extra input to the ARG network, together with the large increase in global capacity coming from start-ups in the Middle East and Asia, this situation is surely under threat.

Shell's announcement is not a major surprise, with the Wesseling cracker being relatively small and uncompetitive. It would not be a surprise if more such announcements were to follow in the not-too-distant future.

Typhoon Leads to Petrochemicals Shutdowns in Taiwan

2010-09-21T16:33:00.002+01:00

photo : http://www.cdn.wn.com/

Chemicals manufacturers are very familiar with the need for comprehensive risk assessments and the implementation of appropriate mitigation measures. However, some events are beyond the wildest imagination of most manufacturers.

Producers in Taiwan have been forced to shutdown petrochemical facilities in Kaohsiung in southern Taiwan because of flooding caused by Typhoon Fanapi.

A report in John Richardson's 'Asian Chemical Connections Blog', published by ICIS, indicates that the flood waters reached a height of more than 100 centimetres in the petrochemical parks.

No doubt the plants will restart swiftly once the waters have receded but one can imagine significant damage to equipment (IP65 is a standard for most instrumentation but only gives protection against water spray and not total immersion) as well as the awful mess that will have to be cleared before things can return to normal.

Shale Gas Prospecting Moves to UK

2010-09-15T17:50:00.003+01:00

photo : Shaun Dunmall (Flickr)

The race for shale gas continues to gather pace, with reports of UK being one of the newest sites for exploration.

For the British, Blackpool is a traditional seaside town, with its iconic tower, donkey rides and amusement arcades on the famous 'Golden Mile'.

That reputation may be set to change however, if the company Cuadrilla Resources is able extract gas from the nearby Bowland shale. Cuadrilla is a new name in the industry but apparently is significantly backed by private equity.

There are some concerns about the extraction of shale gas. The US Environmental Protection Agency is currently investigating the potential problems associated with hydraulic fracturing and in particular the need for high volumes of water, together with the risk of contamination by the chemicals used in the fracking process.

For the UK, with a dwindling supply of gas coming from the North Sea and an increasing reliance on imports from countries such as Russia, the possible availability of shale gas is is potentially very good news. Apparently suitable geological conditions exist in much of the North West of England, North Wales and in the area around Oxford. If Cuadrilla achieve success, we may very well see many more companies joining the hunt.
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Update - thanks to the reader for the following comment on shale gas prospects in the UK

"Boring Rock" - Prospects for Shale Gas in Britain provides the comments of Mike Stephenson of the British Geological Survey. The article can be read at http://www.naturalgasforeurope.com/

ICIS Publishes Top 100 Companies For 2009

2010-09-14T11:32:00.002+01:00

ICIS has recently published its regular Top 100 Chemical Companies feature, together with an excellent analysis of the events of the last year.

The Top 5, ranked in terms of sales, are BASF, Dow Chemical, ExxonMobil, Sinopec and Lyondell Basell. Of these, Sinopec is new to the top 5, having been ranked 8th last year.

Looking back over the last year, it is really quite remarkable that the major chemical companies have fared so well in adapting to an economic crisis that saw an oil price crash from a peak of $147 per barrel down to $32 per barrel and a virtual collapse in markets such as construction and automotive.

Clearly survival required significant cost reduction across the board. Reduced working capital, operating and maintenance cost reductions and reduced capital expenditure were commonplace, the only difference being the depth of cuts from one company to the next.

This blog has talked much about a new normal in the post recession period. The challenge remains a difficult one for all chemicals producers as we move forward. It will be necessary to deal with the economic conditions that this new normal will bring, whilst also adopting strategies to address the impacts of the recent cost cuts in areas such as capital expenditure.

However, in having survived so far, companies have clearly demonstrated that they have the management capabilities and willingness to adapt.

Avoiding Software Downtime to Maximise OEE

2010-09-06T16:46:00.001+01:00

I'm always happy to post relevant articles from readers of the blog. This piece by Tracy Barlow of 24/7 Uptime discusses how to maximise OEE by protecting critical software from downtime or loss.

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Having recently read the Software Advice article “A Plain English Guide To Modern Manufacturing Methods” on International echem’s blog, there is something else to consider when looking to improve overall equipment efficiencies (OEE).

We all know that even a minute of downtime can mean lost productivity, lost profits, increased waste, compromised safety and damaged reputation. But whilst process automation solutions do much to accelerate, optimise and protect manufacturing processes, the software itself has to be protected from downtime or loss.

We researched the offerings available in this area and decided to work with a solution called everRun software from Marathon Technologies. everRun is a cost effective solution implemented on standard hardware/servers that keeps critical systems up and running upto 99.999% levels of availability.

Different systems do need different levels of protection because some are more business critical than others. However, continuous availability is becoming increasingly important to organisations. The application availability pyramid below shows the average yearly downtime suffered with different availability levels:

This technology protects environments by combining the components of two or more physical servers to ‘share’ components: hence faults such as disk array failure and/or loss of network card, etc, can be tolerated with zero impact on the processing environment. Even a full server failure is tolerated with zero downtime.

And this is how it does it:

Marathon everRun High Availability Diagram

I recently heard a very good summary description about this technology “From financial transaction systems at the New York Stock Exchange to pharmaceutical manufacturing companies, more than 3,500 customers worldwide use Marathon everRun to robustly protect their essential systems – and that’s a very high level of trust.”

Turbulent Times Continue for Chemicals Manufacturers

2010-09-06T16:37:00.001+01:00

Having already withstood one of the worst recessions in living memory, chemicals manufacturers were very much hoping for some respite, as the world economies appeared to be pulling out of recession.

The summer break, however, has brought more suggestions of double-dip recession and with car sales and construction starts down, together with a likely slowdown in economic activity in China, we can foresee a difficult few months for the chemical industry. The 'new normal' as predicted by my colleague Paul Hodges, is very much with us.

So how do we cope with this 'new normal'. We've already had job cuts and, in many instances, significantly reduced levels of discretionary expenditure. So where next? It certainly isn't an easy question to answer and there isn't a one size-fits-all solution but I think that a very high level of challenge and focus is most important, in order to ensure that we are fully focussed on doing the right things

Here's a list of questions to challenge the management team of any chemicals manufacturer...

Do you have a highly capable manufacturing management team?
Does your team understand the challenges of the new normal?
Does the team understand the need for adaptability and flexibility?
Does the team know how to achieve this adaptability and flexibility?
Are management objectives aligned with these needs?
Have strategies been prepared for the challenges which may occur?
Are all of the operating and capital cost requirements fully understood?
Is there a relentless drive to improve cost effectiveness?
Does the management team understand fully the consequences of any decisions they make?
Do you know what your competition is doing to achieve success in the new ‘normal’?
Does your workforce have the right skill levels for the high level performance required under varying conditions?
Does your workforce understand the need for change?
Do you have appropriate agreements in place to give you the required levels of flexibility?
Are your workforce objectives and targets aligned with those of management and the organisation?

Holidays

2010-08-09T09:30:00.000+01:00

To all readers of the blog.

I will be on vacation until the end of August. Blogging will restart in September.

A Plain English Guide to Modern Manufacturing Methods

2010-07-27T15:47:00.003+01:00

Thanks to Stephen Jannise of ERP Software Advice (see photo) for pointing out this excellent guide to Modern Manufacturing methods.

Although many such methods were pioneered in the automotive sector, the principles are very much applicable to the chemical industry. Indeed many chemical companies have achieved great success in the application of techniques such as Lean Manufacturing and Six Sigma.

In the post recession environment, companies will achieve success by being smart. This means innovation - such as investment in new technologies, development of new processes and optimisation of existing processes. Modern manufacturing techniques will facilitate much of the optimisation work.

The guide gives an excellent introduction for those who wish to familiarise themselves with the subject!

Iran Petrochemical Plant Explosion Kills Four

2010-07-26T15:43:00.001+01:00

photo : http://www.tradearabia.com/

According to reports, 4 workers were killed as a result of an explosion at the NPC plant in the Gulf island of Kharg. The explosion occuured on Saturday evening.

According to the provincial governor 'An explosion from a gas leak occurred on Saturday evening around 7pm, but it was extinguished at 12am by firefighters'.

Despite the impact of sanctions, Iran has a good record on safety. A quick look at the programme for the 2011 International Conference on HSE, shows the high level of focus on safety issues, including a number of process safety topics. As a state-run organisation, NPC has invested heavily in new plants but has maintained a good safety record. It is hoped that the investigation rapidly identifies and addresses the root cause of this particular incident.

Ineos Bio Waste to Ethanol Projects Gather Momentum

2010-07-16T15:48:00.000+01:00

photo : http://www.m13.ca/

The Ineos Bio waste to ethanol process is attracting a great deal of attention currently.

Back in December, this blog reported that Ineos Bio, together with its partner New Planet Energy, had been selected for a $50M grant for its advanced bioenergy facility in Florida, USA. The facility to use INEOS Bio’s advanced BioEnergy technology to produce bioethanol and power from a range of feedstocks, including forestry waste, agricultural waste, sustainable energy crops, construction waste and municipal solid waste.

More recently, in June this year, it was announced that INEOS Bio had received an offer of a £7.3m grant towards £52m construction costs for the first commercial plant in Europe using its advanced BioEnergy Process Technology. According to Ineos Bio, 'The plant, to be located at the INEOS Seal Sands site in the Tees Valley, is designed to produce 24,000 tonnes per year (30 million litres) of carbon-neutral road transport fuel and generate more than 3MW of clean electricity for export from over 100,000 tonnes per year of biodegradable household and commercial waste. This would provide the biofuel requirement of around 250,000 vehicles per year running on E10* and the electricity needs of 6000 households.'

The process takes domestic waste, converts it into gases and then uses an anaerobic fermentation step to convert the gases into bio-ethanol. My understanding is that the process is highly efficient and has relatively low costs, meaning that this type of facility could be installed in any large population centre and provide an effective means of energy production, whilst eliminating costly landfill or waste incineration.

The Florida facility is due on-line in 2011. If this project proves to be successful, which I fully expect to be the case, one can foresee many other such projects being implemented around the world.

ACC Calls For End of Moratorium on Deepwater Drilling

2010-07-12T17:28:00.001+01:00

photo : www.offshore-technology.com

The American Chemistry Council (ACC) has called for a solution to be found to end the drilling moratorium in the Gulf of Mexico.

The ACC President and CEO, Cal Dooley, made these remarks in The Hill's Congress Blog. Dooley noted the potential harm to US Manufacturing, including chemicals manufacturing, of policies that will reduce the availability and increase the price of energy in the future.

Whilst the moratorium is understandable, as a reaction to events in the Gulf of Mexico, the issue needs to be considered in its wider context. Whilst this blog has long argued for a policy of sustainability and energy efficiency, the world is still highly dependent on fossil fuels and we are very far away from having an energy future based entirely on renewables.

Peak Oil is a major subject by itself, but all experts agree that we are well past the peak of oil discovery and that we are approaching, in the short-to-medium term, the peak of oil production. This means that oil and gas production from unconventional sources, such as shale gas, is increasingly important and we must also continue to find and safely and efficiently produce oil and gas from all conventional sources.

This does not mean that we should take unnecessary risks in doing so but instead should find engineered solutions to our issues and operate under a regime of thorough oversight and regulation. The Gulf of Mexico incident was a tragedy and steps must be taken to prevent this from happening in the future but we cannot afford to call a halt to deepwater production at this time.

Reliance Industries Joins Shale Gas Rush

2010-07-02T16:16:00.000+01:00

photo : energy.alberta.ca

A regular theme on this blog has been the development of the shale gas industry. Now Indian major, Reliance Industries, has joined the party, investing a total of $1.36billion to acquire and develop a share in Texan shale gas assets.

Reliance has paid Pioneer Natural Resources some $236M for a 45% stake in the Eagle Ford shale assets in southern Texas for $236M and will further invest $1.052B to develop the fields over the next four years.

Back in April, Reliance invested $1.7B to create a venture with Atlas Energy, a deal which gave Reliance a 40% in the Marcellus shale fields in the USA.

This move again shows the growing importance of unconventional oil and gas to the IOCs and the petrochemical majors such as Reliance. With discoveries of conventional oil and gas reserves having peaked some time ago and with control firmly in the hands of the National Oil Companies, we can expect more and more activity in the development of unconventional resources. This will also increasingly shape the future of petrochemicals, now that the peak of investment in crackers based on conventional sources of feedstock appears to have passed.

CSB to Investigate Deepwater Horizon Incident

2010-06-23T07:30:00.001+01:00

photo :Oilonline.com

I'm very pleased to hear that the US Chemical Safety Board (CSB) has been invited to investigate the causes of the explosion on the Transocean/BP oil rig, which occurred on 20th April.

The CSB takes a very holistic approach to its investigations, looking at technical factors but very importantly, the organisational, cultural and human factors which may have contributed to such an incident.

An additional benefit of a CSB investigation is the fact that CSB is capable of producing excellent material to share all of the learnings with the wider community. The video 'anatomy of a disaster' about Texas City is a must see for chemical industry professionals.

In a letter to Senator Henry Waxman, the CSB Chairman, John Bresland, has agreed that the investigation will look for similarities with the BP Texas City explosion but stressed the importance that the investigation be carried out without preconceptions and that all of the underlying causes and factors are thoroughly examined.

This point is essential. Politicians and some media outlets have been very quick to condemn BP as 'guilty'. Some of the accusations may prove to be valid but this can only be fairly determined with a thorough and proper investigation of all of the issues and all of the parties involved.

UK Emissions Data Shows Impact of Recession

2010-06-13T09:10:00.001+01:00

photo : DECC

The UK Department of Energy and Climate Change has released provisional 2009 figures for UK greenhouse gas emissions.

At a first glance, the figures appear to tell a positive story, with the UK set to meet its pledge to cut CO2 emissions by 20% from 1990 levels in 2010. However on closer inspection, it can be seen that emissions have been more or less steady since 1995 and the big drop occurred in 2009 as a result of the global recession and a significant drop in manufacturing output. It is likely, therefore, that similar reductions have occurred throughout Europe and North America.

From a social and economic perspective, a reduction in output is counterproductive. If manufacturing capacity is lost in Europe and North America, it is unlikely to be replaced at the same location.

It is absolutely right to focus on reducing emissions but innovation and good engineering practice is the way to achieve this. The 2009 figures create a positive illusion but the reality is that we have a long way to go to achieve sustainable emissions reductions.

Bhopal Arrests - Too Little and Too Late

2010-06-09T16:30:00.002+01:00

photo : ibtimes.com

Much press coverage this week about the sentences given to former Union Carbide empoyees in relation to the Bhopal disaster which occurred on 3rd December 1984, when the plant released 42 tonnes of toxic methyl isocyanate (MIC) gas, exposing more than 500,000 people to toxic gases.

Rightly, in this blog's view, the Indian Press and much of the world's press have expressed their disgust at the lenient sentences and the fact that nothing was done to bring the US based former Union Carbide head, Warren Anderson, to justice.

Bhopal was an incident that was simply waiting to happen. There were very many 'obvious' issues which could and should have been addressed by a company with the experience, expertise and capability of Union Carbide

Capital expenditure had been minimised
General cost cutting had led to poor working conditions and an inadequate inspection regime
Safety rules were inadequate and operators were instructed to ignore them
Training was cut back drastically to cut costs
Workers were forced to use manuals in English, even though very few could understand the language
Some safety features had been dismantled or disabled
Safety systems were inadequately designed
Supervision was reduced to save cost
Poor morale led to an exodus of skilled personnel to better and safer jobs

Chemical manufacturers have a duty-of-care to employees and the general public. Chemical industry professionals receive years of training in order to fulfill this duty. For managers with the right training and experience, issues such as those listed above are easy to identify and address. Managers, at all levels and in any chemical manufacturing company, should be capable of spotting and addressing such major issues. If this isn't they case, they should not be in the role.

Shale Gas Discovered in Poland

2010-05-26T10:25:00.000+01:00

photo : Energy Tribune

According to Polskie Radio's website, PKN Orlen, the Polish refining and petrochemicals group, has discovered large quantities of shale gas in the Lublin area in the East of Poland.

The find is significant, as experts have estimated that Poland may have up to 3 trillion m3 of shale gas. Currently, Poland is reliant on Russian imports for much of its gas.

The news will also be a major boost for Poland's chemical industries, with fertiliser producers and petrochemicals manufacturers potentially set to benefit from this new gas source.

This blog has watched the development of the shale gas business with interest. There have already been significant developments in North America. It has been suggested for some time that Europe could be a rich source of shale gas. Discoveries such as that in Poland, show that the future of energy and chemical feedstock supply in Europe could be set to take a new course.

New Economic Fears Highlight Need for Manufacturing Excellence

2010-05-24T15:17:00.000+01:00

Back in September 2009, this blog highlighted the 'new reality' faced by chemicals manufacurers.

As stated at the time "If our view is correct, we are in for a sustained period of lower volumes and reduced margins but punctuated by periods of high volatility caused by oil and currency markets. This will certainly mean that the pressure that has been experienced by the manufacturing sites during the downturn will continue."

With the current EU financial difficulties and the tightening fiscal controls in China, it appears that this statement was spot on. Although things have been generally better for manufacturers over the last 6-9 months,we are heading into very turbulent times once again, particularly in Europe and in Asia.

As I mentioned back in September, chemical manufactureres need to once again think very hard about the actions they need to take in order to survive the coming storm and to come out in good shape at the other end.

There must be a clear focus on what has to be done to survive but this absolutely must not affect the ability to be flexible .
A focus on cost effectiveness and value for money is essential.
Wastes of all types must be identified and systematically eliminated using approaches such as Lean Manufacturing.
Organisational effectiveness is a must. Staffing levels must be reviewed critically to ensure that organisations are as effective as possible and staff should be trained and ready to play their part by being able to safely and effectively start-up, shut-down, change grade and increase production rates at very short notice.
Simply cutting numbers is not smart enough - skills must be retained but have sufficient flexibility to be available and ready, as and when required

Deepwater Horizon Incident Leads to Regulatory Reforms

2010-05-12T14:18:00.001+01:00

photo : Upstream Today

As efforts continue to stop the flow of oil and manage the environmental impacts of the Deepwater Horizon disaster, the US Government has indicated that it will implement a series of regulatory reforms to minimise the risk of such an incident happening again.

Secretary of the Interior, Ken Salazar, has announced a series of reforms that will provide federal inspectors more tools, more resources, more independence, and greater authority to enforce laws and regulations that apply to oil and gas companies operating in US offshore areas.

Meanwhile, the question of blame is making the headlines. It was reported this week that US oil industry regulator the Minerals Management Service did not enforce the installation of a secondary shutdown system to give back up in the case of failure of the blow out valve. It is also reported that the various parties involved in the incident are already pointing the finger at each other in apportioning blame.

The immediate issues must be resolved by all parties working together to stop the leak and to address the environmental situation in the most effective manner possible. Detailed investigations and apportionment of blame will undoubtedly follow.

A technically sound and proven back up safety system has to be designed and implemented on similar offshore patforms. This is, in my view, essential in order to avoid a major loss of public and government support for the offshore oil and gas industry. With a significant proportion of the world's offshore reserves being located offshore, failure to do something different is not an option.

Shell Singapore Fully On-Line

2010-05-10T15:53:00.001+01:00

photo : Hydrocarbons processing

Shell has announced that its integrated refinery and petrochemicals complex in Singapore is now fully on line.

Shell has long talked of highly efficient, integrated supersites being the company's blueprint for the future. The Singapore Site certainly ticks all the boxes with the following features

Complex refinery with capability to process a wide range of crudes
Flexible cracker using latest technology and with capability to process heavier raw materials from refinery
World scale downstream plants with latest technologies
Fully integrated site infrastructure
Optimisation models to maximise margins depending on feedstock prices and availability

The site can process 500,000 bbl/day of crude and the cracker has a capacity of 800kT. All of the downstream plants are of large capacity.

According to the press release, the investment is Shell's largest ever in chemicals. As the blog noted back in November, at International eChem, we have long argued that the critical success factors for petrochemical operations are integration, size, technology, global reach and location. The SEPC complex scores top marks on all of these points.

Australia Invests in Carbon Capture and Use

2010-05-06T14:35:00.000+01:00

photo : bp.blogspot.com

Sticking my my previous themes of Australia and environmental issues, I was interested to read that the Australian government has committed $40M to a project to capture CO2 and transform it into building materials.

The project is being run by the Calera Corporation, a company which specialises in this technology. Construction work is due to start construction this year and the facility will use carbon dioxide captured from TRUenergy's Yallourn power station.

Following the initial demonstration phase, Calera plans to capture more than 300,000 tonnes of carbon dioxide and convert it into more than 1 million tonnes of building material a year.

Calera believes that the solution is more financially attractive than any alternative carbon capture solution.

If the economics are sound, this has to be an excellent solution, with less uncertainty than carbon capture and storage. The world will undoubtedly continue to need high quanities of cement and if CO2 can be used a feedstock, rather than being released to the atmosphere as a perceived threat to climate, then this has to be a win-win solution to satisfy all parties.

Austraila Delays Emissions Trading Scheme

2010-05-04T14:38:00.002+01:00

Australia has postponed the implementation of its proposed emissions trading scheme until 2012 at the earliest, according to news reports.

In justifying the postponment, Prime Minister Kevin Rudd said that by 2012, when the current Kyoto deal expires, governments around the world would need to make clear their new carbon reduction commitments.

Kevin Rudd has been under significant pressure from within Australia and in particular from Tony Abbott, the leader of the opposition Liberal Party.

Australia's move follows on from the uncertainties over the Cap and Trade bill in the US, which has slipped down the political agenda in recent months. These moves leave Europe increasingly isolated on the issue and has led to some member states questioning the wisdom of unilateral action on climate change. Other member states have suggested the imposition of carbon taxes at Europe's borders, to protect the competitiveness of Europe's industries.

This blog continues to argue that all manufacturing industries need a strong sustainability agenda, with increased use of renewables and a strong focus on new technologies to reduce energy consumption and waste. Government support should be for the development and implementation of such technologies, rather than trying to implement regional schemes which will do little to drive a global improvement in energy efficiency but which will lead to relocation of manufacturing plants and jobs.

As for carbon taxes, they are highly complex to implement, given the range of products to which they will need to be applied. They are virtually impossible to link back to energy efficiency and will be ultimately passed on to the consumer, thereby driving inflation.

Levels of Investment in Manufacturing Software Improving

2010-04-30T13:56:00.002+01:00

There are many ways in which we can assess the health of the chemical industry. Thanks to Houston Neal of Manufacturing ERP Software Advice, for providing another perspective on the health of the chemical industry.

The 2010 Manufacturing Software State of the Industry Roundtable has focused on the state of manufacturing ERP Software.

The report shows that 2010 is healthier than 2009. Purchase activty is up, with the increase in activity attributed to two primary reasons - firstly that we have reached the 10-year anniversary of purchases made as a result of the Year 2000 (Y2K) date problem secondly and most importantly, many companies are restarting buying processes that were deferred in 2009. The report also notes that the chemical sector is one of the most active in terms of new purchases.

This last point is highly encouraging. I've seen many companies in the chemicals sector deferring spend in many areas as a result of the recession. Clearly for items such as control systems and manufacturing software, such expenditure can only be deferred for so long but to see a clear shift at this point in time is very welcome news.

UK Health and Safety Executive Publishes Buncefield Evidence

2010-04-26T14:03:00.000+01:00

photo : Hertfordshire Constabulary

The UK Health and Safety Executive (HSE) has published some of the evidence being presented in the current trial of three companies over the explosion at the Buncefield depot in 2005.

As a reminder, several explosions occurred at the Buncefield Depot in the early hours of Sunday 11th December 2005. At least one of the initial explosions was of massive proportions and there was a large fire, which engulfed a high proportion of the site. Over 40 people were injured but thankfully there were no fatalities.

There was, however, substantial damage to properties in the area and the fire burned for several days, destroying most of the site and emitting large clouds of black smoke into the atmosphere.

A number of videos and photos have been published. The videos are stunning, showing the speed at which the vapour cloud advanced. The photos show the damage to the control room and the spread of debris following the explosions.

I'd recommend all those with an involvement in chemical manufacturing to take a look and challenge your own operations.This type of incident is totally preventable if we take the time and effort to assess the risks and then take the right actions to systematically eliminate them.

Deepwater Horizon - Update

2010-04-23T10:27:00.001+01:00

According to latest reports, concerns are growing for the 11 workers still missing following the explosion on the rig on Tuesday evening, which caused the rig to collapse and sink yesterday.

A team of engineers is also working to control a major oil spill, caused by very subtantial amounts of oil and gas pumping out from the oil reservoir

According to Transocean, the Swiss company that owned the rig, engineers are trying to cut off the uncontrolled flow of oil using a subsea robot. Apparently the the robot, equipped with cameras and remote-controlled arms, is being used to try to activate an automatic shut off device on the seafloor, designed automatically to clamp shut over the base of a pipe that connects the rig with the seabed.

First priority is to locate the missing persons and deal with the spillage. The investigation, when it takes place, will certainly have to look at the design of similar shut-off devices to ensure that in future, activation occurs even in extreme circumstances such as this.

Transocean Oil Rig Explosion - Echoes of Piper Alpha?

2010-04-22T10:36:00.002+01:00

photo : Upstream Today

An explosion on Transocean's 'Deepwater Horizon' oil rig at approximately 10 pm on Tuesday has left 11 people missing and 17 in hospital, of which 4 are critically ill.

Ther rig is owned and operated by the Swiss company Transocean and was carrying out exploratory drilling on behalf of BP.

At presnet, authorities are unable to say when the flames might die out on the rig. A large column of black smoke was seen over the Gulf of Mexico as firefighters tackled the blaze.

Adrian Rose, vice president of Transocean, said the explosion appeared to be a blowout, in which natural gas or oil forces its way up a well pipe and smashes the equipment. But precisely what went wrong is still under investigation.

According to reports, a total of 126 workers were aboard. 79 were Transocean workers, 6 were BP employees and 41 were contractors.

Still far too early to draw any conclusions but the fact that so many are missing and that many more are injured means that a full and thorough investigation must be carried out as quickly as is possible.

Icelandic Volcano - Are the Authorities Being Overcautious Regarding Air Travel?

2010-04-20T15:05:00.002+01:00

photo : Virtualtourist.com

Over the last couple of days, I've heard from many friends and colleagues stuck in various desitnations, either on business or vacation.

We've all read about the issues for travellers and for the airlines. There are also a great many other businesses, mine included, which are totally dependent on overseas travel.

So clearly, the human and economic costs are very high. Against this backdrop, I keep asking myself two questions - Firstly, Are the authorities being too cautious in deciding to ground air traffic? Secondly, would I be willing to fly in European Airspace right now?

The Financial Times has a very interesting article, with some major questions regarding the validity of the computer models used in Europe and the comparisons between the European and US approach to aviation safety.

In the chemical industry, we tend to start with the precautionary principle but then use a combination of theory and data to give a quantified analysis of the risk. Risk can never be eliminated but we can make decisions on whether or not it is acceptable.

If the models are flawed, we need to systematically collect data, such as that generated from the various test flights over the last few days and any other data which we deem necessary. We should then use this to validate or challenge the models (whilst checking whether the jet engines have suffered any damage).

What we can't afford to do is sit around, rely solely on the existing models and hope the problem will go away, particularly when there are other potentially active volcanoes in the same area.

As for whether I would be willing to fly - well I wouldn't want to fly around the volcano but would be willing to accept the assurances given to me by the airline companies and fly if they believe that it is safe to do so.

UK Chemicals Exodus Underway?

2010-04-17T16:04:00.002+01:00

I've just spotted a very interesting article from the Royal Society of Chemistry outlining concerns over the potential exodus of chemical and pharmaceutical companies from the UK.

As many will know, Ineos has recently announced its decision to relocate its corporate headquarters from the UK to Switzerland.

A number of other chemical and pharmaceutical companies may be poised to follow suit, given concerns over the perceived high levels of taxation in the UK for businesses and individuals.

Already the vast majority of UK chemical plants are owned by companies with headquarters outside of the UK. If the UK is no longer considered to be a 'strategic' location for an organisation, there may well be a drift of corporate, commercial and technical positions from the UK. Ultimately plant closures could follow, particularly if the total cost of employment is deemed to be too high.

This is a major concern. We have seen significant numbers of closures in recent years. My sense is that the UK needs a strong chemical sector, particularly if we wish to have a leading role in the development of green technologies. Although relocations of corporate HQs do not change the asset base, they do affect sentiment and can impact future investment decisions.

Lotte Chemical UK - Update 2

2010-04-12T15:54:00.001+01:00

photo : Middlesbrough Evening Gazette

The Lotte Chemical UK PTA plant has now successfully restarted, following the recent acquisition from Artenius UK.

The plant had been mothballed for 13 months following the closure by Artenius but was restarted successfully and ahead of schedule by its new owners.

This is quite remarkable, given that the new production team was only recruited during March of this year. Fortunately, the Teesside area of North East England has excellent process industry skills, so finding people with the right skills and experience was reportedly much easier than it might have been.

Even so, a plant restart after such a period is a complex activity. To successfully achieve it ahead of time is a remarkable achievement. Many congratulations to all involved!

LyondellBasell Agrees US Environmental Settlement

2010-04-08T14:28:00.001+01:00

photo : soils.co.uk

The Chemical Engineer has reported that LyondellBasell has agreed a settlement with the US Government for clean up of contaminated US sites. Under the settlement, LyondellBasell will pay $170m to clean up 15 contaminated sites across the US.

The contamination relates to sites which were never operated by Lyondell or Basell but which had been acquired in historical transactions.

This blog has no knowledge of the transactions involved and does not know what was or was not done in terms of detailed technical due diligence and/or protection against historical environmental liabilities by Lyondell, Basell or any of its predecessors.

The settlement does remind us, however, that costs associated with environmental clean-up can be very high. As chemical industry M&A activity starts to increase, potential buyers should be mindful of the need to carry out comprehensive technical and environmental due diligence, to ensure that all potential value adjusting issues are identified and managed accordingly during any deal

Better News For Manufacturing Sector

2010-04-07T16:52:00.001+01:00

Back in November, I reported on the optimism expressed by purchasing managers in the Institute of Supply Management (ISM) October report.

The latest report, for March 2010, shows that the US manufacturing sector expanded for an 8th consecutive month, showing that the optimism was justified.

As noted previously, 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. 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 now stands at a figure of 59.6%, a very positive score, reflecting the growing optimism throughout US manufacturing.

For chemicals, the news is mixed. Automobile sales have improved significantly and with each new car containing almost $3000 worth of chemicals, this is very welcome news. Meanwhile, another major consumer of chemicals, the construction sector, remains relatively flat.

More positive signs. Still a long way to go to reach 2008 levels but a major improvement on 2009.

Pressure Mounts on European Petchems

2010-03-25T09:56:00.000Z

As the wave of new capacity comes on line, pressure is mounting on petrochemicals producers in Europe.

Just taking ethylene capacity as an indicator, almost 7 million tonnes new capacity started up in 2009, another 7 million tonnes is due to come on-stream in 2010 and a further 5.5 million tonnes in 2011. Almost all of this new capacity is in the Middle East and Asia.

With the construction sector is still relatively weak and the automotive sector potentially at a turning point, given the withdrawal of economic stimulus initiatives, producers have increasingly relied on growth in Asian markets to fill the demand gap.

However there is little doubt that steadily increasing volumes of ethylene and derivatives will be arriving in Europe, increasing the pressure on producers. All have been through major cost cutting programmes over the last couple of years and have little room for further manoeuvre in this regard.

As a consequence, further capacity reduction is almost inevitable. However against a difficult political backdrop, as demostrated by recent strikes in France related to refinery closures, it is very difficult to predict just where this will happen.

5 Years On Since Texas City - CSB Statement

2010-03-24T14:47:00.001Z

photo : CSB

March 23rd marked exactly 5 years since the Texas City disaster, a tragedy that resulted in 15 deaths, 170 injuries and a huge financial cost for the owner, BP.

A lot has happened in that time; there has been much wider recognition of the need for effective Process Safety Management (PSM) and many companies have implemented or are in the process of implementing very strong PSM policies and procedures.

However, there are still many companies that are not doing as much as they should in this regard. This is clearly a major concern. As a regular reader of the trade press, I see details of incidents and fatalities on a depressingly regular basis. This really should not be the case.

The Chairman of the US Chemical Safety Board (CSB), John Bresland has issued a statement regarding the incident and its impact on the industry. His final paragraph is a very succinct reminder for all of us in the industry

"When will we know whether the tragedy of 2005 has resulted in greater safety at BP and other companies’ refineries? Only when we can look back over the passing of a significant number of years without major accidents, deaths, or injuries. In the meantime, only the highest commitment to running down the even smallest of problems and upsets will assure the prevention of so-called low probability, high-consequence events like the tragedy that took so many lives in Texas City five years ago today."

Lotte Chemical UK - Update

2010-03-22T14:26:00.000Z

According to press reports, the Wilton PTA plant will now restart on 15th April. The blog wishes very good luck to Lotte Chemical and its staff at Wilton.

Illinois Resolution Ask Congress to Postpone EPA Regulations on Emissions

2010-03-19T14:46:00.000Z

photo : theage.com.au

Back in December, this blog discussed the recent proposed changes to emissions regulations announced by the US Environmental Protection Agency (EPA). The EPA, in announcing the“endangerment finding", classisfied CO2 and other greenhouse gases as "atmospheric pollutants", allowing it to regulate such emissions under the existing authority granted by the Clean Air Act.

The move has enraged US industry, who believe that the ruling puts at risk US jobs and the US economy.

This week, the Illinois House of Representatives passed a resolution encouraging “the Congress of the United States to adopt legislation that would postpone the US EPA’s effort to regulate greenhouse gas emissions from stationary sources using existing Clean Air Act authority until Congress adopts a balanced approach to address climate and energy supply issues without crippling the economy.”

In a related statement, the President of the American Chemistry Council, Cal Dooley, made the following comment on the issue "Congress and the Administration must act immediately to postpone EPA stationary source regulation that could have far-reaching consequences for economic recovery, job creation and energy efficiency".

Pressure is steadily mounting on the EPA, who, thus far, as resisting pressure to make changes to the proposal.

This blog's view is that issues as important as this are vital to the industry. A balanced and global approach is required to addressing climate concerns. Localised initiatives cause localised damage to industry and employment, they ultimately lead to carbon leakage and do not end up benefitting anyone.

UK PTA Plant Set to Restart

2010-03-15T13:47:00.000Z

photo : El Economista

Following numerous posts about site closure, I'm delighted to post an article about a plant restart. Back in July last year, this blog reported the closure of the La Seda PTA/PTA plant at Wilton, UK.

The company Lotte Chemical UK Ltd., a part of the wider Lotte Group recently bought the Wilton Plant for 26 Billion Korean Won (US$22.4 mln). The Wilton plant has capacity to produce 500,000 tpa of purified terephthalic acid and 150,000 tpa of polyethylene terephthalate.

The Lotte Group's goal is "to be come a group that is appreciated by even one more person and to produce products that are loved by as many people as possible" - I'm sure that the company is appreciated by quite a few people on Teesside just now!

Shale Gas Again in the News

2010-03-11T14:50:00.004Z

photo : Energy Tribune

The subject of shale gas has been very much in the news in recent days.

According to reports, Shell and PetroChina have offered $2.96BN for Australian unconventional gas producer Arrow Energy.

This deal would help meet China's energy needs and would provide additional feedstock for Shell’s proposed 16m t/y LNG production plant at Gladstone port in Queensland.

In the USA, the subject of Shale gas has dominated the CERA Week 2010 Energy Conference in Houston. Keynote speakers from both BP and Chevron have stressed the importance of shale gas to US energy supply, whilst the Energy Secretary, Stephen Chu, asserted his view that natural gas should be seen as a transition fuel, helping the world to achieve a shift towards green forms of energy.

This blog's view is that energy supply and energy security will rise up the agenda in the not too distant future. Many countries (such as the UK) potentially face significant energy shortfalls related to proposed closures of existing generating capacity. A move towards green and sustainable forms of energy will help the energy mix but gas will play an essential part in a secure energy future, both in the transition and in the longer term. The fact that so much activity is taking place in relation to shale gas shows that much of industry shares this view.

Chemical Release at UK Plant Injures Four

2010-03-08T16:16:00.004Z

photo : http://www.hull.ac.uk/

FOUR workers were hurt last week, one very seriously, following a serious leak of titanium tetrachloride (TiCl4) from the Cristal Global titanium dioxide plant near Grimsby, UK.

The workers suffered burns and toxic inhalation injuries when up to two tonnes of titanium tetrachloride were released at the site, following the rupture of a pressurised container. The company has indicated that the site will remain closed until it was satisfied it was safe to restart operations.

The causes of the incident are not yet known and the investigation is on-going. Staff from the UK Health and Safety Executive have been present at the site over the weekend.
According to reports, the company has previously been prosecuted for releasing titanium tetrachloride to the atmosphere in 2006.

The site was severely impacted by the recession during 2009, with a number of production slowdowns and a extended shutdown due to the drop in demand for construction related products.

This incident was very serious and could have resulted in multiple fatalities. Thankfully this wasn't the case but is still vital that all of the root causes are fully understood and issues rectified before the facility restarts.

Blogging to Resume Shortly

2010-02-25T13:43:00.002Z

Blogging has been limited lately due to an extensive travel schedule. Blogging will restart in a week or so

Fatigue Raised as Possible Factor in Kleen Energy Systems Explosion

2010-02-09T19:26:00.001Z

photo : Dayton Daily News

A fire and explosion killed five people and injured several more on Sunday at a gas-fired power plant under construction at Middletown, Connecticut.

According to initial reports, the blast occurred during testing at facility, according to a statement by the mayor's office late on Sunday.

A natural gas leak caused the blast during the testing of the plant, which was 95% complete and was due to come on stream later this year, according to reports.

New reports are suggesting that fatigue may have been a major factor, with some workers reportedly working 12-hour shifts, 7-days per week for an extended period.

There is much guidance available on the risks associated with fatigue. The UK Health and Safety Executive publishes an excellent guide to fatigue and its risks. Although it is too early to say whether fatigue was truly a factor in this instance, it is known to have been a factor in other major instances, such as BP Texas City, and steps should always be taken to avoid chronic fatigue and the associated risks.

Downstream Changes at Shell

2010-02-08T19:18:00.002Z

photo : icnetwork.co.uk

Following relatively weak 4th quarter 2009 results, Shell has commented on the need for further downstream changes in order to improve company performance

Commenting on the results, Shell CEO Peter Voser noted that Shell's fourth quarter was impacted by the weak global economy. He noted that oil prices had increased compared to a year ago but gas prices and refining margins had declined sharply, because of weaker demand and high industry inventory levels.

Shell's assumption is that there won't be a quick recovery, and the outlook for 2010 will remain uncertain. As a consequence, it has sold a number of downstream assets and closed a refinery in Montreal, Canada. A number of other cost cutting initiatives are either underway or being actively considered, including further downstream divestments and a major downstream cost reduction programme.

The assumption that the recovery will not be rapid means that Shell is taking decisive action to position itself for the coming years. The assumption is equally valid for chemicals manufacturers. Actively planning for this scenario, whilst retaining the ability to be innovative and flexible, will be the key to future success, whereas batoning down the hatches and trying to ride out the storm will only lead to difficulties.

Chemical Manufacturers Look to the Future

2010-01-29T09:45:00.000Z

Chemical Manufacturers are taking decisive actions to position themselves for the future. According to Price Waterhouse Cooper's 13th Annual Global CEO Survey, chemical companies are responding to the current challenges in a number of ways:

Companies are increasingly looking to Asia and expect operations to grow in this area
The level of M&A activity is expected to increase
Companies see innovation as being essential to future growth
Comapnies are spending more to develop leaders and in-house talent
Cost cutting and infrastructure improvements are essential

The comments absolutely reflect the need for a coherent and strategic approach to survive and thrive in these turbulent times. As noted previously, excellent strategic planning, in-built flexibility and the ability and desire to innovate will be the key attributes of successful companies.

Paul Hodges' Chemical Industry Outlook

2010-01-26T16:32:00.001Z

My colleague, Paul Hodges has correctly predicted the key economic events that have shaped the chemical industry in recent years. Here is a short video from ICIS, featuring Paul, sharing his views on the 2010 outlook for the industry

Poor Demand In Construction Sector Threatens Chemical Manufacturers

2010-01-26T13:32:00.001Z

photo : diamond.ac.uk

Whilst all chemical manufactuers are hoping for a better year in 2010, recent figures from the US indicate that demand remains very slack in the non-domestic construction sector, a major market for polymer and chemical manufacturers.

According to the American Chemistry Council (ACC), some 20% of spending in construction projects goes on chemicals and plastics and the figure is set to increase as buildings 'go green' with improved insulation, solar power etc.

The Associated General Contractors of America (AGC) has painted a negative picture in a number of recent press releases. In particular, the AGC recently released a construction industry outlook in which nine out of ten contractors stated that they believe that there will be no construction recovery in 2010.

This a big concern. Demand for chemical products relies on consumer demand, with construction and automotive being particularly important sectors. This downbeat assessment does not make happy reading for the chemical industry.

Cap and Trade Under Pressure as Republicans Win in Massachusetts

2010-01-22T11:23:00.002Z

photo : Cleveland.com

The recent victory of Scott Brown in the recent US Senate by-election in Massachusetts is likely to put further pressure on the proposed Cap and Trade legisation.

The new senator actively campaigned against the legislation and his election reduces the Democrat majority in the Senate, making such bills harder to pass.

The election is significant. Brown highlighted two main issues in his campaign - the proposed healthcare reforms and cap and trade. His victory reflects the increasing concern voiced by the US chemical industry regarding the likely impact of cap and trade on industry and jobs.

It is being suggested that the bill could be watered down to focus on renewable energy alone. This blog has long promoted a sustainability agenda and agrees that increased use of renewables should be one element of this approach. There should also be a strong focus on new technologies to reduce energy consumption and waste. The chemical industry should be aiming for efficiency on a global basis. Regional schemes, such as cap and trade in its current form, are not the solution.

Paper Recycling Facility to be Built at Carrington UK

2010-01-15T16:08:00.001Z

photo : bloglemu.blogspot.com

The Spanish company Sociedad Anónima Industrias Celulosa Aragonesa (Saica) has announced it will spend £290million to build a new paper recycling facility in Carrington, near Manchester, UK.

Construction will begin later this year and the facility is due to start-up in 2012. The plant will produce 400,000 t/y of 100% recycled board for use in corrugated cardboard. The investment will include advanced effluent treatment works and a combined heat and power station.

Carrington is the site of the petrochemical complex, formerly operated by Shell Chemicals, which at its peak, employed some 3500 staff. The paper mill itself is located on the site of a former BP distribution terminal, located alongside the Manchester Ship Canal.

This is very good news for an area which has seen multiple chemical plant closures in recent years. LyondellBasell shut down an LDPE plant at Carrington at the end of 2009 and NOVA Innovene (now Ineos NOVA) shut down a PS plant at the end of 2006. As someone who worked at Carrington for many years, I'm delighted to see new investment in the area.

Explosion at PetroChina Kills Five

2010-01-11T11:41:00.000Z

photo : ibtimes.com

An explosion at CNPC's Lanzhou Petrochemical Company in Gansu Province, China has killed 5 people and injured 6 others.

According to reports, the blast, on 7th January, occurred at a naphtha tank farm at the site. The ignition source was believed to be static electricity, which ignited flammable vapours which had leaked from a nearby pygas tank

According to CNPC, there was no damage to nearby residential buildings and there was no escape of toxic gas from the site.Firewater has been collected at the site for treatment.

The CNPC Vice President Liao Yongyuan and a team of experts has visited the site to deal with the aftermath. CNPC has also sent an urgent message throughout the group, advising employees of the accident and stressing the need for improve HSE performance.

Cold Snap Hits Chemical Industry

2010-01-07T11:16:00.004Z

photo shows view from the blog office

The current severe cold snap, affecting much of the Northern Hemisphere, is starting to have a significant impact on chemicals manufacturing.

All manufacturers are well aware of the need for robust winterisation programmes and most plants have well rehearsed procedures which can be implemented as soon as the mercury drops but this year, even the best procedures cannot address all of the issues being encountered.

China has been particularly impacted. Lower operating rates are reported across a number of crackers due to a combination of naphtha shortages and power supply problems. There are also severe transportation problems, particularly in Northern China.

In Europe, some crackers are reporting reduced rates, major polymer producers have reported operating problems and transportation is difficult in some regions. In the UK, many producers have interruptible gas supply contracts, which oblige producers to cut back consumption when national gas demand is high. There are also localised reports of staff having difficulties to get in to work, due to road transport difficulties.

Salt producers are working flat out. In the UK, the Salt Union reports that even though the mine has been working at capacity since mid-December, it is not able to sustain the unprecedented level of repeat orders and is working with the authorities to prioritise deliveries.

With the cold weather expected to last for quite some time, the industry has yet another challenge to deal with as we start the new decade.

Total Makes Strategic Move Into US Shale Gas Business

2010-01-05T10:38:00.000Z

photo : Energy Tribune

Total has made a major move into the US shale gas market. Total and Chesapeake Energy Corporation have agreed a $2.25 billion joint venture related to Chesapeake's Barnett Shale assets

The Barnett Shale is currently the largest natural gas producing field in the U.S. and is producing approximately 50-60% of all shale gas in the U.S.

The move is highly significant for Total, with the company stressing the strategic nature of the investment, which will allow it enter the US shale gas business and to develop its expertise in unconventional hydrocarbons.

The latter point is very significant. As the attractiveness of natural gas grows, we can expect a significant increase in shale gas exploration and production activity wherever opportunities may exist. Watch this space for further news.

Chemical Industry Strategies For The Coming Decade

2010-01-04T09:49:00.002Z

The start of a new year is a good time to think about Chemical industry strategies for the new decade. Just a very quick look back at the 'noughties' will tell us that we are set for a decade of significant upheaval for the industry.

The last decade saw huge changes in the chemical industry. Several years of strong growth followed by a very painful recession. The emergence of new players in the industry and a steady shift of the manufacturing base from Europe and North America to the Middle East and Asia.

In thinking about what is to come, I'd like to highlight two excellent articles published in ICIS Chemical Business

In his article 'Prepare for the Great Petchem Marathon', Paul Hodges focuses on the key issues that need to be tackled. Restructuring, Supply Chain, Technology, Commercial Strategies and Size and Scale are flagged as key issues for chemical companies. Paul suggests that the motto for the new decade could be 'Think About Tomorrow and Act Today'

In another excellent article 'Recession Prompts Shift in Chemical Strategies', Anna Jagger focuses on the societal 'Megatrends' that will provide major opportunities for flexible and innovative chemical companies. The article lists Renewables, Food, Energy Efficiency and Water as being key issues for the coming decade.

The new decade will bring significant change. There will be significant problems to deal with, there will be threats to the industry but there will also be major new opportunities. Excellent strategic planning, in-built flexibility and the ability and desire to innovate will be the key attributes of successful companies.

Seasons Greetings From Manufacturing Viewpoint

2009-12-23T11:55:00.000Z

Manufacturing Viewpoint will be taking a short break during the holidays and will return in early January.

We wish all of our readers and contributors a happy Christmas and a happy and successful new year 2010.

BP To Appeal New Texas City Damages Award

2009-12-22T10:57:00.000Z

photo : BP

BP is set to appeal a $100M award for safety infringements at its Texas City refinery. The Texas Court made its ruling on Friday 18th December and ordered BP to make payments to ten workers after an incident in April 2007 that involved an unplanned release of toxic chemicals at the site.

The affected workers claimed that breathing in benzene and other harmful chemicals released from a sulphur recovery unit had caused dizziness, sore throats, and one worker to pass out. No long-term or permanent injuries were caused.

BP has denied that the release occurred and indeed environmental agencies could find no evidence to support the claims.

This case is one of a number of lawsuits brought against BP involving more than 140 workers and local residents in relation to alleged gas releases from the Texas City Refinery

This blog is very much an advocate of excellence in all matters relating to Process Safety Management (PSM) and believes that all organisations should have the very best policies and procedures in place.

It is also correct that transgressions, where proven, should be punished via the courts but the punishment must fit the crime. In this example, the judgement is extremely severe considering that there is uncertainty about whether a release actually occurred and, most importantly, the fact that no-one suffered any long term effects.

Weekly News Round Up

2009-12-18T13:32:00.002Z

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

The Thai Government has formally ordered construction work to stop at the Map ta Phut petrochemical complex. There is no clear information regarding a likely restart date at this time.

The new Boeing 787 Dreamliner made its first test flight on Tuesday. Each 787 contains carbon fibre and adhesives to the value of $1M, with the carbon fibre coming from polyacrylonitrile. Boeing has already received 840 orders for the new aircraft.

Following recent shale gas discoveries, the American Natural Gas Alliance (ANGA) now believes that the US now has approximately 100 years of natural gas reserves. If correct, this could significantly impact future petrochemical investment in the USA. This news follows the recent announcement of ExxonMobil's acquisition of major US natural gas producer XTO Energy.

According to reports, the bankruptcy court in New York has adjourned the hearing to consider the LyondellBasell's proposed reorganisation plan, until January 12th. The outcome of the hearing is of much interest for Reliance Industries which has made a preliminary non-binding offer for a controlling interest in LyondellBasell.

ACC Expresses Concerns About EPA Emissions Regulation

2009-12-17T15:52:00.006Z

photo : theage.com.au

The President of the American Chemistry Council (ACC) has expressed serious concerns over the recent changes to emissions regulations announced by the US Environmental Protection Agency (EPA)

In announcing the“endangerment finding", the EPA has classisfied CO2 and other greenhouse gases as "atmospheric pollutants", allowing it to regulate such emissions under the existing authority granted by the Clean Air Act.

ACC believes that this will create a significant level of uncertainty, which will stem investment in new facilities and modifications to existing facilities at a time when the industry is in a very fragile recovery period.

Under the EPA rules and regulations, any facilities making new investments would need to obtain a permit. To do this it would be necessary to demonstrate implementation of 'best available control technology', however rules for determining what is required to satisfy this crierion do not yet exist.

ACC suggests that some time out is required to "put together a comprehensive policy that reduces emissions in our country whilst ensuring that our manufacturing sector can continue to invest".

This blog fully supports the approach proposed by ACC. A clear and well defined plan is required to address questions of sustainability and a coherent approach is required to understand and deal with the issue of climate change. Serious consequences for the chemical industry could result if an ill-considered approach is taken for the sake of political expediency.

ExxonMobil Develops Shale Gas Business With XTO Acquisition

2009-12-15T11:40:00.001Z

Photo : Energy Tribune

ExxonMobil has clearly signalled its intent to develop a global shale gas business with the acquisition of XTO Energy, the Texas-based 'unconventional' gas producer.

The deal, which cost some $41bn, gives ExxonMobil a strong global position in the fast growing shale gas market, with assets throughout the world.

Shale gas extraction has become increasingly attractive as extraction techniques have improved and costs have fallen. Estimates of the potential gas supply are being revised steadily upwards as new reserves are located. The involvement of the majors such as ExxonMobil will further increase the amount of new exploration and production. It is unlikely that the 'unconventional' tag will last much longer.

Buncefield - Process Safety Leadership Group Publishes Final Report

2009-12-14T08:18:00.004Z

photo : metro.co.uk

The UK Process Safety Leadership Group (PSLG) has published a report that specifies minimum standards of safety and environmental protection for all UK sites storing large volumes of gasoline.

The PSLG was set up following the explosions at fire the Buncefield fuel depot in December 2005.

The PSLG consists of expert representatives from the industry and regulatory bodies. In the course of its work, the group has established a set of 'Principles of Process Safety Leadership' as follows:

Clear and positive process safety leadership is at the core of managing a major hazard business and is vital to ensure that risks are effectively managed
Process safety leadership requires board level involvement and competence. For companies with boards located outside the UK then the responsibility to show this leadership rests with the most senior UK managers.
Good process safety management does not happen by chance and requires constant active engagement
Board level visibility and promotion of process safety leadership is essential to set a positive safety culture throughout the organisation
Engagement of the workforce is needed in the promotion and achievement of good process safety management
Monitoring process safety performance based on both leading and lagging indicators is central to ensuring business risks are being effectively managed
Publication of process safety performance information provides important public assurance about the management of risks by an organisation
Sharing best practice across industry sectors, and learning and implementing lessons from relevant incidents in other organisations, are important to maintain the currency of corporate knowledge and competence.

The principles are backed up by recommendations on organisation and resources. This blog's view is that this document is a 'must see' for all managers in the chemical industry, irrespective of location, as it provides an excellent checklist for measuring your organisation's current performance against best practice in process safety management.

Weekly News Round Up

2009-12-13T09:22:00.003Z

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

Numerous reports suggest that Reliance Industries is moving quickly in its efforts to aquire LyondellBasell , with executives from the two companies meeting recently in Houston. Reliance is believed to be preparing to make a binding offer for LyondellBasell.

The Chemical Engineer reports that the European Union has approved a substantial amount of funding for a number of green energy-related projects. The EU had previously set aside €4 billion for green energy projects and has now allocated €1.6 billion for carbon capture and storage projects and €0.6 billion for offshore wind energy projects.

Shell has opened a state-of-the-art mono-ethylene glycol (MEG) plant in Singapore. The plant uses Shell's OMEGA process, which is claimed to have lower construction and operating costs and maximises the yield of MEG (producing less di and tri-ethylene glycols), when compared with other processes.

BASF chairman Juergen Hambrecht has spoken positively about his company's fourth quarter results, which were above expectations. 2010 is expected to be 'difficult' given the volatility of global recovery and the fact that central bank interest rates are expected to rise.

Ineos Bio, together with its partner New Planet Energy, has been selected for a $50M grant for its advanced bioenergy facility in Florida, USA. The facility to use INEOS Bio’s advanced BioEnergy technology to produce bioethanol and power from a range of feedstocks, including forestry waste, agricultural waste, sustainable energy crops, construction waste and municipal solid waste.

Hope for Teesside as £60M Investment Package Announced

2009-12-10T09:08:00.004Z

photo : BBC

The UK Government has announced a £60M investment package to support the rejuvenation of industry in the region. and to develop it as a centre of excellence for low carbon and advanced manufacturing technologies.

Teesside, in the North East of England, has long been at the heart of the UK Chemicals industry, with the skyline dominated for many years by the (ex) ICI plants at Wilton, North Tees and Billingham.

The industrial base has significantly declined in recent years, however. ICI no longer exists and there have been multiple chemical plant closures in the region. The situation was exacerbated further with the recently announced closure of the Corus steel plant in the region, with the loss of 1700 jobs.

The £60M investment package will be used in a number of ways. Firtsly, to provide immediate support in the aftermath of the Corus closure. Secondly, there will be investment to help the region establish itself as a low carbon base; with investment to establish bio-based materials, to develop low energy technologies, for development of carbon capture and storage and to develop new business practices.

Very positive news. The region has the skills, the infrastructure and the desire to become this centre of excellence for low carbon technologies. With the political will, a strong and coherent plan and some targeted investment, this dream can become a reality.

GCC to Supply 20% of Global Petrochemicals by 2020

2009-12-08T10:15:00.003Z

photo : GPCA

According to estimates by the Gulf Petrochemicals and Chemicals Association (GPCA), the GCC will meet 20% of the world's petrochemical demand by 2020.

The growth of petrochemicals in the region continues to be very impressive. Current petrochemical output in the region is some 63 million tonnes and this will almost double between now and 2015, with a number of large scale projects projects underway throughout the region.

The annual GPCA Forum is now underway and the agenda has a strong focus on sustainability issues and on achieving success in the post-recession environment.

In implementing such a huge investment programme (estimated at approximately $170 billion between now and 2015), producers in the region will face a number of challenges and issues but these will be overcome, given the right skills and resources. There is little doubt that over the coming decade, the region will develop into the global petrochemicals hub.

As Copenhagen Summit Opens the Impact on Chemical Industry Remains Unclear

2009-12-07T11:07:00.001Z

photo : Scandinavia Travel

With a huge political fanfare, the UN summit on climate change is opening today in the Danish capital Copenhagen, with delegates from 192 countries attending.

According to UN Climate Chief Yvo de Boer " The Copenhagen climate negotiations beginning Monday must yield an ambitious, sweeping agreement to capitalize on pledges by countries to fight global warming".

In the days and weeks leading up to this summit, there has been much political rhetoric but also an increasing level of heated debate, stirred up significantly by the leak of the so called "climategate" e-mails from the Climate Research Unit at the University of East Anglia in the UK.

If a deal is reached, the requirement to reduce CO2 emissions will have significant consequences for industry, both from a cost point of view (cap and trade and other proposed legislative changes) and a technology point-of-view (energy efficiency, carbon capture and storage and other green technologies).

At this stage, it is difficult to see whether an agreement can be achieved. There are major concerns in many countries, in-part relating to the scientific issues (particularly post "climategate") and partly about the impact on industry and consequently employment in those countries.

This blog's view is that the industry must vigorously implement a "sustainability agenda" looking to reduce energy consumption wherever possible and as quickly as is possible, using both energy efficiency programmes and new technologies. This is the right thing to do irrespective of the AGW debate.

Regarding climate change and AGW, a rational and open debate is needed as soon as possible. The 'science is settled' argument can only be finalised when all of the concerns have been discussed and addressed openly.

The current name calling tactics coming from both sides in the debate are totally unproductive and will only serve to polarise views further, making it even harder to achieve universal agreement and agree an implementation plan. Once a broad consensus is achieved, that is the time to decide on legislated targets and sequestration technologies such as CCS.

Weekly News Round Up

2009-12-06T14:19:00.004Z

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

In an interview with The Times, Jim Ratcliffe has indicated that Ineos will consider some asset disposals in the future. The company has to make substantial debt repayments in 2011 and has indicated that some asset sales could be a possibility. Ineos currently has debts of approximately €6.5M.

LyondellBasell has announced that it will shut down its 'oldest and smallest' polypropylene line at its site in Wesseling, Germany. The company commented that this line, with 110kT capacity, was no longer economically viable.

The Thai Supreme Court has upheld an injunction issued in September halting development of $12bn of petrochemical and power projects at the Map Ta Phut Industrial Estate in the eastern province of Rayong. This ruling, which could delay the start-up of several petrochemical plants, including a large cracker, has led to the involvement of the Government, in order to seek a resolution.

An explosion occurred at the Valero refinery in Texas City, Texas, on Friday 4th December, killing one worker and injuring two others. Few details are currently available but the blast is reported to have occurred following a boiler failure, according to a company spokesperson.

In another incident, three people were killed and two injured in a chemical plant explosion in Yongin, South Korea. According to reports, the blast followed a fire at the plant. An investigation is underway to identify the causes.

25 Years on From Bhopal - Have The Lessons Been Learned?

2009-12-04T13:18:00.005Z

The Bhopal disaster was almost certainly the worst incident in the history of the chemical industry. 25 years on from Bhopal, we must take a step back and assess whether the lessons have truly been learned.

The incident took place at a Union Carbide pesticide plant in the Indian city of Bhopal, Madhya Pradesh. On 3rd December 1984, the plant released 42 tonnes of toxic methyl isocyanate (MIC) gas, exposing more than 500,000 people to toxic gases.

The first official immediate death toll was 2,259. A more generally accepted figure is that 8,000- 10,000 died within 72 hours, and it is estimated that approximately 25,000 have since died from gas-related diseases.

The causes were multiple.

Capital expenditure was minimised
General cost cutting had led to poor working conditions and an inadequate inspection regime
Safety rules were inadequate and operators were instructed to ignore them
Training was cut back drastically to cut costs
Workers were forced to use manuals in English, even though very few could understand the language
Some safety features had been dismantled or disabled
Safety systems were inadequately designed
Supervision was reduced to save cost
Poor morale led to an exodus of skilled personnel to better and safer jobs

There is no doubt that the chemical industry has improved significantly since Bhopal. I would very much doubt that such a severe set of issues can exist at any modern-day facility. In general, awareness of process safety is generally much improved throughout the industry.

In spite of this, however, we can not and must not be complacent. The current recession has hit the chemical industry hard and finances are under severe pressure - meaning that cost cutting is essential to survival. This is real life and has to happen - but at the same time, we must ensure that the safety and integrity of our plants is never compromised.

Canada Rail Strike Hurts Chemicals Manufacturers

2009-12-01T10:54:00.001Z

photo : life.com

With 70% of the production volume of the Canadian chemical industry being moved by rail, the current rail strike has the potential to severely hurt chemicals manufacturers.

The dispute, by the locomotive engineers, is not currently impacting freight, as positions are being covered by managers, but this isn't considered sustainable in the long-term, especially as weather conditions deteriorate.

As a response, the government introduced legislation this week to order 1,700 unionised employees back to work and send the dispute to binding arbitration. It claims the strike could have "serious repercussions" for a still-fragile economy.

Canadian Chemical Producers' Association president Richard Paton has commented that the the strike could threaten the economic recovery, with manufacturers potentially forced to scale down production and lay off workers.

As this blog has noted, the post-recession 'new normal' is chracterised by a very fragile recovery with sustained periods of lower volumes and reduced margins but punctuated by periods of high volatility caused by oil and currency markets.

So for the Canadian Chemical Industry, a significant problem with logistics would be a disaster. This issue, on top of all of the other challenges that the industry is facing, may be enought to push some manufacturers over the edge. Hopefully a solution will be found quickly.

Weekly News Round Up

2009-11-26T17:04:00.001Z

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

2009-11-26T10:30:00.005Z

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

2009-11-25T11:51:00.003Z

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

2009-11-24T12:07:00.003Z

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

2009-11-19T13:08:00.000Z

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'

2009-11-19T12:02:00.000Z

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

2009-11-17T08:08:00.001Z

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

2009-11-16T16:28:00.002Z

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

2009-11-14T11:03:00.001Z

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

2009-11-13T14:27:00.002Z

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?

2009-11-12T15:08:00.001Z

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

2009-11-11T09:42:00.004Z

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

2009-11-10T15:01:00.001Z

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

2009-11-06T11:50:00.003Z

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

2009-11-05T14:00:00.004Z

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

2009-11-04T11:50:00.001Z

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

2009-11-03T14:10:00.004Z

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

2009-11-01T16:19:00.001Z

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.

Record Fine For BP

2009-10-30T14:51:00.000Z

Following on from my previous comment on BP Texas City, the BBC has now reported that BP has been fined a record $87m (£53m) for failing to correct safety hazards at the site.

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As noted previously, the Occupational Safety and Health Administration (OSHA) cited 270 violations at the oil refinery. BP said it believed it was in "full compliance" with a 2005 settlement agreement with OSHA and would work with the agency to resolve the issue.

The $87m fine is the largest in OSHA's history.

Mixed News as Companies Report on Q3

2009-10-30T12:28:00.001Z

Mixed news for the chemical and process industries as companies reported Q3 results

BASF reported third quarter profits down 69% year on year to €237M. BASF expects a long slow climb out of recession. BASF expects some employees will remain on short-time working into 2010. Whilst business has stabilised the climb out from the trough will be slow.
Shell reported a collapse in Q3 profits from $10.9 billion in 2008 last year down to $3 billion. As a result of this poor performance, Shell will axe some 5000 jobs worldwide in its 'Transition 2009' programme
BP's results were some 50% better than city analyst's expectations, with replacement cost profit of $4.98 billion. BP has already cut costs following reorganisation and efficiency improvements and aims to do even more this year. BP noted that they had achieved a 7% increase in production as well as a number of new developments in the Gulf of Mexico, Iraq and China, amongst others.
GSK showed that the pharma sector is still reasonably strong. Profits were up 12% at $2.4 billion. Demand for the H1N1 vaccine has help bolster GSK

Overall, things remain tough for commodity sector, and particularly for those who rely on housing starts and the automotive sector for a major proportion of their demand. The end to the various stimulus packages will also create issues as volumes drop back to the 'new normal'.

Some sectors are clearly much less affected, such as pharma, although cost cutting and a move to generics will make things tougher.

For manufacturers, we can anticipate another tough year, chartacterised by reorganisations, reduced capital expenditure and some site closures as we slowly start to pull out of recession.

World's Largest Polymer Park Changing Face of Plastics Conversion

2009-10-29T09:46:00.001Z

photo: Arabianoilandgas.com

With up to 15 million tonnes of new polymer capacity coming on stream in the GCC region from highly integrated and effficient plants, the obvious next step was to improve the integration of these plants with the downstream convertors. The new Abu Dhabi Polymers Park is a huge step in achieving that goal.

The park, developed by the Abu Dhabi Basic Industries Corporation (ADBIC), a state owned organisation, will cost some €3.5 billion to complete and once fully operational, will consume up to 2 million tonnes per year of polymers (mostly PE, PP, PVC and Polyester).

The park's developers have given considerable thought to the design of the cluster and have come up with a very well structured package. The park will have purpose designed logistics facilities, a nearby deep-sea container port, flexible supply chain and technical service capabilities and competitively priced utility and land costs. Unlike existing clusters, the concept has been carefully designed from the outset, rather than evolving out of large corporate supersites, as was the case with many of the European clusters.

So with leveraged procurement, high quality logistics, on-site technical support capability and competitive land and utility costs, it sounds pretty good. Add to that a growing local market and zero tax on company and private income and you have an irresistible opportunity.

Shell - Integration Key To Successful Growth

2009-10-28T12:07:00.005Z

photo : Hydrocarbons Technology

Shell believes that integration is key to delivering what it calls the 'oil chemicals advantage' in its petrochemical facilities.

Downstream Today has reported a recent speech at the recent Petchem Arabia 09 in Abu Dhabi by Aslam Moola, Business Development Manager for Shell Chemicals. Mr Moola cites various examples of projects and existing installations that clearly demonstrate the benefits of integration.

Integration, together with strong project implementation and effective production and energy management, is increasing the competitiveness of plants such as SEPC on Jurong Island, Singapore as well as other integrated Shell complexes around the world, according to Mr Moola.

The Middle East is set to benefit fom this integration. This will be even further enhanced by the development of downstream manufacturing capabilities, such as the polymer parks in Abu Dhabi and the growth of domestic markets in the region.

At International eChem, we have long argued that the critical success factors for petrochemical operations are integration, size, technology, global reach and location. Clearly, all of these factors must be supported by a strong business strategy, together with highly effective delivery of that strategy.

Recent projects in the Middle East and Asia tick all of the boxes and will increasingly dominate supply in the years to come.