09 March 2011 02:34 [Source: ICIS news]
HOUSTON (ICIS)--A deep and disciplined approach to the integration of chemical units with refineries is needed if the match-up is to succeed, ExxonMobil Chemicals president Stephen Pryor said on Tuesday.
"But capturing the benefits of downstream integration requires more than simply co-locating petrochemical and refining operations," Pryor told the annual five-day CERA conference in Houston.
There are many examples of companies that went that route and - after failing to generate attractive returns - gave up and exited or de-emphasised the chemical business, he said.
ExxonMobil has 90% of its petrochemical capacity integrated with refining or upstream gas processing, Pryor said.
Its integration model includes having the flexibility to select the feedstock that delivers the highest returns for the entire integrated complex, and being able to adjust processes and the product mix in real-time to sustain the optimal recipe.
That allows ExxonMobil to "extract value from every molecule", Pryor said.
The approach also targets the highest-value combination of fuels, lubes, commodity chemicals and specialty products, he said.
Three other factors in the model are cost savings through economies of scale; the best use of investment capital through joint planning and shared engineering, construction, and infrastructure; and a unified approach to staff development.
In the latter case, this means developing managers by rotating them between both the refining and chemicals parts of the company, to give them a perspective that discourages them from focusing solely on the success of an individual business unit.
Although ExxonMobil has been committed to its model for decades, it is still seeking - and finding - new opportunities to more closely integrate refining and chemicals, Pryor said.
That pursuit has generated a combined average return on capital employed for the refining and chemical businesses of 20% from 2000 through 2010, he said.
Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy
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