BP to invest £500m in Grangemouth and Hull

09 November 1998 13:38  [Source: ICIS news]

LONDON (CNI)--BP is to invest £500m ($831m) in new plants at its Grangemouth, Scotland and Hull, northeast England sites, the company announced Monday.

An existing ethylene pipeline from Grangemouth to Teesside will be extended by 151km to Hull, and ethylene manufacturing at Grangemouth will be increased to over 1m tonne/year. BP will also build a new 110 000 tonne/year ethanol plant at Grangemouth and, as revealed exclusively by CNI earlier Monday, a vinyl acetate monomer (VAM) plant and a ethyl acetate plant at Hull.

BP said the investment, to be completed by 2002, will enable both the Hull and Grangemouth sites to benefit from close integration with North Sea feedstocks, new technologies and low-cost on-site power generation. The UK government has recently approved construction of a combined heat and power (CHP) plant at the Grangemouth site, and this was an important factor in BP's investment decision.

Construction work on the new plants and the pipeline, together with investment in two additional plants at Grangemouth announced earlier this year, will create up to 2200 jobs at Grangemouth and 900 jobs at Hull between 1998 and 2002. In addition, 225 new chemicals industry jobs will be created at the Hull and Grangemouth sites.

BP is expanding its KG ethylene cracker at Grangemouth by 270 000 tonne/year. The expansion is the second since the plant came onstream in 1993, and will coincide with the availability of new feedstocks from the Central Graben Area of the North Sea from around 2000. Together with the recently completed 50 000 tonne/year expansion of the neighbouring G4 cracker, the KG expansion will take Grangemouth's total ethylene capacity to over 1m tonne/year. The ethanol plant is scheduled for completion in 2001, and work will begin immediately.

Work will begin immediately on the CHP plant, with commissioning due in 2000. The plant, to be built by IVO of Finland and Mitsubishi of Japan, will generate 230 tonne/hour of steam and 130MW, principally for on-site consumption.

BP is already building a 300 000 tonne/year linear low density polyethylene (lldPE) plant and a 250 000 tonne/year polypropylene (PP) plant at Grangemouth. The lldPE facility is due to be completed in 2000 while the PP plant, owned by the BP/Elf-Atochem joint venture, Appryl, is scheduled for completion in 1999.

The new ethyl acetate plant at Hull will be based on BP's proprietary 'direct method', which does not require ethanol as a raw material. It will replace output at Hull from BP's ethanol-based ethyl acetate plant. The resulting reduced ethanol requirement at Hull will enable BP to exit its 150 000 tonne/year ethanol plant at Baglan Bay.

BP said the eventual cessation of VAM and ethanol production at Baglan Bay will result in 150 permanent job losses at the site early in the next century. The closure of the Baglan Bay VAM plant is planned to coincide with the start-up of the new VAM plant at Hull.

Availability of ethylene from the extended ethylene pipeline, combined with acetic acid from BP's Hull plant, "will enhance options" for the Hull site. BP produces 700 000 tonne/year acetic acid at Hull, and this is currently being expanded to 750 000 tonne/year.

Bryan Sanderson, BP Chemicals chief executive said the investments will increase mid-cycle earnings by £85m/year, mainly from reduced production and logistics costs. "It will demonstrate that the northeast UK is one of the most attractive chemicals manufacturing locations in Europe and, indeed, the world."

BP has been developing a blueprint to increase the competitiveness of its chemicals business in Europe since 1990. Over the period 1990 to 1997, chemicals assets with a combined capacity of 1.75m tonne/year have been closed or sold because they were either uncompetitive or inconsistent with long-term strategy.

The Grangemouth site is adjacent to BP's refinery and the terminal of BP's Forties Pipeline System, which provide access to a variety of liquid and gas feedstocks. The Hull facility is linked by pipeline to North Sea methane for acetic acid production and utilities supply.

By: Anna Williams
+44 208 652 3214

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