Lotte Chemical UK - Update 2

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!

Hope for Teesside as £60M Investment Package Announced

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.

Outcome of Teesside Study - Ten Point Plan Annouced

photo : BBC

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

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

Industry champions will lead the various points in the plan covering

Innovation

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

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

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

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

Friday News Round Up

Friday again, so a good time to update on various past stories and share some news snippets.

• Problems persist at Lavéra, with Arkema forced to prolong its force majeure on PVC. This was due to on-going problems on the Vinyl Chloride Monomer plant at Lavéra. According to the La Provence newspaper, issues included a minor chlorine leak which led to site emergency procedures being initiated. Arkema report that there was no adverse environmental impact.

• The UK chemical cluster at Wilton was again in the news. It was announced that a study will  be conducted with businesses on the Wilton site to understand their immediate and future needs, and the outcome will dictate what extra action is needed to support them.

• The American Chemical Society (ACS) are holding a small & medium business Webinar to give participants an opportunity to learn about trends in the chemical industry that can impact jobs and businesses. Scheduled for Thursday, Oct. 22, 2-3 p.m. Eastern Time, the free webinar will feature my colleague Paul Hodges, author of the  ICIS "Chemicals and the Economy'" blog. The webinar's topic is "What you need to know about Chemistry and the Economy! Secrets to finding hidden opportunities."

          Registration details are available by following this link.

• The debate about climate change rages on ahead of the Copenhagen Summit. Paul Hudson's BBC blog has led to many exchanges of views, with another senior BBC reporter, Peter Sissons also joining the debate. Cap and Trade is very much the hot topic right now (please pardon the pun), so we can expect this debate to intensify in coming weeks.

Confusion Over Future of Wilton EO Plant

photo : BBC There is confusion regarding the future of the Wilton, UK EO/glycols plant. Back in July, Dow announced that it intended to close the facility primarily due to the uncompetitiveness of MEG and the need for significant investment to upgrade the plant to produce more di- and tri-ethylene glycols. Local unions have expressed concern about the cascading effect of the closure on other industries in the value chain, with downstream Croda and Shell plants directly impacted by the closure. On a UK-wide basis, this closure, together with the LyondellBasell's recently announced Carrington LDPE closure, puts significant pressure on the UK ethylene balance, with supply now significantly greater than demand. On Sunday, the UK Sunday Times published a story that US-based Third Coast Chemicals were looking to take control of the plant, with the UK government providing most of the required £50m funding in what is regarded as the first leg of a strategic review by the government of the chemicals industry. The Sunday Times quoted 'senior industry sources' stating that 'the government was in the early stages of formulating an assistance programme to the beleaguered £60 billion-a-year industry.' On Tuesday, however, the regional industry group, NEPIC, denied knowledge of any such negotiations, noting that although Third Coast had previously expressed an interest, discussions had since broken down. Difficult to pick out the bones from this story. My view is that the UK ethylene network is at serious risk unless something is done to avoid a major supply/demand imbalance. Wilton, as an important chemical cluster, needs plants such as the EO/glycols facility to secure its future as a centre for chemical industry growth and innovation. The process engineering skills based on Teesside are critical to the UK's ability to develop the low carbon technologies of the future. A coordinated approach, involving government, government agencies and industry is the only possible way to achieve this future.

Chemical Parks Under Threat?

From the 1990s onwards, the divestment of assets by many large chemical producers led to the break up of the single company supersites such as Wilton (UK), Marl and Leverkusen (Germany).

In order to survive the new reality, the 'Chemical Park' or 'Chemical Cluster' concept was established, with a number of operators on a site, sharing common infrastructure as well as a range of shared services.

New purpose-built parks have also been established, such as Jurong Island in Singapore, with over 94 multinational firms now present.

The concept is undoubtedly a good one. In principle, costs should be lower, as infrastructure and services costs can be shared between many parties and many suppliers/consumers are on the same site, reducing logistics costs. Permit applications for new plants are more straightforward as chemical production activity is already present at the site. Finally, the environmental issues related to plant closure should be simplified, due to the on-going industrial activity at the site

My personal experience is that whilst the concept may indeed be a very good one, participating companies need to weigh up very carefully the pros and cons for their own situation. Issues such as competitiveness of services, cost of and quality of infrastructure, flexibility of choice are very important - otherwise you may end up paying for some things you don't need and find yourself facing sharply rising future costs if the infrastructure quality is poor.

Also, in these challenging times, it is very important to consider what happens if other participating companies leave the cluster. As an example, Wilton in the UK, has suffered a number of recent plant closure announcements, with Dow Chemical, Croda, Invista and Artenius all annoucing closures.

Such a situation can increase costs and risks for the companies left behind and can, in the worst case, bring into question the viability of the entire site, unless positive action is taken to address the issues.

In balance, my view is that chemical parks are a good thing. Provided that the chemical park's strategy is consistent to the individual company operating strategy and all issues and threats have been considered and addressed, the positives do outweigh the negatives.