Market intelligence: Total to crack more gas for petrochemicals

31 May 2013 09:36  [Source: ICB]

The France-based oil and petrochemical player will shift its feedstock slate towards using more gas as it expands capacity in the US and shuts down plants in Europe

Europe's petrochemical producers are likely to do everything they can over the next few years to drive production costs down and, where realistic, to weed out uncompetitive capacity.

A number of players - Switzerland-headquartered INEOS, Italy-based Versalis and Austria's Borealis - are looking seriously at importing ethane from the US to feed crackers in Europe. And those with North American assets have been realigning crackers to process more ethane feedstock - and planning new facilities.

 BASF's site in Freeport, Texas, US, uses petrochemicals produced by its Port Arthur cracker joint venture with Total

Copyright: Rex Features

Producers generally are assessing feedstock options and the ways they can reduce their reliance on expensive, oil-related naphtha.

A few years ago, the focus was on broadening the cracker feedstock slate and on heavier refinery streams, such as hydrowax, but the oil/gas cost environment has changed markedly.

Plants in Europe can crack a wide range of feedstocks, from ethane, propane and refinery gases to liquefied petroleum gas (LPG), naphtha, gas oil and hydrowax, which in many ways is an advantage.

But to a great extent it depends on where a cracker is located and its proximity to a refinery.

The more upstream-integrated players, particularly, look to capitalise on refinery integration to help reduce feedstock costs and to optimise co-product output.

Cracker co-products include propylene, C4s such as butadiene (BD), and aromatics such as benzene, toluene and paraxylene (PX).

The decisions by Total to invest in modernising its refining and petrochemical platform in Antwerp, Belgium, and to crack more ethane in the cracker at Port Arthur, Texas, US, have to be seen in this light.

Total is downsizing but upgrading its Antwerp petrochemical and polyolefins operations. At the same time, it is adding a new refinery upgrading complex.

Antwerp is Total's largest refinery and the second largest in Europe with 31 plants and a production capacity of 360,000 bbl/day, or 18m tonnes/year. The Fina Antwerp Olefins (FAO) plant complex is the second largest in Europe for the production of base chemicals, including ethylene, propylene and benzene, Total says on its website. Total agreed with ExxonMobil in December last year to take full control of their 65:35 joint venture.

A solvent de-asphalting unit and a mild hydrocracking unit will be built at the refinery for start-up in 2016. They will help the refinery upgrade heavy fuel oil into desulphurised diesel and ultra low sulphur heating oil. A gasoline desulphurisation unit at the refinery was commissioned in April 2005.

The details of Total's petrochemical investments in Antwerp are less clear and the company had not responded to ICIS questions by the time of writing.

The company says it will build a new plant to convert "low-value refinery fuel gases into low-cost petrochemical feedstock, replacing oil-based naphtha". The unit, due for start-up in early 2017, is expected to enhance the integration between Total's refining and petrochemical operations at the site.

Alongside the investment, however, the company has decided to close a small, currently idled cracker in Antwerp, believed to be the 250,000 tonne/year NC1 naphtha cracker. It will also close the oldest high density polyethylene (HDPE) line at the site, at the end of 2014, once investment in other polyethylene (PE) lines has been completed.

The plants earmarked for closure "are no longer competitive in the world economic environment", Total said.

Total Petrochemicals Antwerpen is the polymers producer downstream from the olefins venture. Its total HDPE production capacity is 510,000 tonnes/year and the company uses various catalyst systems for the production of a large number of PE grades. Most of its feedstock comes from the FAO plants.

In nearby Feluy, Total runs the largest polypropylene (PP) production site in Europe, with a capacity of 930,000 tonnes/year. The site also has 170,000 tonnes/year of HDPE capacity and 160,000 tonnes/year of polystyrene (PS) capacity, according to the Total website.

The oil and petrochemical major said on 23 May that it had also made a major shift away from naphtha cracking at its large joint-venture plant in Port Arthur, Texas. The cracker is a 40:60 joint venture with Germany's BASF. It is also thinking about building a new gas cracker at the site to capitalise on shale gas dynamics.

The existing facility was commissioned in 2001 to crack liquids - needed for co-product propylene as well as ethylene - but the 1m tonne/year plant now has 80% gas cracking capability. Since early April, at its nine furnaces, it has been able to crack 40% ethane and 40% propane and butane with feedstock supplied through the Mont Belvieu natural gas liquids (NGL) hub in Texas.

A 10th ethane cracking furnace being built is due on stream at the site in the second quarter of 2014. It will raise total cracker capacity by 15%.

"We adapted the steam cracker to give it flexibility and [to] maintain its competitiveness," said Patrick Pouyanne, president of Total Refining & Chemicals.

"It can now use as a feedstock ethane, which costs around $30/barrel of oil equivalent (boe) - versus around $100/boe for naphtha - and liquefied petroleum gases such as butane and propane, which are also cheaper."

Total is earmarking its share of ethylene produced by the joint venture with BASF for its Bayport PE plant and its share of propylene for its La Porte PP plant. Both facilities are located in Texas.

By: Nigel Davis
+44 20 8652 3214

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