China to Invest in Petrochemicals from Coal Facility

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.

UK Health and Safety Executive Publishes Buncefield Evidence

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.

Total Makes Strategic Move Into US Shale Gas Business

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.

Weekly News Round Up

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

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

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

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

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

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

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

Total Cleared Over Toulouse Explosion

photo : Lepost.fr

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

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

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

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

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

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

Friday News Round Up

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

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

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

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

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

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

SATORP Achieves Substantial Cost Reduction

Following on from my previous post on the cost savings achieved by Dow and Saudi Aramco at Ras Tanura, I have now learned that Total and Saudi Aramco have reported cost savings of over 20% on the SATORP integrated refinery project. This has been achieved by slightly delaying the project and lengthening the EPC selection process in order to take advantage of lower construction costs. As noted previously, the IHS CERA downstream index showed an increase of over 40% for construction costs between 2006 and Q3 2008, reflecting the significantly increased demand for new construction in this period. Even so, to achieve a 20% reduction in cost for a project as large and as complex as SATORP and in such a short period of time is highly impressive. I'm informed that Saudi Aramco and Total will be presenting details of this project as a case study at the forthcoming Petchem Arabia meeting , which takes place in Abu Dhabi during October.

Serious Explosion at French Petrochemical Plant

Numerous sources report that two people died and several others were injured in an explosion at Total's Carling Site in Eastern France. Reports suggest that the incident occurred during a start-up of the cracker, which had been shut down following bad weather in the area. No further details are available at this time.