Solutia Postpones Massive Phenol Plant As Market Weakens

1999/05/02

By Alex Tullo

Solutia Inc. will delay the construction of its previously announced 300-million-pound phenol plant in Pensacola, Fla. The company says the phenol market will be overcapacitated in early 2001, when the unit was previously scheduled to come on stream.

Solutia was set to break ground for the project during the first quarter. Now the company says it will begin work next year and complete the line no earlier than 2002. JLM Industries Inc. will stay on as a co-investor and receive 125 million pounds of capacity from the plant.

Because Phenolchemie Inc., Shell Chemical Company, Aristech Chemical Corporation and other companies are set to add about 1.75 billion pounds of new capacity in roughly a year, Solutia predicts that prices for phenol will plummet.

"We look at making phenol as being in a back integrated position: making versus buying," says Charles Weidhas, director of Solutia's intermediates operations. "Under normal buying conditions, this project makes a whole lot of sense for us, but it doesn't make sense if we can buy phenol near cash costs," he explains.

Solutia's phenol technology is a proprietary route that uses benzene and nitrous oxide (N2O), a by-product of downstream adipic acid production, to make phenol and nitrogen. "What we're doing is getting value out of a gas [N2O] we are currently abating," Mr. Weidhas says. Fluor Daniel has already conducted some of the pre-engineering for the project.

When the plant comes on stream, it may produce more than its 300-million-pound nameplate, depending on the amount of N2O the Pensacola, Fla., facility produces by making adipic acid.

Solutia says its plan to build a KA oil unit is proceeding as scheduled. Last August, Solutia awarded a contract to Kvaerner Process for the development and front-end engineering of the plant, which will produce cyclohexanone and cyclohexanol by selective vapor-phase hydrogenation.