ConocoPhillips splitting in two, fate of plastics operations undecided
ConocoPhillips Co. is splitting itself into two independent companies, but just which one will oversee its plastics joint venture may not be decided for “several months.”
The Houston-based company announced its plan July 14 to spin off its downstream operations to create one firm overseeing refining and marketing and a separate firm covering exploration and production. The move will improve the company’s value, executives said, by allowing each business to further focus on its specific needs.
The proposal still must win federal regulator and shareholder approval, but CEO Jim Mulva said they expect to complete the work within the first half of 2012.
However, it is not certain yet what will happen to joint ventures, including Chevron Phillips Chemical Co. LP, owned with Chevron and which group will own ConocoPhillips stake.
“That [decision] will be made over the next several months,” Mulva said in a conference call with analysts.
Among Chevron Phillips Chemical Co. LLC’s holdings is Performance Pipe, a Plano, Texas-based polyethylene pipe extruder.
Performance Pipe ranked No. 7 on Plastics News’ recent survey of North American pipe, profile and tubing extruders, with estimated relevant sales of $400 million.
Chevron Phillips also makes polyethylene, polypropylene, polyphenylene sulfide and styrene-butadiene copolymer resins.
Bellingham, Wash., adopts ban on single-use plastic bags
Bellingham has become the 23rd community in the United States and second in the state of Washington to ban single-use disposable plastic bags at retailers.
The ban, which goes into effect July 11, 2012, also requires retailers to charge shoppers at least five cents for each paper bag used at checkout. However, restaurants will still be able to use plastic bags for take-out items. City officials estimate that approximately 22 million single-use plastic bags are currently used annually by people in the town 90 miles north of Seattle which has a population of 80,000.
Plastic bags used for bulk items, frozen foods, meats and fish, prepared foods, flowers and prescription medicines also are excluded from the ban. Newspaper, door-hanger bags and laundry-cleaning bags are also exempt from the ban, which was unanimously approved July 11.
The other city in Washington state with a plastic bag ban is Edmonds.
Bellingham is the ninth community in the U.S. to ban plastic bags this year. In addition to the bag bans in 23 U.S. communities, Washington, D.C., and Montgomery County, Maryland, have a 5-cent tax on plastic and paper bags at carryout.
Calif. Supreme Court upholds Manhattan Beach bag ban
Reversing a lower court ruling, the California Supreme Court has upheld a Manhattan Beach, Calif., ordinance that bans the use of plastic bags by local businesses.
The Save the Plastic Bag Coalition, a group of plastic bag manufacturers and distributors, sued to stop the law from going into effect, saying the Los Angeles area-city did not prepare an environmental impact report before enacting the law.
The Court of Appeals had sided with the coalition, but the Supreme Court overruled that decision with a July 14 unanimous ruling.
“Substantial evidence and common sense support the city’s determination that its ordinance would have no significant environmental effect,” Judge Carol Corrigan wrote in the 22-page ruling.
The law was passed in 2008 to ban the use of point-of-sale plastic carry-out bags.
Kraton forms JV with Formosa Petrochemical
Kraton Performance Polymers Inc. and Formosa Petrochemical Corp. are forming a joint venture to build a styrenic block copolymer plant in Mailiao, Taiwan.
The 30,000-metric-ton-per-year plant will cost $165 million to $200 million and be operational in the second half of 2013, according to a July 14 news release from Houston-based Kraton.
The plant will incorporate Kraton’s proprietary polymerization technology, and it will produce value-added polymer grades. Kraton will market all products made at the site.
Kevin Fogarty, Kraton’s president and CEO, said the 50-50 joint venture may be “the first step in a long-term relationship with FPCC,which may provide for future capacity expansions.”
PTT, Mitsubishi Chemical start bioplastic JV
Japan’s Mitsubishi Chemical Corp. and Thailand’s PTT Public Co. Ltd. are investing $233 million in a joint venture bioplastic production project, the companies said July 13.
The companies have been talking since 2009 about forming a joint venture to manufacture bio-based polybutylene succinate.
The 50-50 JV plant will be located in Rayong, Thailand, and production is scheduled to start in 2014.
China plant to use methanol-to-olefins technology
Wison (Nanjing) Clean Energy Co. Ltd. will use technology from Honeywell International’s UOP LLC unit to convert methanol from natural gas or coal into olefins.
Honeywell announced that it will provide technology licenses, basic engineering, catalysts, adsorbents, specialty equipment and technical services for the plant, which is scheduled to start up in 2013.
The plant, in Nanjing, China, will be one of the world’s first methanol-to-olefin production facilities. It is projected to produce 295,000 metric tons per year of ethylene and propylene for conversion to chemical products.
Wison (Nanjing) Clean Energy is fully owned by Shanghai-based Wison Group Holding Ltd.
UOP is based in Des Plaines, Ill., and is a unit of Morris Township, N.J.-based Honeywell.
India’s Proposed Plastics Processing Hub Expected to Help Increase Consumption of Polymers
The Adani Group’s (Ahmedabad, India) MundraPort and Special Economic Zone (MPSEZ) has made a proposal to set up a 200-acre plastics processing park at Mundra, India that will seek to attract investment of about R40 billion ($9 billion), according to senior officials of the industries ministry of the Indian state of Gujarat and the Adani Group.
The park is expected to attract makers of polyvinyl chloride (PVC) pipes, packaging materials and plastic furniture, among others. Pankaj Modi, COO of MPSEZ says the company has submitted a proposal to the Union and state governments for the plastics processing park project, which is still in the conceptual planning phase. India currently has more than 30,000 small, medium and large plastics processing units across the country and the park would act as a cluster.
MPSEZ offers the advantage of proximity to a port that can be used to import raw materials and export finished products. The investors could source raw materials, including PVC, polyethylene, polystyrene and polypropylene via the sea route from either domestic manufacturers, such as Reliance Industries, or import the products. Many potential investors have already expressed interest in setting up plastics processing facilities at the park, according to MPSEZ.
The park would help boost India’s plastics consumption, which at 6 kg per capita, is still very low. Consumption is expected to double in the next 3 to 5 years, however. India currently imports more than 1 million m.t./year of polymers. The country’s plastics industry generates revenues of about R850 billion/year. Reliance Industries is the India’s largest producer of polymers. Others include Indian Oil, Gail (India) and Haldia Petrochemicals.
SRF Invests in BOPP Plant in South Africa; Will Soon Complete HFC-134 a Unit in India
SRF (Gurgaon, India), a producer of refrigerants, engineering plastics and technical textile yarns, plans to invest about $70 million in a 30,000-m.t./year biaxially oriented polypropylene (BOPP) filmplant at a greenfield site in Durban, South Africa. The company is in the final stages of acquiring the land, says Prashant Mehra, v.p./marketing and strategic sourcing at SRF. The plant, due to begin production in the second quarter of 2013, will be SRF’s second packaging film plant outside India. Last October SRF’s board approved the construction of a 28,500-m.t./year biaxially oriented polyethylene terephthalate (BOPET) film plant in Bangladesh.
The new unit will mark SRF’s entry into BOPP film and forms part of a IR6.56 billion ($149.6million) investment approved by the company earlier this year. That expenditure also includes the construction of a plant to produce the ozone-friendly refrigerant HFC-134a. The company currently has two film plants in India, based at Indore and Kashipur, which have capacity to make 59,500 m.t./year of BOPET film.
SRF, the only Indian manufacturer of HFC-134a is building a 15,000-m.t./year plant at its chemical complex at Dahej, due on stream in January 2013. It will be the company’s second such facility. The existing unit, based at Bhiwadi, has capacity to produce 5,000 m./t./year. The Dahej unit will be back integrated to the manufacture of anhydrous hydrofluoric acid (HF), one of the key raw materials. It will be designed to produce 20,000 m.t./year of HF.
Mexichem and Pemex seek OK for USD 556 million vinyl chloride joint venture
Mexichem SAB de CV, Latin America’s largest producer of PVC pipe, said Wednesday it has asked Mexico’s antitrust authority to approve a $556 million vinyl chloride monomer-producing joint venture with state oil monopoly Petróleons Mexicanos (Pemex).
“We hope to have authorization for the deal by mid September,” Mexichem’s investor relations director Enrique Ortega Enrique Ortega told Plastics News.
The authority is the Federal Competition Commission (Comisión Federal de Competencia). Pemex made a similar announcement to Mexichem’s on Tuesday. Neither company has specified how much money each would put into the new company.
Ortega was reluctant to add anything to the official announcement, posted on the Mexican Stock Exchange’s Web site, for fear of jeopardizing the deal.But he did say that part of the investment would be for a new plant.
Mexichem, headquartered in the the municipality of Tlalnepantla, a few miles north of Mexico City, said in the official announcement that the plan is to produce 24,000 metric tons of VCM in the company’s first year of operation, 146,000 metric tons in the second year and 217,000 metric tons in the third.
“The vertical integration of the vinyl chain will allow us to compete in a global market and to exploit the advantages that this industry offers the country,” Ricardo Gutiérrez, chairman of Mexichem’s executive committee, said in the statement.
Pemex monopolizes crude oil and gas production in Mexico but not petrochemicals, an area in which its presence is increasing.
In March 2010, Brazilian petrochemicals giant Braskem SA and Mexico’s Grupo Idesa SA de CV formalized an agreement with Pemex subsidiary Pemex Gas y Petroquímica Básica to build a $2.5 billion petrochemical complex in Coatzacoalcos, Veracruz state, to include an ethylene cracker and three polymerization plants.
Pemex Gas y Petroquímica Básica will supply the cracker’s feedstock. The cracker alone will cost $1 billion.
In its stock exchange announcement, Mexichem said the new company would allow it to strengthen its competitive position in the production chain by reducing its reliance on raw material supplies from foreign competitors.
SKC Plans MajorPO and Derivatives Capacity Expansion; Aims to be Leading PO Producer in Asia
SKC (Seoul) is planning a major increase in capacity of its hydrogen peroxide-propylene oxide (HPPO) plant at Ulsan, Korea. SKC’s president Park Jang-suk said recently that the company will raise its combined propylene oxide (PO) capacity to 600,000 m.t./year by 2016, with the aim of becoming the leading PO producer in Asia.
The expansion will be carried out in stages starting with an addition of 30,000 m.t./year PO capacity at the HPPO plant, raising the total to 130,000 m.t./year of PO by the first half of 2012.SKC plans to start work on another revamp by end of next year, which will raise PO capacity by 70,000 m.t./year by end of 2012, giving SKC a total of 200,000 m.t./year of PO capacity, based on the HPPO process by 2013. The existing unit started production three years ago, using the Evonik Industries/Uhde HPPO technology. It was the first unit to commercialize the process.
SKC plans to construct another HPPO plant with a capacity of 200,000 m.t./year of PO by 2016. The projects will add to SKC’s existing 200,000 m.t./year PO plant at Ulsan, which uses the company’s own propylene oxide-styrene monomer (POSM) technology. The combined 600,000 m.t./year PO capacity will make SKC the leading producer in Asia by 2016, Park Jang-suk says.
The company is also planning a major expansion of polyols and propylene glycol (PG) capacity as well as additional system houses. SKC will double PG capacity to 200,000 m.t./year and raise polyols tonnage from the current 135,000 m.t./year to 400,000 m.t./year by end 2016.
The HPPO process will dominate PO production in the future, Park Jang-suk says. Conventional PO plants, mostly in China, are not environmentally-friendly, due to chlorine emission, while PO/SM plants may encounter “trouble with a fluctuating styrene monomer prices and high sewage costs.”
The HPPO plant sources its hydrogen peroxide (H2O2) from Evonik Degussa Peroxide Korea’s H2O2 plant at Ulsan. SKC acquired a 45% stake in Evonik Degussa Peroxide Korea, the biggest manufacturer of H2O2, last year.
SKC sources its propylene supplies from its Ulsan based cracker and fluid catalytic cracker, which have combined capacity for about 1 million m.t./year of propylene.
SKC to expand HPPO plant,set up 600,000 tons of propylene oxide (PO) capacity
SKC announced that it will set up production capacity of 600,000 tons of propylene oxide (PO) by expanding its hydrogen peroxide propylene oxide (HPPO) plant.
SKC plans to double production capacity ofthe HPPO plant from the current 100,000 tons to 200,000 tons by 2013 after completing the construction of an additional PO production capacity of 30,000 tons by H1-2012.
Bain Capital’s Styron Files for IPO
Styron today filed with U.S. regulators for a proposed initial public offering (IPO), seeking to raise as much as $400 million. The filing is under the company name Trinseo, which will be the name of the company by the end of this year. The number of shares to be offered, price range, and timing have not yet been determined. Styron is controlled by private-equity firm Bain Capital (Boston), which purchased it from Dow Chemical last year for $1.63 billion. Bain currently owns 92% of Styron, Dow has a 7% stake, and company management owns about 1%. The company plans to list as Trinseo on a U.S. stock exchange.
Styron product lines include styrene-butadiene latex, styrene-butadiene rubber, polycarbonate, acrylonitrile butadiene styrene/styrene acrylonitrile resins, expandable polystyrene, polystyrene and styrene monomer units. The company recorded a loss of $9.3 million on sales of about $1.54 billion in the first-quarter of this year, the regulatory filing says. High raw material prices, interest expenses and a charge related todebt refinancing contributed to the loss. The company will use net proceeds for debt repayment and general corporate purposes, Styron says. It had about $1.4 billion borrowed under a term loan and $85 million borrowed under a credit facility as of April 22, according to the regulatory filing.
Styron posted $5 billion sales in 2010, with net income of $56.7 million. Styrenics accounted for 38% of 2010 sales; styrene-butadiene latex, 30%; engineering plastics,21%; and synthetic rubber was 11%. A majority of sales are in Europe and the Middle East, which accounted for 56% of sales in 2010. Asia was 24% of 2010 sales; U.S. and Canada, 15%; and Latin America was 5%.
Styron says its growth strategy includes targeted capital investments in the most attractive part of its business as well as expansion of market share in emerging markets. The company recently announced plans for a new solution styrene butadiene rubber (SSBR) production line in Schkopau, Germany, that is expected to come on-line in 2012, and expansion of latex production capacity in Zhangjiagang, China, also expected on-line in 2012. The company says it will expand share in emerging markets and pursue acquisitions. “We believe that a long-term trend toward consolidation in our markets will continue, which given our scale and geographic reach, will create opportunities for our business,” Styron says.
Styron obtains 45%-50% of its raw materials from Dow, including benzene, ethylene, butadiene and bisphenol-A, according to the filing. Dow today supplies 100% of Styron’s benzene and ethylene under a 10-year contract. Pricing is tied to price indices for each region and includes large-buyer discounts. The company says it has the flexibility to buy 25% of its benzene from alternative sources. Styron says Dow is its largest butadiene supplier in Europe, but that it also has other supply sources. Butadiene supply in North America and Asia, apart from a transition period away from Dow in North America, is from third-party producers via supply contracts, Styron says.
Pricing for its key raw materials has been volatile, Styron notes in the filing. “However, we have contractual provisions in place intended to substantially reduce Styron’s exposure to such price volatility and protect Styron from extreme price increases in its key raw materials,” Stryon says.
Styron announced plans in April to change its name to Trinseo. Most operations currently use Styron and will be renamed Trinseo in the coming months, the company says.
The IPOs lead underwriters are DeutscheBank and Goldman Sachs.
La Seda Sells Portuguese PET Plant
La Sedade Barcelona has agreed to sell its Artenius Portugal polyethylene terephthalate (PET) resins plant to Control PE, SGPS, a unit of Imatosgil and Banco Espirito Santo (Lisbon). The divestment forms part of La Seda de Barcelona’s restructuring plan announced two years ago. The 70,000 m.t./year PET plant is based at Portalegre, Portugal and has not been operating since the end of 2010. It was originally a polyester fiber production facility, which was converted to make PET resins, using batch production technology.
Control PET SGPS will pay La Seda €5,6 million ($8 million) between 2011 and 2015, a price that may increase, according to Artenius Portugal’s performance, under the terms of the deal. The buyer plans to re-start the facility next month.
Indian Company Launches Huge PET Project in Egypt
An Indo-Egyptian joint venture, The Egyptian-Indian Polyester Co., is today launching a $160-million polyethylene terephthalate (PET) resin project in the private free zone area at Ain Sokhna, Egypt. The company, owned 70% by Dhunseri Petrochem & Tea Ltd., (Kolkata, India), 23% by Egyptian Holding Company for Chemicals (Echem, Cairo), and 7% by the engineering group Enppi (Cairo),will build a plant designed to produce 1,200 m.t./day of PET chips. Output will be used in the production of packaging, including bottles, food containers as well as containers for personal care products and cosmetics.
The ground breaking ceremony is being attended by Egypt’s Petroleum Minister Mohamed Abdel Moniem along with the governor of Suez and R. Swaminathan, India’s ambassador to Egypt. Production is expected to begin in December 2012. The plant will be the first of its kind in North Africa and one of the largest such units in the Mideast. The facility will meet Egypt’s domestic demand, currently covered by imports, and will facilitate exports of PET.
Gevo produces fully renewable and recyclable polyethylene terephthalate with Toray (29-6-2011)
Gevo Inc. has successfully produced fully renewable and recyclable polyethylene terephthalate (PET) with its potential customer, Toray Industries, Inc. (Toray). Toray is one of the world’s leading producers of fibers, plastics and chemicals, while Gevo is a leading renewable chemicals and advanced biofuels company. In April 2010, the two companies signed a non-binding letter of interest for the future supply of renewable paraxylene derived from Gevo’s isobutanol sometime in 2012 or thereafter.
Working directly with this important potential customer, Gevo employed prototypes of commercial operations from the petrochemical and refining industries to make paraxylene from isobutanol. This renewable paraxylene was sent to Toray for conversion into biobased PET articles. Toray employed its existing technology and new technology jointly developed with Gevo and used Gevo’s para-xylene and commercially available renewable mono ethylene glycol (MEG) to produce fully renewable PET (all of the carbon in this PET is renewable). The next step in this collaboration between Gevo and Toray is to move from lab-scale “proof of concept” to establishing commercial-scale operations. Gevo is currently working with partners to optimize the process technology needed to produce para-xylene from isobutanol at commercial-scale and competitive economics.
“We believe there is strong customer demand for fully renewable, non-petroleum derived PET and we are working to fill that demand as soon as possible. Last month, we disclosed that we had provided renewable para-xylene to international brand owners for evaluation and the production of a fully renewable bottle from PET,” said Christopher Ryan, Ph.D., President and COO of Gevo. “We are pleased to have validated this technology with Toray and look forward to building a market for fully renewable PET as soon as possible.” “Companies today are looking for ways to introduce new products and packaging that helps meet the growing consumer demand for environmentally friendly products while at the same time, contributing to the sustainability goals of their companies,” said Chiaki Tanaka, Executive Vice President and CTO of Toray. “Our partnership with Gevo and our internal progress to date suggest we are on track to help our customers fulfill these needs.”
Lotte Pakistan PTA mulls 1m tonnes new capacity by 2014
Lotte Pakistan PTA (LottePPTA) plans to triple its purified terephthalic acid (PTA) nameplate capacity to 1.5m tonnes/year by late 2014 to meet the growing domestic and regional demand, a company executive said on Thursday.
The company has a 500,000 tonne/year plant located at Port Qasim, 50 km (31 miles) outside the industrial port city of Karachi “The cost of expansion will be between $450m (€320m) to $500m,” said Asif Saad, CEO of Lotte PPTA, the only PTA manufacturer in the country.
“If it goes according to plan, it [the new capacity] should start up by the end of 2014,” Saad told ICIS in an email from Karachi.Lotte, the South Korean conglomerate, acquired the majority share holding in Pakistan PTA Limited (PPTA) in September 2009.The name of the company was subsequently changed to Lotte Pakistan PTA, according to company’s website.
According to the website, Lotte PPTA has made the single largest foreign direct investment to date of $490m in Pakistan’s petrochemical industry.
The PTA output from the company’s existing 500,000 tonne/year plant is sold in the domestic market. However, a small quantity is exported every year, mainly to the Middle East and India and occasionally to China, Saad said.
Pakistan, which has a large downstream textile sector along with a fast growing polyethylene terephthalate (PET) market, has an annual PTA consumption that is estimated at 650,000 tonnes, Saad said, adding that Lotte PPTA produces 500,000 tonnes/year, so the country has to import the balance to meet demand. Saad said Pakistan’s polyester market growth has been at 7-8% annually, a trend likely to continue in years ahead.
The PTA expansion plans run parallel to Byco Oil Pakistan Ltd’s (BOPL) construction of the country’s first aromatics facility, expected to come on line by the middle of 2013.
The aromatics facility will produce about 100,000 tonnes/year of benzene, 92,000 tonnes/year of paraxylene (PX), 80,000 tonnes/year of isomer-grade mixed xylene (MX) and 50,000 tonnes/year of orthoxylene (OX).
When asked if Lotte PPTA will be buying feedstock PX from Byco after the completion of its aromatics facility, Saad said: “It is too early to consider purchasing PX from Byco.”He said Lotte PPTA will be purchasing approximately 1m tonnesof feedstock PX after the start-up of its new capacity.
“This means [the] bulk of product [PX] will continue to be sourced from overseas, until such time that Lotte PPTA feels ready to put up its own PX plant in Pakistan. The company plans to use its footprint in Pakistan to become a regional petrochemical player,” Saad added.
Total To Acquire 60% Stake In SunPower
French oil major Total SA (TOT, FP.FR) said Thursday it plans to acquire a 60% stake in SunPowerCorp. (SPWRA, SPWRB), a deal that values the U.S.-based solar-panel maker at $2.3 billion.Total, which focuses on the exploration and production of oil and natural gas, said it would pay $23.25 for each Class A and Class B share it intends to acquire. The offer price presents a 46% premium over Wednesday’s closing price of SunPower’s Class A shares. The investment is worth about $1.37 billion.
Under the agreement, Total will provide SunPower with up to $1 billion of credit support over the next five years.
The deal signals growing confidence among conventional energy players that solar power is likely to become a viable energy source, despite its current small size. The global solar-panel market, worth about $71 billion in 2010, according to research firm Clean Edge, is widely expected to continue growing, driven by government policies favoring clean energy and lower manufacturing and development costs.
SunPower’s Class A shares were up 39% to $22.36 in after-hours trading and spurred a broad rally among other solar companies. Shares of Suntech Power Holdings Co. Ltd. (STP) were up 7% at $9.68 while First Solar Inc. (FSLR) shares were up 5.9% at $146.53 in after-hours trade. Total’s American depositary shares were recently down 13 cents at $63.67.
Total, which has had an active solar focus since 1983, decided to invest in SunPower after a two to three-year search “for a strategic partner in the solar business,” Philippe Boisseau, head of Total’s gas and power division, said in an interview. He added that solar power will become a crucial energy source in Europe and North America and that Total intends to become a global leader in the solar industry, in addition to its core oil and natural gas businesses.
“Solar will gradually take its share” of the world’s energy market, Boisseau said. “We want to be there when this happens.”
Total plans to keep SunPower’s management team in place and continue investing in the business, Boisseau said. He declined to provide further details.
Total’s acquisition of a majority stake in SunPower will allow the California company to “radically accelerate” its plans to expand manufacturing of solar panels and develop large solar farms, said SunPower Chief Executive Tom Werner. In addition to expanding its existing business, SunPower will work to commercialize thin-film solar-power technology that Total has developed and may use other materials made by Total in solar power generation, Werner said.
“This is a transformational investment…that will allow SunPower to accelerate its plan,”Werner said in an interview. “Post close, we’ll form a collaborative effort to focus activities on a joint roadmap.”
SunPower’s remaining shares will continue to trade, Werner said. Total will select six new members for SunPower’s board, adding to five existing board members, including Werner, who is chairman. Werner said he plans to keep his position at the company and that SunPower’s headquarters would remain in San Jose, Calif.
The boards of both companies have approved the transaction.
Werner would notsay how much SunPower would expand its operations over the next few years, but said that Total and
SunPower aim to be one of the world’s top three solar energy companies over the next five to 10 years.
SunPower was not among the world’s top 10 solar-panelsuppliers by market share, according to data from Navigant Consulting.
In February, SunPower reported 2010 net income of $179 million on revenue of $2.2 billion, up from a 2009 annual profit of $32.5 million on revenue of $1.5 billion. The company has continued to expand into the profitable solar-power generation business, while also continuing to manufacture solar panels in an increasingly cost-competitive market. SunPower also has started leasing its solar panels to residential and commercial customers in the U.S., a more downstream business that includes customer management and project finance.
SunPower said its deal with Total would likely lower its cost of capital and increase its access to uncollateralized debt financing. Some analysts have expressed concern about SunPower’s cost structure relative to industry peers.
Total will release its first-quarter earnings Friday at 0600GMT.
Sasol Completes Talisman Shale Deal
South African petrochemicals group Sasol Ltd. (SSL-Analyst Report)has closed its previously announced deal with Canadian energy explorerTalisman Energy Inc (TLM-Analyst Report)to buy a 50% stake in the latter’s prolific Montney Basin shale natural gas assets in western Alberta and north-eastern British Columbia for approximately C$1,050 million (R7,413 million).
The transaction –which was declared in March and the second between the two companies in recent times –was completed following regulatory and shareholder approvals. Per the agreement, Johannesburg-based Sasol and Alberta-based Talisman will split ownership in 57,000 acres of Talisman’s Cypress A properties that are estimated to contain 11.2 trillion cubic feet of natural gas.
In the first strategic partnership –signed in December 2010 and concluded in March –Sasol entered the North American shale gas market by agreeing to pay C$1,050 million to acquire a 50% interest in another of Talisman’s Montney shale properties, Farrell Creek, which holds an estimated 9.6 trillion cubic feet of gas.
The co-operation with Talisman is part of Sasol’s previously laid out plans for a significant outlay in upstream shale gas resources associated with its gas-to-liquids (“GTL’) projects in North America apart from unlocking additional value in the world-class Montney shale play.
In recent times, Sasol –a pioneer in the area of synthetic petroleum alternatives –has continuously focused on the commercialization of its GTL technology by constructing plants in gas-rich regions of the world that will strengthen its position in the industry in the coming years.
The company, which constructed the world’s first commercial-sized GTL plant in Qatar, plans to leverage the opportunity to arbitrage between gas and oil prices. Under normal circumstances, the ratio of the price of oil (measured in $ per barrel) to the price of natural gas (in $ per million British thermal units) fluctuates between 6 and 12. However, in recent times, this has decoupled to an unprecedented degree, up at around 20.
With gas prices remaining at depressed levels and thereby diverging significantly from high oil prices, Sasol is looking to utilize the spread by using its GTL technology that is expected to be more profitable than the company’s traditional business of producing motor fuels from coal.Even though Sasol has a Zacks #4 Rank (Sell rating) in the short run, we are Neutral on the ADRs in the longer term.
Industry vows fight on styrene designation
The U.S. styrene industry will “contest vigorously” the U.S. Department of Health and Human Services’ listing of styrene in its 12th Report on Carcinogens, Jack Snyder, executive director of the Styrene Information and Research Center, said in a statement.
“The designation is completely unjustified by the latest science and resulted from a flawed process that focuses on only those data that support a cancer concern,” Snyder said.The comments come in response to Friday’s announcement that styrene is one of eight substances newly listed in the report.
On May 26, the Styrene Information and Research Center notified the Health and Human Services legal counsel of its intent to seek a preliminary injunction if styrene was listed.
Styrene, used in the building of fiberglass boats, is listed as “reasonably anticipated to be a human carcinogen based on limited evidence of carcinogenicity from studies in humans, sufficient evidence of carcinogenicity from studies in experimental animals and supporting dataon mechanisms of carcinogenesis.”
Snyder said research from European Union regulators determined that styrene does not represent a human cancer concern. EU scientists reviewed the full styrene database, weighing all of the available data in reaching their conclusion, he added.
“It is important to note that the reports do not present quantitative assessments of carcinogenic risk. … Listing in the report does not establish that such substances present a risk to persons in their daily lives,” he said. “In plain language, this statement means that [the National Toxicology Program] has not concluded that styrene presents an actual human cancer risk or a risk from any of the thousands of products made with styrene.”
A coalition of groups, including theNational Marine Manufacturers Association, had fought against including styrene in the report, saying additional reviews were needed using a “rigorous unbiased transparent process.”“We are disappointed that HHS has made this decision based solely on its own limited and misguided studies,” NMMA president Thom Dammrich said when the report was released. “[The National Toxicology Program’s] deficient scientific process, combined with their limited breadth of study in the face of a number of outside studies that were not evaluated demands that the listing be carefully examined.
Enterprise to Build Sixth NGL Fractionator at Mont Belvieu, TX
Enterprise Products Partners says it will build a sixth natural gas liquids (NGL) fractionator at its Mont Belvieu, TX facility that will increase capacity by 75,000 barrels per day (bpd), to more than 450,000 bpd of NGLs at the site. The new fractionation unit will accommodate continued growth of liquids-rich natural gas production from the Eagle Ford Shale basin in South Texas. Start-up is expected in early 2013.
Enterprise’s net fractionation capacity will increase to more than 780,000 bpd when the sixth unit comes onstream. Enterprise recently announced plans to bring onstream a fifth NGL fractionator at the site later this year. The company currently has four NGL fractionators operating at Mont Belvieu with nameplate capacity to produce 305,000 bpd; its most recent fractionator, with the capacity to produce 75,000 bpd, came onstream in late November of last year.
“As with our fifth Mont Belvieu fractionator, which is currently under construction and scheduled to be completed in the fourth quarter of 2011, the sixth unit is expected to be fully contracted when it begins service,” says Jim Teague, executive v.p. and COO of Enterprise. “From a demand perspective, a persistent and significant differential between natural gas and crude oil prices continue to favor NGLs over heavier crude oil derivatives as feedstocks for the petrochemical industry.”
Petrochemical facilities have responded with announcements of planned new construction or modifications to make greater use of NGL feedstocks, Teague says. “In the last 12 months alone, approximately 100,000 bpd to 150,000 bpd of heavy cracker feedstocks have been replaced with light-end feedstocks,” he adds.
Enterprise’s additional fractionation capacity provides a new source of NGL supplies on the U.S. Gulf Coast, helping to position U.S. petrochemical companies as one of the lowest cost producers of ethylene globally.
Based on public drilling and production data, activity in the Eagle Ford Shale continues at a brisk pace. About 170 rigs are currently working in the play and more than 900 wells are on production with about 1,400 additional wells in various stages of drilling and completion. Current production from the play is estimated at approximately 850 million cubic feet per day (MMcf/d) of natural gas and 140,000 bpd of crude oil and condensate.
Evonik Sells Acrylate-Based Additives and Plastisols Business to Kaneka
Evonik Industries has signed a contract to sell its acrylate-based plastic additives and plastisols business to Kaneka Corporation. The business includes two production plants at Wesseling, Germany. The 30 employees at the Wesseling site will be offered the option to stay on with the business, Evonik says. The transaction is subject to approval by the anti-trust authorities. Financial details were not disclosed.
The additives are used as processing aids or impact modifiers in polyvinyl chloride (PVC) and in engineering plastics. Plastisols are used in the automotive industry as a PVC substitute for underbody protection and as sealants.
Abu Dhabi’s Takreer Selects UOP Process for Big Propane Dehydrogenation Plant
UOP has been selected by the Abu Dhabi Oil Refining Co. (Takreer) to provide technology for a new propane dehydrogenation (PDH) plant in Abu Dhabi. The new facility will use UOP’s C3 Oleflex technology to convert propane to propylene. It will be designed to produce 500,000 m.t./year of propylene.
UOP will provide engineering design, technology licensing, catalysts, adsorbents and equipment for the project, which is expected to start up by the end of 2013. “This is the world’s first PDH unit to be implemented within a refinery, a significant milestone that indicates refineries are moving toward production of higher-value petrochemical products to achieve the most value from their operations,” says Pete Piotrowski, senior v.p. and general manager/process technology and equipment at UOP.
The facility will help meet the world’s growing demand for propylene and it will help strengthen Takreer’s business, says Jasem Al Sayegh, general manager at Takreer. UOP says that the Oleflex process provides the lowest cash cost of production and the highest return on investment compared with competing technologies.
UOP was recently selected by Takreer to provide technology for its carbon black and delayed coker project, using the Uninfining process at Ruwais, Abu Dhabi. The latest contract builds on Takreer’s earlier awards to UOP for the supply of technology and engineering services for the expansion of the Ruwais refinery.In addition to propylene, the refinery will produce unleaded gasoline, naphtha, liquefied petroleum gas, aviation turbine fuel, kerosene, gas oil, bunker fuel and other hydrocarbon derivatives. The refinery is expected to be completed in 2014.
ExxonMobil Delays Start-up of Singapore Cracker Until 2012
ExxonMobil is delaying the start-up of its 1 million m.t./year ethylene plant on Jurong Island, Singapore into next year from the end of 2011 due to longer-than-expected safety checks needed for its petrochemical projects, local reports say quoting an ExxonMobil official. Georges Grosliere said that the cracker will be the last of the projects to be started up within the new complex and the start up will take place sometime in 2012.
The cracker is the core unit of ExxonMobil’s second petrochemical project in Singapore that includes associated derivative units for the production of polyethylene (PE), polypropylene (PP) and specialty elastomers, as well as an aromatics extraction unit, and an oxo alcohol expansion. The anticipated mechanical completion and start-up activities for the new facilities were due to be phased beginning in late 2010 through 2011. ExxonMobil says that major polymer units, such as the specialty elastomers, the PE, and PP plants have been mechanically completed and their commissioning has started. Commissioning of the downstream units will occur in phases through 2011 and 2012, the company says.
Canadian grocery chains to require clamshell suppliers to shift to PET
Canada’s top five grocery chains will require its suppliers to shift to PET for clamshell thermoformed packaging in a move designed to simplify the product stream and increase recycling.
Wal-Mart Canada Corp. officials are also talking to suppliers across national boundaries for the initiative, and expect it will expand as part of the increased emphasis on sustainability for the world’s biggest retailer.
“Right now, there are 5.8 billion pounds of [thermoformed] packaging going into landfills in North America each year. Our goal is to facilitate the recycling of that material,” said Guy McGuffin, vice president of sustainable packaging for Wal-Mart Canada of Mississauga, Ontario, during the Wal-Mart Sustainable Packaging Conference June 22 as part of PackEx Toronto.
“The idea is to move away from materials that are not easily recycled and into materials that are more easily recycled. If we work together, we believe we can recover that 5.8 billion pounds, which would be a fantastic result.”
PET is already widely recycled, with a recycling stream already in place for bottles. Pushing for PET and eliminating, as much as possible, “look-alike” plastics which complicate recovery —and discourage both municipal recycling collections and recyclers from taking clamshell containers —the retailers believe they will open the floodgates for more thermoformed PET collection and reuse.
Other materials may have their use, but the retailers believe PET can provide an adequate substitute. In those cases when PET is not viable, it will encourage polystyrene. Polylactic acid containers have their own “green” credentials, officials said, but using it in thermoforming just complicates an already overly-complex set of obstacles to recycling, so Wal-Mart and other stores preferred PET as the industry standard.
In addition, retailers are working with the Adhesive and Sealant Council and the Association of Postconsumer Plastics Recyclers on a set of guidelines for labeling adhesives that will eliminate contamination from glues and labels.
The Retail Council of CanadianGrocers will require all labels to meet APR-certified adhesives by Jan. 1, said Christian Shelepuk, waste reduction program manager for Wal-Mart Canada.
Canada’s biggest grocery store chain, Loblaws Inc. of Brampton, Ontario, first contacted the National Association for PET Container Resources in Sonoma, Calif., in summer 2010, wanting to eliminate unrecyclable packaging, said Mike Schedler, technical director for NAPCOR.
When it was told that its 1,400 stores still would not create enough critical mass to bring PET clamshell recycling into the mainstream, it began working with other Canadian firms —Wal-Mart, Safeway Canada, Metro and Sobeys —in a cooperative effort to bring about the change.
The companies have coordinated the project through the Retail Council of Canada’s grocery group, working with recyclers and recycled PET users to identify and solve issues that would derail its efforts.
Ontario’s extended producer responsibility regulations, which give companies more responsibility for their waste, is helping prod the move, Schedler said.
“There are a lot more market drivers in Canada than in the U.S. that are very visible and pushing this forward,” he said. “The amount of dollars they would have to pay for their unrecycled material would not be insignificant.”
Early on, the group came together around a bale of used thermoformed PET containers and got a quick lesson on one of the primary problems, said Leon Hall, manager of sustainable packaging for Wal-Mart Canada.
When they cut apart the bindings holding the containers together, the bale held its shape. Glue used on the labels was strong enough to hold the compacted plastics together —and contaminate the entire bale, Hall said. Even if separated, the glue would gum up machinery, and current washing methods used to separate labels from bottles in PET bottle recycling did not work with the adhesives used in thermoforming.
In November, the retailers began working with the Adhesive and Sealant Council to tackle the glue problem. The groups decided the bestsolution would be to adapt to sealants that already work on PET bottles, said Matt Croson, president and CEO of the Bethesda, Md.-based ASC.
Adhesive makers must register their products with the APR by July 15. APR will then test and certify those adhesives as working with existing cleaning systems already in place for PET bottles. By Jan. 1, the retailer’s group will require its suppliers to use thermoform packaging that meets APR guidelines.
“This one’s not complicated,” Hall said. “Choose materials thatcan be recycled and while you’re at it, fix the adhesive, because that [label] doesn’t need to stay on there forever.”
It is not just the adhesives getting extra attention, however. During testing, Wal-Mart discovered that the Chilean-based supplier of blueberries was using a fluorescent blue additive in its PET packaging to make the berries look better, he said. That produced a recycled flake that did not meet standards. Wal-Mart is now working on global specifications for those and other additives which contaminate the stream.
With those changes, recyclers should be able to loop thermoformed PET intoits existing bottle feedstock.
“We have the capability to manage thermoforms if they’re mixed in with the bottle flow,” said Ryan L’Abbé, vice president and general manager of private label water bottler Ice River Springs Water Company Inc.’s PET recycling unit, Blue Mountain Plastics Division.
Ice River, based in Feversham, Ontario, opened its own PET recycling plant in Shelbourne, Ontario. It collects PET from municipal recycling programs in Ontario, Michigan and New York and sorts, cleans and grinds to flake. It then uses the flake in its in-house PET extrusion, pre-forms and blow molding.
“We need more recycled content,” L’Abbé said. “We want to put (PET) into a product that’s recycled again and again and again. We can really consume a lot of the thermoforms that are in the market currently, and that’s a big benefit.”
The project will also benefit more than bottlers or retailers. Shelepuk said Wal-Mart estimates the recycled content of mixed plastics now in thermoformed packaging is worth $120 a ton, but that should climb to $600 per ton as part of the PET stream. That kind of money at high volume will pay for the recycling process, he said.
In addition, the companies estimate that PET packaging recycling across North American could create more than 20,000 jobs.
“As an industry,” Hall said, “we can make this happen.”
Plastics News staff reporter Mike Verespej contributed to this report.
Berry Plastics buying Rexam closure business for $360 million
Berry Plastics Corp. has confirmed a deal to buy Rexam plc’s beverage and specialty closures business for $360 million in cash. The deal is scheduled to close in thethird quarter.
Rexam SBC makes injection and compression molded specialty and beverage closures, jars, and other plastic packaging products for the food, beverage, industrial and household chemical, automotive and beauty end markets.
The business had 2010 sales of about $500 million and employs 1,500. It has eight manufacturing facilities —seven in the United States and one in Brazil. It also has joint venture plants in Malaysia and Mexico, and a technical center in Perrysburg, Ohio. Rexam purchased the business from Owens-Illinois Inc. in 2007.
Curt Begle, president of Berry’s Rigid Closed Top Division, said in a June 20 news release that the Rexam business will complement Berry’s operations, and will establish Berry “in markets where we do not have a significant presence today.”
As of Dec. 31, the business had gross assets of £280 million and liabilities of £50 million.
The sale, which is part of Rexam’s planned reorganization of its plastic packaging operation, will produce an exceptional charge of around £25 million, of which £15 million will be cash costs. The net proceeds will be used to reduce debt, said the company.
The deal had been rumored last week, and the London business newspaper City A.M. had reported June 17 that London-based Rexam was in exclusive negotiations with Evansville, Ind.-based Berry.
Rexam officials had confirmed in December that they were in talks to sell the closures unit. At its annual meeting in May, Rexam announced that for accounting purposes, it was reclassifying the largely North American closures unit as “discontinued operations.”
In 2008, Berry and Rexam were embroiled in a legal dispute over Berry’s hiring of former Rexam closures official John Whitehead; the case was settled out of court.
Vivanta moving US PVC plant to India
Vivanta Enterprises Ltd., a New Delhi-based manufacturer and importer of chemicals, is setting up a plant to make suspension-grade PVC in the western Indian state of Rajasthan.
“The new plant is strategically located near Udaipur, Rajasthan and about 160 kilometers from Kandla port,” said Dharam Goel, the company’s managing director.
Vivanta is spending about $25 million to buy, move and set up the plant, a former Georgia Gulf Corp. plant in Oklahoma City that uses Ineos technology.
“This type of plants are not available in the India,” Goel said. Moreover, the cost is almost one-fourth of the cost of a new plant, Goel said.
The plant would likely to be operational in the middle of 2012.
“Currently, the PVC plant is getting dismantled at Oklahoma and it [will take] almost 10 months getting the plant dismantled, shipped, installation and operational in India. We would likely to commence production around middle of 2012,” Goel said.
Vivanta Enterprises isa major importer of synthetic rubber and polymers in India. The group has graduated from trading business and ventured into processing of polyethylene wax, polypropylene compounding, and reprocessed rubber and polymers by setting a factory in Delhi.
According to the company, there is a big demand-supply gap for PVC in India, which imports about 1 million metric tons of the resin annually.
Fluor Corp awarded contract by Dow for Freeport propane dehydrogenation expansion project
Fluor Corp. has been awarded a contract by The Dow Chemical Company to provide basic engineering and design services on its propane dehydrogenation (PDH) expansion project in Freeport, Texas. The undisclosed contract value will be booked in Q2-2011.
“We are pleased to have been selected by Dow as their partner for this important expansion project,” said Peter Oosterveer, president of Fluor’s Energy & Chemicals Group. “We are also encouraged to see a renewed focus on growth and expansion in the chemical industry in the United States.” The basic engineering will be executed in Fluor’s Houston, Texas office with support from its office in Manila, Philippines. Once construction is complete, the facility will produce polymer-grade propylene.
Celanese doubles vinyl acetate/ethylene (VAE) capacity at Nanjing integrated chemical complex
Celanese Corporation has doubled the capacity of its vinyl acetate/ethylene (VAE) unit at its integrated chemical complex in Nanjing, China. The expanded unit, which builds on Celanese’s advanced VAE technology, started production in Q2-2011, and is expected to meet the increased global demand for innovative specialty solutions in vinyl-based emulsions. Vinyl-based emulsion solutions span a broad range of end-use applications, including low VOC (volatile organic compounds) odor paints and coatings with Celanese’s EcoVAE(R) binder, specialty adhesives, and building and construction applications.
“This geographic expansion demonstrates the strength and vision of Celanese as a global emulsions leader applying regional resources to continually innovate and improve our technology in emerging economies to meet our customer’s business needs,” said Phil McDivitt, general manager, Celanese Emulsion Polymers. Celanese opened its integrated chemical complex in Nanjing, China, in September 2007. The complex, located at the Nanjing Chemical Industrial Park, brings world-class scale to one site for the production of acetic acid, vinyl acetate monomer, acetic anhydride, emulsion polymers, Celstran(R) long fiber-reinforced thermoplastic (LFRT) and GUR(R) ultra-high molecular weight polyethylene (UHMW-PE).
China Jilin inks JV deal with Evonik to build 300,000 tpa propylene oxide plant
Germany’s Evonik has signed a deal with officials from Jilin Province for a non-exclusive license to build and operate a 300,000 tpa propylene oxide plant in Jilin Province, Northeastern China, as per Platts. The plant will be run by a yet-to-be-established joint venture between Jilin Shenhua and Jilin North Chemical Company. It would take an estimated 2-3 years for a propylene oxide plant to be build after construction starts. Evonik will license the HPPO-process in which propylene is oxidized with hydrogen peroxide to produce propylene oxide.
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