Shell to Close Ethylene Capacity at Wesseling

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.

Ineos Bio Waste to Ethanol Projects Gather Momentum

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.

UK Chemicals Exodus Underway?

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.

Weekly News Round Up

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.

Weekly News Round Up

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.

Ineos Studies Waste to Bioethanol Plant

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

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

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

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

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

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

Views from EPCA

The European Petrochemical Association (EPCA) meeting is taking place in Berlin this week. Delegates from many companies are taking part and sharing views on the issues affecting petrochemicals and the outlook for the future. Two subjects are dominating discussions. These are the fragility of the current recovery and the likely impact of new Middle East capacity. The consensus is emerging that conditions will remain difficult for some time. Tom Crotty, INEOS Polyolefins CEO, has shared his view that this recession cycle is likely to be U-shaped, rather than the hoped-for V-shaped cycle . There are a number of critical success factors for petrochemical producers; location, technology and scale of assets are very important. Integrated producers have an advantage over non-integrated producers and global reach is essential in order to flexibly supply the best markets. All of these factors undoubtedly give advantage. In addition to this, and reiterating the theme of sevaral recent blog posts, strong and flexible operational management will give the dexterity that is required to manage the peaks and troughs. One thing is sure, there will be many further changes to the manufacturing footprint as we move forward.

Lavéra Shut Down Due to Major Steam Leak

photo: La Provence /Naphthachimie

A major steam leak on Saturday 5th September has led to a total shutdown of all of the petrochemical plants at the Lavéra Site, near Marseille in the South of France.

This has affected plants owned by Ineos, Arkema and Naphthachimie (a Total/Ineos JV). Early reports indicate that these shutdowns are already impacting a number of markets, most notably for polypropylene.

It appears that a sudden and catastrophic failure of a 25 bar steam header caused the incident, which also led to a minor ethylene release from a nearby pipeline. Initial reports from the operator, Naphthachimie, suggest that the incident was caused by 'operational reasons' as they consider that the system was well maintained and regularly inspected. Some of the local unions have, however, expressed concern about the potential impacts of on-going cost cuts at the site, with reductions of 24% targeted by 2013.

Most importantly, no-one was hurt in this incident but, whatever the cause, such a major shutdown is very costly and a major concern issue for all impacted parties.