LyondellBasell decided to greenlight its $2.4bn propylene oxide/tertiary butyl alcohol (PO/TBA) project in Channelview, Texas as it sought to leverage proprietary technology and regional feedstock advantage.
“This asset will provide the lowest manufacturing cost in the [PO] industry,” said Jim Guilfoyle, senior vice president - Global Intermediates & Derivatives, Global Supply Chain at LyondellBasell, in an interview with ICIS. “Our strategy is to focus on growing the I&D (Intermediates & Derivatives) business segment,” he added.
The project, the largest single investment in LyondellBasell’s history, will have capacities of 470,000 tonnes/year of PO and 1m tonnes/year of TBA. The TBA will be converted to methyl tertiary butyl ether (MTBE) and ethyl tertiary butyl ether (ETBE) at its Bayport Complex near Pasadena, Texas. Construction is expected to begin in the second half of 2018 with completion scheduled for mid-2021.
“Our investment in this plant combines the best of both worlds – our leading PO/TBA process technology with proximity to low-cost feedstocks, which gives LyondellBasell a competitive advantage in the global marketplace for these products,” said LyondellBasell CEO Bob Patel in a statement. On the feedstock front, propylene supply should be “adequate” with a number of propane dehydrogenation (PDH) projects in North America, he said.
LyondellBasell also has metathesis capability in Channelview, Texas, which converts ethylene to propylene, while on-purpose propylene production via PDH could also be considered in the future, he noted. The other key feedstock, natural gas liquid (NGL) butane, should continue to be abundant with US shale gas production, said Guilfoyle.
LyondellBasell sees a greater feedstock advantage in the PO/TBA process versus the PO/SM (PO/styrene monomer) process as the latter is based on benzene as well as ethylene. Benzene is produced from crude oil rather than cheaper natural gas, and the US is a major importer of the aromatic. Plus, the US exports around 30% of styrene production, making it more challenging to grow regional capacity without a feedstock advantage, he noted.
STEADY DEMAND GROWTH
On the demand side, the executive sees steady growth in polyurethanes (PU), the key end market for PO.
“The outlook is very stable with growth at 3-4%/year – at or above GDP. We are confident in continuing growth and we have strategic partnerships [in PU],” said Guilfoyle. In Asia, he sees faster PU demand growth of around 5-6%/year. LyondellBasell plans to sell PO and derivatives from the new plant to customers in the US and abroad, with a “significant portion” of the PO likely going to derivatives it produces such as propylene glycol (PG) or P-series glycol ethers. Some merchant PO would also be exported, primarily to Asia, he said.
The new LyondellBasell PO/TBA project will be the largest of its kind in the world with 470,000 tonnes/year of PO capacity. Other PO/TBA plants have PO capacities ranging from 200,000-350,000 tonnes/year, said Guilfoyle.
TBA AND ETHERS
While the investment is driven primarily by PO dynamics, TBA and its derivatives are also important products, he noted. Dehydrated TBA in the form of high purity isobutylene will be used in fuel additives and lubricants – a smaller but growing market.
Demand for the octane boosting ethers MTBE and ETBE are mostly driven by the gasoline market.
“Even with the electrification of vehicles, our view is that gasoline demand will continue to grow in the near future. And the ethers represent about 2% of the gasoline consumed around the globe, so we believe we have plenty of ability to place ethers into the pool,” said Guilfoyle.
In addition, regulations on Tier 3 gasoline with lower sulphur content and greater fuel efficiencies in the internal combustion engine require greater use of octane boosting ethers, he noted.
LyondellBasell’s existing PO capacity is around 2m tonnes/year, while ethers capacity is about 2.8m tonnes/year. It is the second largest producer of PO behind Dow, and the largest producer of ethers, according to the company. The company has about 550,000 tonnes/year of PO capacity at Channelview, Texas, where it uses the PO/SM process, and around 600,000 tonnes/year at Bayport, Texas via PO/TBA, according to ICIS plants & projects.
LyondellBasell said the $2.4bn investment falls under its $5bn investment programme in the US Gulf Coast, where other large petrochemical producers have also announced significant expansion projects to take advantage of cheap gas-based feedstocks.
All of its Texas crackers – in La Porte, Channelview and Corpus Christi – have had investments to expand capacity. The firm completed in January a 363,000 tonne/year ethylene expansion at its Corpus Christi cracker, which brought the unit’s total capacity to 1.1m tonnes/year.
Construction of a polyethylene (PE) plant at LyondellBasell’s La Porte site is underway, with a completion date expected for 2019. It would double the site’s annual PE capacity to 900,000 tonnes/year.
Additional reporting by Jonathan Lopez in London