Shintech cracker brings total new US units to 11

15 April 2014 22:51 Source:ICIS News

Focus story by Joseph Chang

NEW YORK (ICIS)--Shintech’s permit application to build a 500,000 tonne/year cracker in Louisiana brings the total number of new crackers planned in the US to 11.

The new plants, along with brownfield expansions, represents a 52% increase in existing US ethylene capacity, according to an ICIS analysis.

Companies planning to build new crackers in the US to take advantage of shale gas feedstock include Chevron Phillips Chemical, ExxonMobil Chemical, Dow Chemical, Sasol, Formosa Plastics (two crackers), Occidental Chemical/Mexichem, Axiall/Lotte, Shell, Odebrecht and now Shintech.

Shintech aims to “assure stable supply” of feedstock to manufacture polyvinyl chloride (PVC), its parent company, Japan’s Shin-Etsu, said.

The permit application was submitted to the Louisiana Department of Environment Quality.

The application shows Plaquemine as a possible site, even though Shin-Etsu said it has not decided on either the location or the timing of the project.

Of the planned 11 new crackers, nine have disclosed capacities. Shell and Odebrecht are the exceptions, although Braskem CEO Carlos Fadigas had indicated in an interview with ICIS that the Odebrecht cracker could be on the scale of the Braskem Idesa cracker in Mexico at 1.05m tonnes/year. Braskem would operate the Odebrecht cracker.

Brazil-based industrial conglomerate Odebrecht is a major and controlling shareholder in Brazil’s Braskem.

The 11 new crackers would have estimated ethylene capacity of around 12.5m tonnes/year, according to the ICIS analysis. Expansions at existing facilities are expected to add another 1.5m tonnes/year of capacity, resulting in a combined addition of 14.0m tonnes/year to total about 41.16m tonnes/year of US ethylene capacity.

Nine of the 11 crackers would be built on the US Gulf Coast, with just Shell and Odebrecht planning projects in the US northeast at Monaca, Pennsylvania, and Wood County, West Virginia, respectively.

Four of the 11 cracker projects are still in feasibility stage, including the latest announced by Shintech. A number of companies are still waiting to secure permits to start construction. Dow expects to gain approval in the third quarter of 2014.

In the race to build, Chevron Phillips Chemical has taken the lead with its cracker in Cedar Bayou, Texas. The company broke ground on 2 April and expects start-up in 2017. It is the only US cracker currently under construction.

Most of the new crackers are scheduled to start up in 2017, although this could easily push out to 2018 as engineering and construction (E&C) resources are constrained by a massive build-out in the US – not just crackers but methanol, fertilizer, propane dehydrogenation (PDH) plants and liquefied natural gas (LNG) export terminals.

The US cracker and petrochemical project boom is the stuff cycles are made of, and points to coming overcapacity in the local market, although much of the product is targeted for export.

In the meantime, the US petrochemical sector is expected to enjoy strong profitability in the next few years on low-cost feedstocks, prior to the wave of capacity from the new crackers.

“With stronger NGL [natural gas liquids] production in North America, we expect US chemical producers to remain advantaged for at least the next 2-3 years. We see continued growth in ethane supply outstripping demand in the years prior to the start-up of the new ethylene crackers,” said Charles Neivert, analyst with investment bank Cowen & Company.

“Many new capacity projects have been announced but they are still in the early stages and we do not expect these additions to have any impact until 2017 as new supplies come to the market. The degree of impact is still up for debate since US capacity is simply substituting for capacity growth which would have otherwise been seen in Asia,” he added.

Additional reporting from Bill Bowen

PLANNED NEW US CRACKERS
Company Capacity Location Start-up
Chevron Phillips Chemical 1.5m tonnes Cedar Bayou, Texas mid-late 2017
ExxonMobil Chemical 1.5m tonnes Baytown, Texas Late 2016
Dow Chemical 1.5m tonnes Freeport, Texas 2017
Sasol 1.5m tonnes Lake Charles, Louisiana 2017
Formosa Plastics 1.0m tonnes Point Comfort, Texas Q1 2017
Formosa Plastics 1.2m tonnes Louisiana NA
Occidental Chemical/Mexichem 544,000 tonnes Ingleside, Texas 2017
Axiall/Lotte 1.0m tonnes Louisiana 2018
Shintech 500,000 tonnes Louisiana NA
Shell World-scale Monaca, Pennsylvania NA
Odebrecht World-scale Wood County, West Virginia NA
Source: Companies, ICIS analysis

By Joseph Chang