INSIGHT: First wave of US crackers kick off construction

01 September 2014 15:30 Source:ICIS News

By Joseph Chang

NEW YORK (ICIS)--The first wave of new US crackers backed by the shale gas boom is kicking off with four out the 11 planned cracker already under construction. Two others have secured some of the necessary permits, awaiting others.

Together, these six crackers are scheduled to start up in 2017, and represent a 30% increase in existing US ethylene capacity. On a wider basis, there are a total of 11 planned new crackers in the US and seven expansions, which amount to 53% of existing capacity.

Crackers under construction include those by Chevron Phillips, Dow, ExxonMobil, and Occidental Chemical/Mexichem. Companies that have secured some permits include Formosa and Sasol.

On 22 August, ExxonMobil held a ceremony at the site of its planned new 1.5m tonne/year cracker in Baytown, Texas, which will feed two new 650,000 tonne/year polyethylene (PE) units 13 miles (21km) away at Mont Belvieu, Texas. It actually broke ground in June.

The investment will be the largest ever made in the US for ExxonMobil Chemical. “We’ve designed this plant to be the most competitive petrochemical plant in the world,” said president Steve Pryor.

The plants will be built within the fencelines of its existing sites with no increase in the permitted emission limits, a feat to be accomplished with state-of-the-art technology, said Pryor. It will also be the company’s largest PE supply point on the planet, said Woody Paul, manager of the Baytown Olefins Plant.

Other companies are making progress on the permitting side – the last regulatory step needed before construction.

On 6 August, Formosa received greenhouse gas (GHG) permits from the US Environmental Protection Agency (EPA) for the construction of its new cracker, low density PE (LDPE), and propane dehydrogenation (PDH) plants at Point Comfort, Texas.

The size of the cracker was disclosed at 1.59m tonnes/year, up from an earlier estimate of 1.0m tonnes/year. The downstream 568,000 tonne/year LDPE unit (up from a previous estimate of 300,000 tonnes/year) will be able to produce resin at different grades, including products that use vinyl acetate as a co-monomer.

Formosa is awaiting the issue of permits from the Texas Commission on Environmental Quality (TCEQ), and expects start-up in 2017.

And Sasol has secured air and water permits for its planned new cracker and derivatives complex in Lake Charles, Louisiana.

“The air and water permits for the ethane cracker and derivatives complex and the US gas-to-liquids (GTL) and chemical value adds facility have been issued,” said Sasol spokesman Alex Anderson on 25 August.

“Provided the wetlands permit is received in a timely manner, all commercial and engineering construction contracts are substantially completed and sufficient funding has been raised, we anticipate taking the final investment decision for the ethane cracker and derivatives complex later this year,” he added.

Sasol’s planned cracker is targeted for start-up in 2017, said Anderson.

Meanwhile, other non-cracker projects continue to fill the burgeoning US pipeline.

On 25 August, LyondellBasell announced it will develop a world-scale propylene oxide (PO) and tertiary butyl alcohol (TBA) plant on the US Gulf Coast.

Slated to start up in 2019, the unit will have capacity of over 400,000 tonnes/year of PO and over 900,000 tonnes/year of TBA and derivatives.

LyondellBasell plans to sell PO into the global market to meet growing demand for polyurethanes, and TBA and derivatives for use in high octane gasoline blending components as well as for synthetic rubber and lubricant additives production.

While we have not finalized the exact location of the plant, the abundant natural gas liquids associated with shale gas make the US Gulf Coast an advantaged feedstock region,” said Pat Quarles, senior vice president of Intermediates and Derivatives at LyondellBasell.

But it’s not only US petrochemical companies or those with assets in the US that want a piece of the country’s natural gas liquids (NGLs) bounty from shale gas.

Most recently, on 20 August, Reliance Industries announced plans to import 1.5m tonnes/year of ethane from a new terminal being built in the US for its crackers in India. Shipments are expected to begin in the fourth quarter of 2016.

On 14 August, SABIC announced plans to retrofit its cracker in Teesside, UK to crack NGLs by 2016, to take advantage of the North American shale gas boom.

On 7 August, Borealis announced a 10-year deal to import US ethane for its cracker in Stenungsund, Sweden.

And INEOS has plans well under way to import ethane from the US for its crackers in Grangemouth, UK and Rafnes, Norway.

These developments are worth watching, as these global projects will draw on the same ethane feedstock that US producers are counting on to be in abundant supply and at a cheap price.

US ethylene expansions based on shale gas


For a link to the map click here.

Additional reporting by Al Greenwood, Jessie Waldheim and Tom Brown

By Joseph Chang