US Gulf Coast cracker projects move forward

22 July 2013 21:44 Source:ICIS News

US Gulf Coast cracker projects move forwardBy Joseph Chang

NEW YORK (ICIS)--Many of the planned new US cracker projects are moving forward, and are on track for completion by 2017, according to companies and a major engineering and construction firm.

“We are optimistic that at least six, if not all seven announced new crackers will be built, generally within the 2017 timeframe as a goal,” said Richard Meserole, vice president, construction, for Fluor’s Energy & Chemicals Group.

“Dow Chemical is progressing quickly and is already in the engineering, procurement and construction (EPC) phase, while other companies are also moving forward well,” he added.

US-based engineering and construction firm Fluor is the main contractor for the EPC phase of Dow’s ethane cracker in Freeport, Texas, and is also involved in the early stages of a number of the US Gulf Coast ethylene projects.

The company is also the lead contractor for the front-end engineering and design (FEED) phase for Sasol’s planned 1.5m tonne/year cracker in Lake Charles, Louisiana. Sasol plans to make a final investment decision (FID) in 2014 and expects to start operations in 2017.

There are seven major new cracker projects planned in the US – by Dow, Sasol, Chevron Phillips Chemical, ExxonMobil Chemical, Formosa Plastics, Occidental Chemical/Mexichem and Shell.

Six crackers are planned to be built on the US Gulf Coast, while Shell plans to build in Monaca, Pennsylvania, near the Marcellus shale gas formation in the northeast US.

“Speed to market is very important to get ahead of the competition, especially for C2 [ethylene] and derivatives, which are commodity chemicals,” said Fluor’s Meserole.

Resource constraints could arise with multiple players building projects, he noted.

“But we are confident we can attract the right labour required to advance these projects,” Meserole said.

Key to many of these projects is off-site modularization – assembling equipment at an off-site location and then shipping it to the site.

“All these projects have a modularisation component. We have shipyards in the Philippines, Mexico and Canada where we can perform a good segment of the work,” said Meserole.

Project updates

Dow completed the FEED phase of its Freeport, Texas, cracker project in June and is now onto the EPC phase while in the process of securing air permits.

The company has already committed to ordering certain long lead-time equipment items and more will follow in the coming weeks, said Ron Huijsmans, Dow’s US Gulf Coast investments program manager.

“Plans to construct a new, 1.5m tonne/year ethylene facility at Freeport are progressing in alignment with previously announced targets, with expected start-up in 2017,” said Huijsmans.

“Detailed engineering, equipment procurement and site development for the facility has commenced in alignment with company targets,” he added.

Long lead-time equipment items typically include compressors and reactors, according to Fluor’s Merseole.

Dow is also in the process of securing an air permit from the Environmental Protection Agency (EPA) for the project. On 20 June, the EPA notified Dow that its application for a Greenhouse Gas (GHG) Prevention of Significant Deterioration (PSD) air permit for the project was incomplete.

“A response to the EPA regarding the Greenhouse Gas permit application was submitted in mid-July 2013, and the permitting process is being managed with the diligence it deserves,” said Huijsmans.

Securing air permits is one of the major steps in progressing new petrochemical projects.

“Generally speaking, once you receive an air permit, you can start construction,” said Fluor’s Meserole.

Chevron Phillips Chemical received its PSD air permit on 17 January 2013 for its planned cracker in Cedar Bayou, Texas.

The company completed the FEED stage in the second quarter and is in the “final approval steps of our project execution process”, said Melanie Samuelson, spokesperson for Chevron Phillips Chemical.

“We are on track to build a world-scale 1.5m tonne/year ethane cracker and two polyethylene [PE] units – each with a capacity of 500,000 tonnes/year – along the US Gulf Coast as part of our USGC Petrochemicals Project. The estimated completion date for the USGC Petrochemicals Project is 2017,” said Samuelson.

The final investment decision (FID) is expected later this year, and construction is expected to start in 2014, she added.

ExxonMobil Chemical is awaiting a final air permit after receiving notice of a draft PSD air permit from the EPA on 3 June 2013. It has also received a draft permit from the Texas Commission on Environmental Quality (TCEQ).

“We are required to obtain permits from both the US EPA and the TCEQ in order to build our expansion project, and we working our way through that process,” said Margaret Ross, spokesperson at ExxonMobil Chemical.

“Our planning basis is late 2016 start-up, pending completion of the required governmental reviews and approvals,” she added.

ExxonMobil Chemical is planning a 1.5m tonne/year ethane cracker at Baytown, Texas, along with two 650,000 tonne/year PE units nearby at Mont Belvieu, Texas.

The company will make a final investment decision following completion of the permit reviews and approval, said Ross.

Environmental groups Environmental Integrity Project, the Sierra Club and Air Alliance Houston have opposed the air permit application by ExxonMobil.

As part of the state permit review process, “an administrative hearing by the Texas State Office of Administrative Hearings (SOAH) was held on 8 July in Baytown, which evaluated parties who want to participate”, ExxonMobil’s Ross noted.

“The administrative hearing allowed all involved to finalise the schedule to complete the permitting process,” she added.

Another hearing on the merits of the case by the SOAH will take place from 1-4 October 2013, according to a court document detailing the schedule.

The decision from the SOAH is expected in January, with the formal decision from the TCEQ by early February, according to the document.

Formosa Plastics received a notice from the EPA of an incomplete PSD air permit application on 9 April 2013 for its planned 1.2m tonne/year cracker in Point Comfort, Texas, and 300,000 tonne/year low density PE (LDPE) plant at the site.

The company would not comment on any update.

Occidental Chemical submitted a PSD air permit application with the EPA on 21 December 2012 for its planned 544,000 tonne/year joint venture cracker with Mexichem at Ingleside, Texas.

The company did not respond to requests for comments on the status of this application or the progress of the project.

Most companies that operate major petrochemical facilities “are fairly adept” at securing permits, said Fluor’s Meserole.

“They have to be confident that they will get the permits to be considering making these huge investments,” he added.

Among the companies building new crackers, “Dow obviously has a huge head start on the competition,” noted Meserole.

While Dow has not received a final PSD permit, it is the only company that confirmed it is in the EPC stage of its project.

The stages of building a new project are generally the feasibility study, FEED (front-end engineering and design), FID (final investment decision) and EPC (engineering, procurement and construction).

However, the FID can sometimes come during the EPC stage. And the permitting process can also take place during the FEED and EPC stages, noted Fluor’s Meserole.

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
Braskem 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

By Joseph Chang