18 October 2013 09:33 [Source: ICB]
Its five plants are all located in the southern US, which is beneficial to Ascend economically and logistically as a result of the close proximity to the Gulf of Mexico
Ascend Performance Materials views its planned propane dehydrogenation (PDH) plant not necessarily as about just propylene but also through the prism of the myriad products it can produce more effectively thanks to a more stable feedstock environment, an executive with the US-based producer said.
“For me, this is a tremendous example of how you could use shale gas to change the complete competitiveness of US-based chemicals,” said Thomas Verghese, vice president of Ascend’s chemicals division.
Verghese sees the advantage in chemicals, not LNG exports
As a private company, Ascend does not have to file public financial information about its assets or conduct quarterly earnings calls.
But Verghese and John Ferguson, global business director for the company’s chemicals division, gave a look inside the US producer during an interview with ICIS.
Ascend has come a long way since being at one time the nylon division of Monsanto.
The global chemical producer spun off the division in 1997 to form the company Solutia, which ran into bankruptcy issues in the 2000s.
It ended up selling the nylon division to private equity firm SK Capital in June 2009, who renamed it Ascend Performance Materials.
The former Monsanto division makes nylon 6,6 and a host of other chemicals, according to Verghese.
Headquartered in Houston, Texas, its five plants are all located in the southern US, which is beneficial to Ascend economically and logistically as a result of the close proximity to the Gulf of Mexico.
Ascend and guest operations at the site convert the hydrogen cyanide into other products on site – the dangerous chemical “is never shipped off site”, according to Verghese.
About 70-80% of the ACN Ascend produces is consumed internally, with the rest sold to customers, Ferguson said.
The ACN Ascend keeps is sent to Ascend’s Decatur, Alabama, plant – the only worldscale adiponitrile (ADN) plant in the world based on ACN, where it is be converted into ADN and then into hexamethylenediamine (HMD).
The HMD is transported to the company’s Pensacola, Florida, site, where it is combined with adipic acid to make nylon 6,6.
Ascend’s two other plants – located in Greenwood, South Carolina, and Foley, Alabama – get into how the nylon 6,6 is used in applications.
Along the chemical production chain, a host of co-products are created as well, including amines, nitriles, acids and esters, that have proven to be very profitable, Verghese said.
About 40% of Ascend’s total production is sold in North America, with Europe taking about 30%, Verghese said.
The US shale gas advantage has subsequently led to increased cracking of lighter feedstocks and an influx of cheap natural gas liquids (NGLs).
Such an environment has led to more volatility in the propylene market, but also an opportunity to use cheap propane to secure propylene.
“We insulate ourselves from raw material swings,” according to Verghese.
The decision to build a PDH plant “wasn’t driven by our [ACN] business. It was driven more by nylon and the other chemicals we sell”.
LNG NOT A GAME CHANGER
Separately, Verghese said US exports of liquefied natural gas (LNG) will not be a game changer in terms of natural gas prices, but the next wave of downstream investments could drive prices higher in the long term.
“To me it’s not about shale gas. It’s going to be the next wave of investments,” said Verghese.
“It’s cheaper to export a finished good than it is to export a base chemical, and particularly [natural] gas.”
Verghese said that, due to the expense of compressing, storing and shipping LNG, it takes a landed price of at least $12/MMBtu to make exports attractive enough for a serious shift toward them.
He does not see that upward price movement occurring in areas that are currently well under that level.
The move by some companies to get permits to export LNG from the US to non-free trade agreement (FTA) countries has led to a debate between companies that want to maximise the US shale gas advantage through exports of gas and those that would rather just export the products made from it.
Verghese said that it will not in fact be LNG exports that lead to any substantial market move for natural gas, but possibly the investments that will need to be made to make use of all the chemicals being produced from shale gas.
“I don’t see [LNG exports] as a game changer,” Verghese said.
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