US Eastman to source propylene from 750,000 tonne/year project

23 May 2012 17:00  [Source: ICIS news]

HOUSTON (ICIS)--A 750,000 tonne/year propane dehydrogenation (PDH) project by a yet-to-be announced supplier will provide propylene to US-based Eastman Chemical, a company executive said on Wednesday.

Eastman has a 10-year contract with the producer, who will start up the PDH project in 2015, said executive vice president Ronald Lindsay during the Goldman Sachs Basic Materials Conference in New York.

Eastman had said during its first-quarter earnings conference call on 27 April that it had signed a contract to source propylene from a PDH plant.

Lindsay said the 180,000 tonne/year offtake agreement would result in $30m (€24m) in annual cost savings and operating earnings.

The location of the PDH unit was not divulged. The supplier is in offtake discussions with other companies, Lindsay said.

Eastman had also considered an olefins conversion unit (OCU) for its site in Longview, Texas, as well as restarting an idled cracker at Longview, as a means of providing propane, Lindsay said.

However, the OCU and the cracker restart would each cost about $100m, while the PDH project by another producer would require no capital expenditures by Eastman.

The PDH agreement will provide allow Eastman to preserve upfront capital, which it can use for other projects, Lindsay said.

The company has taken several steps to increase its olefins supplies, including debottlenecks and the restart of a Longview cracker in 2010.

The actions are expected to improve earnings by $80m/year by 2016, Lindsey said.

($1 = €0.79)

By: Brian Ford
+1 713 525 2653

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