NOVA pushes back PE plant decision on glut of new US projects

18 December 2013 21:37  [Source: ICIS news]

HOUSTON (ICIS)--NOVA Chemicals will revisit the possibility of building a new polyethylene (PE) plant near the end of this decade because the company already has expansion projects it can execute and because of a glut of new projects being undertaken, which has caused construction costs to increase, the company's chief executive said on Wednesday.

NOVA is considering a second Advanced Sclairtech PE plant that it could build in Ontario, the US Gulf Coast or elsewhere in the world.

Initially, the company said it could make a decision on the project by the end of this year.

However, NOVA has instead decided to make a decision on the project near the end of this decade, as part of the final phase of its NOVA 2020 strategy.

NOVA made this decision partly because it is already executing more modest expansion plans during the second phase of the 2020 strategy in 2014-2018, said Randy Woelfel, CEO.

This includes expanding the ethylene capacity at the company's cracker in Corunna, Ontario, by about 20%. The cracker has a capacity of 1.8bn lb/year (817,000 tonnes/year), the company said.

In addition, the company plans to pursue a debottlenecking project at its Moore low-density polyethylene (LDPE) line in southern Ontario and to retrofit the Moore high-density polyethylene (HDPE) line.

Also, the company has started construction on a 1bn lb/year linear low density polyethylene (LLDPE) expansion project in Joffre, Alberta.

However, if NOVA decides to take on a second PE plant, it would do so in the midst of a chemical plant boom in North America, the likes of which have not been seen in decades.

Petrochemical producers are adding new capacity to take advantage of low-cost feedstock, made available by the advent of shale gas and tight oil.

"It is clearly taxing the resource base to support that type of growth, whether it is looking for skilled workforce or the capacity of engineering companies, the capacity of critical equipment suppliers," Woelfel said.

Ultimately, this adds up to more time and money, he said. "Work is taking longer to progress. We're certainly seeing significant inflation in project costs."

The Federal Reserve actually noticed the same trend. In its most recent Beige Book, the Fed noted that refiners and petrochemical companies are having a difficult time finding engineers and construction labourers for current and proposed plant expansions.

Shell called off its $12.5bn (€9.13bn) gas-to-liquids (GTL) project in Louisiana because it had become too expensive.

Cost inflation led NOVA to push the possible second PE plant towards the end of the decade, Woelfel said. "We felt it was a smarter answer for NOVA to do the easily manageable work in our middle phase and our final world-scale expansion a bit later."

Companies have announced numerous expansion projects in the US as well as Canada.

Enterprise plans to start production at its first propane dehydrogenation (PDH) facility in the third quarter of 2015. It may build a second PDH plant, which could start up in the first half of 2017.

In addition to Enterprise, Dow Chemical announced plans to build two PDH plants. Formosa, PetroLogistics and Ascend Performance Materials also announced plans for plants. Williams plans to build one in Canada.

Several companies are also expanding ethylene capacity in the US and Canada. The following lists the projects.


NORTH AMERICA ETHYLENE EXPANSIONS BASED ON SHALE GAS

Company

Project

Capacity

Location

Start-up

Sasol

New cracker

1.5m tonnes

Lake Charles, Louisiana

2017

Occidental Chemical/Mexichem

New cracker

544,000 tonnes

Ingleside, Texas

Feb 2017

ExxonMobil Chemical

New cracker

1.5m tonnes

Baytown, Texas

Late 2016

Chevron Phillips Chemical

New cracker

1.5m tonnes

Cedar Bayou, Texas

mid-late 2017

Dow Chemical

New cracker

1.5m tonnes

Freeport, Texas

2017

Shell

New cracker

World-scale

Monaca, Pennsylvania

2019-2020*

Formosa Plastics

New cracker

1.2m tonnes

Point Comfort, Texas

2017

Williams

Expansion

272,158 tonnes

Geismar, Louisiana

Q4 2013**

INEOS

Debottleneck

115,000 tonnes

Chocolate Bayou, Texas

end 2013

Westlake Chemical

Expansion

113,399 tonnes

Lake Charles, Louisiana

2014

Westlake Chemical

Expansion

82,000 tonnes

Calvert City, Kentucky

Q2 2014

LyondellBasell

Expansion

363,000 tonnes

La Porte, Texas

mid-2014

LyondellBasell

Expansion

113,000 tonnes

Channelview, Texas

2015

LyondellBasell

Expansion

363,000 tonnes

Corpus Christi, Texas

Late 2015

BASF Fina Petrochemicals

Expansion

NA

Port Arthur, Texas

2014

Considered expansions

LyondellBasell

New cracker

World-scale

US

NA

Hanwha Chemical

New cracker

World-scale

US

NA

Axiall

New cracker

World-scale

US

NA

Indorama Ventures

New cracker

1.3m tonnes

US

NA

SABIC

New cracker

World-scale

US

NA

Odebrecht

New cracker

World-scale

US

NA

PTT Global Chemical

New cracker

World-scale

US

NA

Aither Chemicals

New cracker

272,000 tonnes

US Northeast

2016

NOVA Chemicals

Expansion

NA

Corunna, Ontario, Canada

NA

* ICIS estimate
** Timing uncertain after explosion on 13 June 2013


($1= €0.73)


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By: Al Greenwood
+1 713 525 2645



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