Producers likely to take ‘condo cracker’ approach to US shale

28 March 2012 21:10  [Source: ICIS news]

HOUSTON (ICIS)--Petrochemical producers more are likely to band together to build ethane “condo crackers” and derivatives plants to take advantage of US shale gas reserves than to go it alone, the chief executive of LyondellBasell said on Wednesday.

Several companies have announced they are studying potential cracker projects in the US, but it is unlikely that most of the projects will advance, said CEO Jim Gallogly at the IHS Chemical World Petrochemical Conference in Houston.

There has been little talk of partnerships on such projects in the US so far, he said, but added it makes economic sense to do so.

He compared the situation with the petrochemical plant construction boom that occurred more than 10 years ago in the Middle East.

“Capital costs, just like in the Middle East, will rise as more projects go forward from the drawing board to field execution,” he said.
“We believe it will be far more difficult than anyone realises. You should anticipate project delays.”

Companies “may begin then to partner up to what we call condo crackers, something our company has indicated we would be willing to participate in, where multiple partners build a single large facility,” he said.

Shell has picked a site near Monaca, Pennsylvania, for a possible cracker.

In addition, Shell is considering building polyethylene (PE) and monoethylene glycol (MEG) units at the site, the company said.

Shell has not provided capacities or start-up times.

Shell has said it is still years away from making a final decision on funding a new cracker.

The advent of shale gas development in the US has led to several companies considering or announcing plans for new crackers.

Several companies have said they are planning to build a cracker or are at least considering such projects in the US.

Chevron Phillips Chemical plans to build a 1.5m tonne/year ethane cracker and two PE plants, each with a capacity of 500,000 tonnes/year.

Formosa Plastics plans to build an 800,000 tonne/year olefins cracker, a propane dehydrogenation (PDH) unit and a low-density polyethylene plant at its Port Comfort, Texas, site, with a start up as early as 2016.

Dow Chemical's new ethane cracker will be a brownfield project it will likely build in Texas, with start up in 2016-2017, the company said.

Renewable Manufacturing Gateway (RMG) and Aither Chemicals signed a letter of engagement to collaborate on financing and building a petrochemical complex using Aither's ethane-cracking technology.

In addition, Thailand-based polyester producer Indorama and a partner are in the early stages of studying the feasibility of a new US cracker.

Sasol has started a feasibility study for a cracker and derivatives project at Lake Charles, Louisiana.

Mexico-based Mexichem said it was in early talks to take an ownership stake in a new ethylene plant in the US, it said.

SABIC said it would consider investing in a US cracker either with a partner or by itself.

Braskem also said it was considering a greenfield investment in an ethylene and PE plant in the US.

By: Brian Ford
+1 713 525 2653

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