Petrochemical and Chemical

 Update

 

October 2004

 

Table of Contents

 

Petrochemical and Chemical
 

 

Ethanol Projects
 

 

 

GAIL to Expand Petrochemical Complex at Pata in Uttar Pradesh

State-run GAIL (India) Ltd announced it would invest Rs 650 crore on expansion of its petrochemical complex at Pata in Uttar Pradesh to achieve economies of scale besides strengthening its overseas portfolio.

"We would be investing Rs 650 crore in the next 30 months for expansion of our petrochemical plant to reduce average cost of production due to economy's of scale," GAIL Director Finance J K Jain told at the companies 22nd Annual General Meeting.

GAIL is also exploring business opportunities in the petrochemical business in Kerala and Eastern India. GAIL is looking at Kerala for investment in projects like R-LNG marketing and distribution through pipelines from the proposed LNG terminal at Kochi, compressed natural gas (CNG) and piped natural gas (PNG) network and a petrochemical plant project in Kasargod district.
 

The Kasargod plant could be useful in meeting the growing demand for polymers in the southern region. The company plans to expand its petrochemical plant in two phases.
 

In the first phase, it has de-bottlenecked its petrochemical plant to raise polyethylene production capacity from 160,000 tonnes per annum (TPA) to 2,10,0000 TPA.
 

In the second stage of expansion, the ethylene capacity will be increased from 3,000,000 TPA to 4,40,000 TPA by increasing the number of cracker furnaces from four to five and the HDPE capacity from 1,00,000 TPA to 2,00,000 TPA.
 

GAIL Ltd is exploring business opportunities in the Central Asian Republics, Turkey and some African countries.
 

Gail has taken equity stake in Fayum Gas and Shell CNG in Egypt and also received the first dividend for 2003-04 from Fayum Gas. It has recently bought 15 percent stake in NatGas in Egypt. At present, the company is targeting Myanmar, Bangladesh, Iran, Egypt and the Philippines as possible destinations for investment.
 

Technip Recently Awarded Projects in China

Technip recently was awarded two petrochemical projects in China: one for the modernization of 6 cracking furnaces for PetroChina Jilin Petrochemical Company and the other one for the construction of 3 cracking furnaces for PetroChina LiaoYang Petrochemical Company.

For both projects, Technip's engineering center based in Zoetermeer (Netherlands) will provide engineering package and review/advisory services for detailed engineering and construction/start-up phase and also the Technip's GK6 technology.
 

The GK6 technology improves the ethylene production of the furnaces by 35 percent compared to the original capacity. This increase in capacity is achieved by replacing the existing coil. Moreover, this technology allows the furnace to operate on a range of feedstocks from naphtha to heavy oils, with high selectivity and long on-stream time. To-date, Technip's GK6 technology has been applied for the modernization of over 100 furnaces in the last seven years.
 

At present, China has seven ethylene plants in operation. All the original furnaces of six of the seven plants have been modernized using Technip's GK6 technology. Thanks to these revampings, the country's overall ethylene capacity based on the GK6 technology now stands at 3 million tons per year.
 

A major player in the field of ethylene, Technip's share of the global market for cracking furnaces is becoming more and more significant. Technip is also one of the only world-class groups capable of taking on complete responsibility — from conceptual design to turnkey design and construction — of ethylene plants based on its proprietary technology.
 

With a workforce of about 19,000 persons, Technip ranks among the top five corporations in the field of oil, gas and petrochemical engineering, construction and services. Headquartered in Paris, the Group is listed in New York and Paris. The Group's main engineering and business centers are located in France, Italy, Germany, the UK, Norway, Finland, the Netherlands, the United States, Brazil, Abu-Dhabi, China, India, Malaysia and Australia. The Group has high-quality industrial and construction facilities in France, Brazil, the UK, the US, Finland and Angola as well as a world-class fleet of offshore construction vessels.
 

Vinythai PCL in Thailand Expanding its Plastic Resin Production Facilities
Vinythai PCL (VNT.TH), a Thai affiliate of Belgian chemical conglomerate Solvay S.A. (SOLB.BT), is considering expanding its plastic resin production facilities to meet rising product demand in the region.
 

We're finalizing the feasibility study on the project (to expand the facilities) and we hope to make a decision before the end of the year," Managing Director Vincent De Cuyper told Dow Jones Newswires recently.
 

Since Vinythai's finances are improving, it can start thinking about increasing its capacity for the future, De Cuyper said. However, he declined to disclose the size of the planned investment.
 

The expansion plan aims to fulfill growing demand locally and abroad for polyvinyl chloride, or PVC, De Cuyper said.
 

PVC is widely used in automotive parts, construction materials, consumer goods and packaging.
 

If Thailand's second-largest PVC maker makes a decision this year to proceed with the plan, the new plant will begin operations at the end of 2006 at the earliest, De Cuyper said.

The plant will take about two years to be completed.
 

"Even though the new plant will be ready a little late (in reaping the peak cycle of petrochemical prices), it's still reasonable" to proceed with the plan, he said.
 

De Cuyper expects the low end of the PVC price cycle to start in 2008. The average PVC price this year is expected to be around $770 a ton. The current price is about $1,000 a ton.
 

Vinythai's PVC plant is currently operating at a full capacity of about 200,000 metric tons a year.
 

Its manufacturing unit, which makes vinyl chloride monomer, or VCM, a raw material used to produce PVC, will have a capacity of 200,000 tons a year in April next year after debottlenecking. It now has a capacity of 195,000 tons a year.
 

Current domestic demand for PVC is around 450,000 tons a year, with an annual growth of 6 percent.
 

Japan Energy Corp to Build Paraxylene Facilities in 2006 at either the Kashima or Chita Refinery

Japan Energy Corp is expanding its petrochemical products division in response to rising profit margins from higher prices and growing demand in China.

By fiscal 2006, the petroleum wholesaler aims to augment its production facilities for base chemicals used in making synthetic fibers. It intends to build paraxylene facilities in 2006 at either the Kashima or Chita refinery, with details such as projected capital outlays to be decided during the current fiscal year. The new facilities will increase company wide paraxylene capacity by 70 percent to around 1 million tons a year.

The firm recently spent about 1 billion yen (US$8.98 million) to add production lines for cyclohexane at the Chita refinery, increasing capacity there 80 percent to 220,000 tons annually.

Through the expansion, Japan Energy plans to raise its annual output capacity for chemicals known as aromatics by 50 percent to 1.5 million tons a year. The additional output will be exported to China and Southeast Asia.

 

Potash Corporation Announced an 82,000 Tonne Expansion of Prosphoric Acid Plant 

Potash Corporation of Saskatchewan Inc. (PotashCorp) announced an 82,000 tonne expansion of its purified phosphoric acid plant at Aurora, NC. The $73.0 million expansion will increase the company's total annual purified acid capacity to 327,000 tonnes and is expected to be fully operational by the second quarter of 2006.
 
This expansion will not increase the company's overall capacity in phosphoric acid (P2O5), which is the key ingredient in purified acid. Rather, PotashCorp will be redirecting its existing P2O5 capacity to higher-margin products sold to industrial customers in North America. Historically, these products have provided a significantly higher gross margin than phosphate fertilizers. This expansion will accommodate growing demand in both North and South America.
 
With this expansion, PotashCorp will continue to capitalize on its competitive advantages in purified phosphoric acid production. Foremost of these is the company's access to high-quality rock in North Carolina with fewer impurities, resulting in superior product quality. The close proximity of this ore body to the Aurora processing facility and the vertical integration of the Aurora phosphate complex also bring inherent cost savings to the process. When the expansion is complete, the plant (already the world's largest and lowest-cost producer) will be even larger and more efficient.

"This investment furthers our decommoditization strategy for our phosphate business into higher-margin products," stated Bill Doyle, President and CEO. "We have a defined and distinct advantage in this area and with our advanced production technology and 15 years of operating experience, we believe we can bring further value to our customers."
 
Potash Corporation of Saskatchewan Inc. is the world's largest fertilizer enterprise producing the three primary plant nutrients and a leading supplier to three distinct market categories: agriculture, with the largest capacity in the world in potash, fourth largest in phosphate and third largest in nitrogen; animal nutrition, with the world's largest capacity in phosphate feed ingredients; and industrial chemicals, as the largest global producer of industrial nitrogen products and one of only three North American suppliers of industrial phosphates.
 

Indian Petrochemicals Corporation Ltd (IPCL) to Build Ethylene Plant by 2008
Eng. Mohammad Bin Hamad Al Madi, deputy chairman of the board of directors and executive president of Saudi Basic Industries Corporation (SABIC), expressed satisfaction over the current operation of the company's factories, with full production power and readiness for future projects, in addition to abiding by environmental and hygienic regulations to the highest standards. Al Madi also revealed that the company now has several new projects in Yanbu; one of them is the setting up of a giant company, which is already underway. This company will be one of the largest Petrochemical complexes in the area. An engineering company has been given contracts for implementing the gigantic project at a cost of about SR 10 billion. This company will specialize in ethylene, polyethylene and glycols ethylene, with the capacity to produce a total of 3.8 million metric tons annually and production is estimated to begin by the year 2008.

Al Madi also said that, currently in Europe, comprehensive engineering studies are being carried out on new expansions, and these expansions will be implemented in accordance with the economic feasibility. SABIC is also holding discussions with the Dutch government about the new rules regarding foreign investments and tax regulations in the Netherlands.

In fact, SABIC's European projects are in full production and have yielded huge profits. The company depends on Naphtha, which has gone up in price since the increase of crude oil prices which has affected the European economy. SABIC's Riyadh branch earned profits from the rise in Naphtha prices, which in the end created a working balance.

Muhammad Al Madi also revealed the planned expansion of the company in the 'Razi' area, and setting up of the Razi 5 factory, a huge project which is estimated to start operations by the third quarter of 2007, with an annual productive capacity of 1.7 million tons, making it the largest factory of its kind in the world. Al Razi is in fact one of the largest factory complexes for the production of methanol at the international level.

IPCL Planning to Build MEG Plant at Gandhar
Reliance-owned IPCL, the pioneering petrochemical company in India is the largest producer of ethylene (830,000 mta) and polyethylene (540,000) in the country. It mainly produces polymers, fiber and fiber intermediaries and chemicals.

The IPCL stock is being driven by corporate developments, with the company planning to build the world's biggest MEG plant at Gandhar in Bharuch District, Gurajat with a capacity of 500,000 tonne per year at an investment of Rs 10 billion.

IPCL is also planning expansion of chlor-alkali plant by 25 per cent to 1,70,000 tonne per year of caustic soda and capacity creeps in the EDC and VCM plants by 15 percent. 

IPCL proposes to invest the money in changing gas crackers at two of its petrochemical complexes Gandhar in Gujarat and Nagothane in Maharashtra to multi-feed crackers. The shift to a multi-feed cracker is of paramount importance as IPCL has been finding it difficult to source the requisite quantity of gas for achieving capacity optimization.

KFH Bahrain Starts $1.3 Billion Combined Petrochemical-Energy Complex
KFH Bahrain implements US$1.3 billion combined petrochemical-energy complex in Bahrain. This project represents the first of its kind to be undertaken in the region.

Successful feasibility studies on the US$1.3 billion project were carried out in conjunction with a word-class consortium consisting of partners such as General Electric (GE) Energy, Weir International and Stone & Webster and in cooperation with Uhde GmbH and Chicago Bridge & Iron Company — global leaders in their respective areas.

The project will be financed through a combination of equity and debt of US$400 million and US$900 million, respectively, which the Bank will commence in arranging following the obtaining of the required licenses and preparation of the private placement memorandum.

The integrated nature of this world-class complex, which will be designed according to the highest international safety and environmental standards and using the latest technologies, is aimed at ensuring maximum efficiency and cost effectiveness. The planned facility will be capable of providing total power capacity of 1,000MW per hour and 30 million gallons of water per day while simultaneously producing six key petrochemical products. These include: 315,000 metric tonnes of Ethylene Dichloride (EDC), 500,000 metric tonnes of Caustic Soda, 167,000 metric tonnes of Liquefied Petroleum Gas (LPG) and 44,000 metric tonnes per annum of Gasoline Stream in addition to some quantities of Hydrogen and Sulphur. Approximately 255 million standard cubic feet per day of natural gas will be required to operate the complex at full capacity.

The project is aimed at meeting ever-increasing demands for power and potable water in Bahrain. For example, every year, additional power required in the Kingdom is estimated at 150/200MW per hour and, while current projects are expected to meet near-term shortages, they are not expected to sufficiently meet long-term requirements in the Kingdom. Demands on potable water are similarly high and expected to continue to increase at a significant rate going forward.

Further this project is expected to support the Kingdom's broader economic goals of achieving greater diversification of the economy and downstream development through the expansion of the petrochemicals sector and the creation of numerous opportunities.

At its peak development phase, the onsite labor force is anticipated to be approximately 3,500 laborers in addition to the creation of 500 new jobs on an ongoing basis.

Export opportunities will also be significant for the high-demand petrochemicals to be produced at the complex and the Bank is already engaged in discussions with a number of reputable off-takers supplying markets such as China, India, Japan, Australia and other international markets.

According to Mr. Abdulhakeem Alkhayyat, General Manager of KFH-Bahrain, ' We are pleased to announce our sponsorship and support of this important and innovative project. It is the mission of KFH-Bahrain not only to provide financial backing for projects that support real growth in the local and regional economies, but to conceptualize and then develop such projects as we have done here. This is a unique project and a compelling investment opportunity, which we intend to maximize for the benefit of the Bahrain economy and our stakeholders.'

A suitable location for the project will shortly be finalized with the Ministry of Industry of the Kingdom of Bahrain and the project is expected to be completed by the first quarter of 2008.

Mr. Osama Al Khaja, Head of Corporate Finance of KFH-Bahrain added, 'This groundbreaking project will substantially contribute to Bahrain's downstream development and produce numerous infrastructural and economic benefits for the Kingdom as well as local and international companies. With the support and participation of world-class partners, we look forward to moving ahead with the next phase of this first of a kind regional project.'

NOVA Chemicals Corporation and Pemex Petroquimica in Feasibility Study for World-Scale Ethylene and Polyethylene Complex in Mexico

 NOVA Chemicals Corporation confirmed it has been selected by Pemex Petroquimica (Pemex) as a partner in a feasibility study for a potential world-scale ethylene and polyethylene complex in Mexico.

 

This confirmation follows a recent announcement by Pemex, which has named NOVA Chemicals and two Mexican companies, Grupo Idesa and Indelpro, as its strategic joint-venture partners in the proposed ethylene-based petrochemicals and plastics complex known as Project Phoenix. The partners have committed to a feasibility study that aims to confirm the project will deliver a globally competitive ethylene cracker and key derivatives, initially including two world-class polyethylene plants.

"We are pleased to be selected by Pemex as a partner for what could be a truly outstanding chemicals and plastics complex," said Jeffrey M. Lipton, President and CEO of NOVA Chemicals. "We believe that this proposed complex has all of the ingredients to be the next logical supply increment for the North and South American ethylene/polyethylene markets. We expect to develop a world-scale facility that is globally cost competitive, will produce a wide range of high quality products and will target start up in 2009 or 2010, depending on market conditions."

Initial assessments by NOVA Chemicals indicate potential for the proposed complex to achieve a competitive position that equals or exceeds that of the company's cost-advantaged Alberta, Canada, facilities. A Mexican complex will benefit from access to advantaged feedstocks, a strong and growing domestic polyethylene market, and broad market access through the North American Free Trade Agreement (NAFTA) and potentially the Mercosur trade agreement. NOVA Chemicals was selected to participate in the joint-venture study because of its proven success in the design, construction and operation of advantaged assets in Canada, its proprietary catalyst and Advanced SCLAIRTECH™ polyethylene technology, as well as its marketing expertise.

Showa Denko K.K. Will Produce High-Purity Ammonia in Taiwan
Showa Denko K.K. has decided to start producing high-purity ammonia in Taiwan starting in May 2005 through a new subsidiary that will build a 1,000-ton-a-year plant at Tainan.

High-purity ammonia is increasingly used in the production of gallium-nitride light-emitting diodes (LEDs) and laser/electronic devices, and of semiconductors and liquid crystal displays (LCDs). (Ammonia serves as a nitrogen source in the former application and as a nitride-film-forming gas in the latter).

World demand for high-purity ammonia is expected to increase from around 3,000 tons in 2004 to 6,000 tons by 2008, due to sharp increases in demand in Japan, Taiwan and South Korea. Specifically, demand for use in LCD production is forecast to increase at an annual rate of 20-25 percent, centering on Taiwan and South Korea, while demand for use in LED production will grow at 10 percent or more, mainly in Japan and Taiwan.

SDK is already producing approximately 1,000 tons a year of high-purity ammonia in Kawasaki, Japan. The majority of the output is being exported to Taiwan, where SDK has a market share of about 50 percent.

To meet further growth in demand for high-purity ammonia in Taiwan centering on LCD applications, SDK will establish this month a new subsidiary named Taiwan Showa Chemicals Manufacturing Co., Ltd. The new company, to be capitalized at NT$70 million (approx. Y228 million), will have its head office in Taipei and build its plant in Tainan. SDK will own 80 percent of the company while Young Sun Chemtrade Co., Ltd., and Showa Specialty Gas (Taiwan) Co., Ltd., will own 10 percent each. The new company will adopt SDK's purification technology and quality control system to provide high-quality product and services and ensure competitiveness of the operation.

Royal Dutch/Shell Group is Studying the Feasibility of Building a Petrochemical Plant in Qatar

Royal Dutch/Shell Group agreed to consider building a chemical plant in Qatar that would help convert the nation’s natural gas reserves, the world’s third-largest, and produce ethylene, used in an array of products from antifreeze to solvents, said Abdullah bin Hamad al-Attiyah in Abu Dhabi.

 

Shell, in partnership with Qatar Petroleum, is studying the feasibility of building a processing plant to take ethane out of gas produced from Qatar's North field, the world's largest, and produce ethylene, used in an array of products from antifreeze to solvents, said Abdullah bin Hamad al-Attiyah in Abu Dhabi.

 

”We are talking to them about building a big petrochemical plant,'' al-Attiyah told reporters. ”It's a natural progression as the ethane will be supplied as a byproduct from the gas-to-liquids plant they are building'' in Qatar, he said. The Gulf state aims to develop a petrochemical industry that may rival Saudi Arabia, the region's largest chemical producer, he said.

 

Shell, Europe's second-largest oil company, agreed last year to spend $5 billion on a project in Qatar to convert gas into diesel and other fuels, which is almost 10 times bigger than any other such plant now existing.

 

BASF Building Chemical Plant in Nanjing and Caojing

BASF AG Chief Executive, Juergen Hambrecht, said he expects plants slated to start operations next year in China to boost sales in Asia.

 

A $2.9 billion complex in Nanjing, China, and a $1 billion plant in Caojing will enable BASF to “significantly” increase sales in China by the end of the decade from 1.6 billion euros ($2 billion) last year, Hambrecht, said in an interview.

 

“These are giant investments — together worth more than $3 billion — and many products will come out of it,'' Hambrecht said in Berlin. “For all of Asia, we intend to raise the share of sales from 13 percent today to 20 percent in 2010, and we will accomplish this.”

 

BASF, the world's largest chemical maker, expects China to become the second-biggest chemical market by 2015 as the number of consumers with annual purchasing power of $10,000 or more rises more than ninefold to 700 million from 76 million in 2001. The Ludwigshafen, Germany-based company is spending 2 billion euros on plants in China between 2001 and 2005.

 

The company is building the Nanjing complex in a venture with Chinese oil company Sinopec Group, and the Caojing plant with Huntsman Corp. and Chinese partners. The plants will produce about 1.7 million tons of chemicals a year, mostly for the Chinese market, Hambrecht said.

 

“BASF is well placed to benefit from the upstream chemical momentum in this region, with the only downside being the 2005 financial effect of the Nanjing ‘Verbund’ site startup,” Commerzbank analysts David Phillips and Peter Mackey wrote in an e-mailed note. The Nanjing plant will probably have startup costs of about 150 million euros, they said.

 

The Nanjing complex, the biggest project in BASF's history, is slated to be completed by the end of 2004 and start operating in the first half of 2005. The complex includes a cracker and nine other plants. The cracker uses heat and pressure to split naphtha, an oil derivative, into ethylene and polyethylene, which are used to make other chemicals and plastics.

 

The Caojing plant will make chemicals used to produce polyurethane for coatings and foam. BASF is building a second plant in Caojing, near Shanghai, at a cost of less than $300 million, to make chemicals used in elastic and Spandex.

 

The company's Chinese sales may rise as much as 10 percent this year on higher demand from carmakers and construction companies, Johnny Kwan, managing director of the China unit, said in June. BASF had about 7 percent of the chemical market in China in 2002.

 

BASF aims to make 70 percent of the chemicals it sells in the Asia Pacific region locally by 2010. The company had 2003 sales in the Asia Pacific region of 4.3 billion euros, based on the company’s location, or 13 percent of total revenue of 33.36 billion euros.

 

Huntsman to Build the World’s Largest Low Density Polyethylene (LDPE) Facility in UK

 Huntsman has announced the go-ahead for plans to build the world’s largest low density polyethylene (LDPE) manufacturing facility, on Teesside in the UK.

The 400,000 tonnes per year plant, Huntsman’s first venture into the growing European polyethylene market, will be built at the Wilton International site at a cost of around £200 million. The company anticipates the main plant will cost approximately £180 million with a further £20 million covering logistics and infrastructure.

It will create 117 permanent jobs and help underpin the future of the Huntsman Cracker facility at Wilton and will also help to sustain a further 747 Huntsman and contractor jobs at the company’s Aromatics business at North Tees and Wilton.

Subject to the signing of a technology license agreement, the company expects to begin construction in 2005, with the plant being operational in the third quarter of 2007.

Huntsman’s decision to move ahead with the new facility is due in large part to a grant of £16.5 million ($30 million) under the Regional Selective Assistance (RSA) scheme from the UK Government, via the Department of Trade and Industry.

Mr. Huntsman commented: "Teesside is one of the most important of our global locations and we are delighted that we will now enhance our presence here with this large, world class polyethylene facility. It is good news for Huntsman, for the economy of the Northeast and for the UK as a whole. We have worked hard to make it a reality and the faith and confidence of the UK Government has been very important to the process.

Tata Chemicals will Invest $450 to $500 Million in Fertilizer Project in Bangladesh
Tata Chemicals managing director Prasad Menon said that the company will invest $450 to $500 million in its proposed fertilizer project in Bangladesh. “Out of the total $2 billon proposed investment by the Tata group in Bangladesh, Tata Chemicals will be investing $450-500 million to set a urea plant in Bangladesh.

Vietnam and China Building Urea Fertilizer Plant in Ninh Binh Province
Vietnam and China have signed a memorandum of understanding (MoU) on the building of an urea fertilizer plant in northern Ninh Binh province.

The US$400 million project has a capacity of more than a million tonnes of fertilizer a year.

According to the MoU, the Vietnam Chemicals Corporation (VINACHEM), the project's investor, will borrow $360 million from the Chinese government with an interest rate of 2.5-3 percent a year for 15 years, including a grace period of three years.

The feasibility study of the project, the biggest by VINACHEM, has been submitted to Vietnam's prime minister for approval.

Once the Ninh Binh urea fertilizer plant is put into operation, VINACHEM will supply an estimated 750,000 tonnes of urea, a nutrient-rich nitrogen fertilizer, per year, meeting 30 percent of the agricultural sector's demand.

Incitec Pivot Considering $600 Million Fertilizer Plant in Brunei
Incitec Tivot Ltd., Australia’s biggest fertilizer company, joined with Mitsubishi Corp. and WestSide Ltd. to study building a $600 million fertilizer plant in Brunei as prices for the crop nutrients surge.

The plant would have the capacity to produce 1.23 million metric tons of urea a year, making it the largest in Asia, Incitec Pivot said in a statement. The Melbourne-based company would operate the plant and have the right to sell the majority of its production.

 

Spot prices for urea, the biggest source of nitrogen used in agriculture, have doubled in the past two years as natural gas prices have climbed. One unit of gas is needed to make three units of urea. Brunei, Southeast Asia's third-largest natural gas producer, would provide an abundant supply of the fuel and proximity to Australia, the world's No. 2 wheat exporter.

 

“The venture would have to have some drive from a natural gas cost point of view” to locate the project in Brunei, said John King, a Bangkok-based petrochemicals consultant at Nexant Inc. “Locations in Australia may require a lot of infrastructure development compared with locations in Brunei.”

 

Tokyo-based Mitsubishi, Japan's biggest trading company, owns a quarter of Brunei LNG Sdn., the country's only LNG supplier. WestSide Ltd. is the original proponent of the project. The closely held company's Indonesian subsidiary trades fertilizer in Asia and the company has links with ammonia and urea buyers on the West Coast of the U.S., Incitec Pivot said.

 

A fertilizer-processing facility in Brunei would also help the country reduce its reliance on oil and gas, which contribute more than 80 percent of export revenue. It would increase Brunei's sales abroad by about $150 million a year, Incitec Pivot said. Pittsburgh-based Alcoa Inc. last year agreed to study building a gas-fired aluminum plant in Brunei.

 

The urea plant would take about three years to build and create 200 jobs, Incitec Pivot said in the statement, which was sent to the Australian Stock Exchange. Its location in Brunei would enable it to supply buyers in Asia, the U.S. West Coast and Australia, it said.

 

“If the project proves viable it will fit comfortably with our strategy of being a world-competitive fertilizer supplier into the Australian market,” said Greg Witcombe, Incitec Pivot's managing director.

 

Shares of Incitec Pivot, which is 70 percent-owned by Orica Ltd., closed unchanged at A$19.00 on the exchange. They have gained more than a fifth this year.

 

The company joins Burrup Fertilizers Ltd., a unit of India's Oswal Group, and Plenty River Corp. in seeking to tap Australia's $2.2 billion fertilizer market. Australia uses about 1.5 million tons of urea a year. Incitec Pivot is currently the country’s only domestic supplier of the fertilizer, making 250,000 tons annually. The remainder is imported, mainly from the Middle East, Incitec Pivot said.

The National Petrochemical Industries Co. to Build $1 Billion Polyethylene Plant
The National Petrochemical Industries Co. intends to establish a new industrial project for the production of polyethylene, at a cost estimated to be $1 billion, with participation of Saudi and foreign investors and businessmen.

The project is to be implemented and completed within the next three years. An agreement has been reached with Saudi Aramco for the provision and supply of necessary raw material required for production in the factory. The new project is expected to generate a number of jobs for Saudi young men, in addition to the infusion of modern and the latest technology and international expertise.

The factory's product, polyethylene, is utilized in a number of industries such as manufacture of carpets, packing material and bags. Another petrochemical, to be produced by the factory will be polypropylene, which is a multi-purpose hot plastic material, used in the production of many products, in different industries. Its many uses include food packing, food and drink cartons, children's toys, ropes, bags, household appliances, luggage and textiles. It is also used in the manufacture of some internal automobile parts.

Polypropylene has proved itself to be highly in demand in the local and international markets, due to its varied usage and applications. It is also popular among manufacturers because of its strength and resistance properties against rust and heat, in addition to its environment friendly properties. It is recyclable and can be used freely without fear of environmental pollution.

The company's first project, the Saudi Olefin Co. Ltd. plant for the production of propylene and polypropylene has already come on stream in Jubail, total investments in which amount to SR 2 billion. The National Petrochemical Industries Co. owns 75 percent of Saudi Olefin Co. Ltd. while 25 percent is owned by the foreign investor, Basil Holding Co.

Ethanol Projects

 

Lena Michigan Plant Sued to Install Ethanol Projects

Citizens say the Lena plant spews foul-smelling emissions. Last spring, they and the Illinois Environmental Protection Agency sued the plant for violating the U.S. Clean Air Act.

Many of the 78 ethanol plants currently operating in the United States, like the Monroe plant, have positive records.

“We’re darned happy to note that our justifiable worries have come to naught,” the Monroe Times said in a newspaper editorial praising the ethanol plant built on the edge of town. “The promises... have all added up to success.”

Others, like the Lena plant, have burdened their communities.

“I didn’t oppose this plant until after it began operating,’’ says Lena activist Heidi Thorp. “Knowing what I know now, I’d try to stop it from starting.’’

Whether an ethanol plant functions well or not seems to depend primarily on two factors: the quality of the pollution-control technology and the competence of the operator.

In Monroe, those two factors have been positive. In Lena, until recently, they have been negative.

Penn-Mar Ethanol Has Proposed to Build a Large Ethanol Plant — the First in the East — in Lancaster County

 But first it must persuade this community that it will run an operation like Monroe’s, not Lena’s.

Penn-Mar has applied for local and state permits to run a 60-million-gallon production plant along the Susquehanna River in Conoy Township, three miles northwest of Marietta. The township will hold the first of three public hearings on that plan shortly.

The company says it will employ the “best-available technology’’ in the plant planned for a site 1,000 feet from the river.

The plant will turn corn into ethanol — an additive used by gasoline refiners to comply with the Clean Air Act. Many of Penn-Mar’s investors are corn farmers from Pennsylvania, Maryland and Delaware who hope to sell grain to the plant.

The project’s builder, Lurgi PSI of Memphis, TN, and the engineer of its fermentation system, ICM Inc. of Colwich, KS., have developed several other ethanol plants.

If successful in the permitting process, Penn-Mar plans to begin manufacturing ethanol by the summer of 2006. Then, says project manager Scott Welsh, “the burden will be on us to continue to operate the plant appropriately.’’

A local citizens’ group, Stop the Ethanol Plant (STEP), questions whether Penn-Mar can build and operate the plant without disrupting the neighborhood and has called on Conoy Township to reject the proposal.

Based on ethanol plant operations elsewhere, the quality of air-cleaning technology installed in an ethanol plant makes all the difference in whether it is a good or bad neighbor.

Most ethanol plants of the first generation — those that began operating before 2002 — violated the Clean Air Act and emitted foul odors that could be smelled for miles around.

That began to change after environmental officials cracked down on the Gopher State ethanol plant in downtown St. Paul, MN, criticized for causing odors and sickness.

In October 2002, the EPA ordered Gopher State and 11 other Minnesota plants, and eventually all others nationwide, to install state-of-the-art emissions controls.

State-of-the-art controls, then and now, are thermal oxidizers, devices that burn and destroy organic fumes. These expensive mechanisms remove 98 percent of all air pollutants, according to Cary Secrest of the enforcement division of EPA in Washington.

Most ethanol plants updated their technology and survived. Some, notably Gopher State, tried to improve but failed. Gopher State went bankrupt and closed down early this year.

Aware that the EPA was considering imposing stricter emissions rules, operators at Badger State Ethanol in Monroe chose to install a thermal oxidizer before it was mandated. The plant went on line two years ago this month and has run without incident.

Representatives of Penn-Mar Ethanol and Conoy Township officials visited Badger State last year. They liked what they saw. Penn-Mar patterned its proposal for the Susquehanna site on Monroe.

“Monroe and Lena started up at a time when plants were starting to put the thermal oxidizers in but they weren’t required yet,’’ says Welsh. “Monroe said proactively that they were putting the thermal oxidizer in and Lena did not.’’

Adkins Energy’s Lena plant began operating about two months before Badger State in Monroe. After attempting to function for months without a thermal oxidizer, Lena recently installed one. Results of new air-quality tests are not in yet.

Heidi Thorp, a leader of the citizen’s group suing Adkins, is not sure she will trust them.

“When this plant came here, they told us it wouldn’t have any odor or emissions,’’ she says. “They said they would put in a thermal oxidizer but didn’t. They made it up.’’

Gary Kramer, Badger State Ethanol’s plant manager, is in a unique position to judge the quality of both plants. He chaired the board at the Lena plant until four years ago, when he discovered that other company officials planned to cut corners on operations. He quit and went to work at Monroe, but he still lives in Lena.

“Down at Lena they made a terrible mistake from not recognizing the need for a thermal oxidizer,’’ Kramer says. “We felt here that we couldn’t take the chance.’’

That decision has paid big dividends. Neighbors are at ease with the Monroe plant. Measured air pollution is small. Kramer says no one at a nursing home and park 2,000 feet away has ever complained about odor or noise — both problems in Lena.

The two plants are lighted 24 hours a day, but the Monroe plant put canopies on its lights so they shine down. The Lena plant has no canopies. Kramer says his hometown ethanol plant radiates an “orange glow’’ at night.

What about profitability?

Plant investors are making money in Monroe, but not in Lena, which has spent more money installing up-to-date pollution controls than it would have spent to put them in originally.

Farmers are making money in both places because the price of grain has risen and the cost of transporting corn has declined.

There are plenty of other success stories in the ethanol industry.

The Midwest Grain Processors plant at Lakota in northern Iowa began production with a thermal oxidizer two years ago. It plans to double its capacity to 100 million gallons a year.

Lee Smith, editor of the Fairmont Sentinel, across the border in Minnesota, says no one complains about the Lakota plant.

“In this part of the country, everyone is excited whenever an ethanol plant is opened,’’ Smith says. “They’re happy to see value added to the corn.’’

The Glacial Lakes plant in Watertown, SD, also uses a thermal oxidizer. Watertown Public Opinion reporter Terry O’Keefe says there have been no environmental complaints about Glacial Lakes or any of the other four ethanol plants within 60 miles.

Elsewhere, though, problems continue. Neighbors of Michigan Ethanol in Caro, MI, say a thermal oxidizer has not eliminated odors and the plant has caught fire five times in two years.

Ron Woloshen and others have sued Michigan Ethanol and the village of Caro, alleging multiple violations of pollution and zoning laws.

Woloshen says yellow grain dust coats the neighborhood and pollutes nearby Cass River.

“When the plant was proposed, I did not oppose it,’’ says Woloshen. “I know we need these things in our community. But for God’s sake, we have to do them right.’’

DEP officials currently are examining Penn-Mar Ethanol’s proposal to assess whether the company plans to do it right. Ron Davis, new source review chief for DEP’s south central region, says under EPA regulations if Penn-Mar proves it can control pollution, it will be considered a “minor’’ polluter and approved.

“We’re leaning to the fact that that (approval) is what would happen,’’ he says. “The thermal oxidizers are the main control device, but they are proposing a number of smaller things to help control emissions as well.’’

An ethanol plant in Pennsylvania faces stricter pollution controls than in the Midwest, he notes, because current air quality here is worse than there.

Coshocton Ethanol Moving Forward in Ohio
Coshocton Ethanol, LLC will receive a 50 percent Job Creation Tax Credit for a seven-year term to begin operations. The value of the tax credit will be $249,131 over the term, and the company would be required to maintain operations at the site for 14 years.

The tax credit will enable Baard, LLC to develop the operation that will utilize components of corn to produce ethanol.  Ohio was in competition with Michigan and Indiana for the $79.3 million project, which is expected to create 41 jobs within the first three years of operation.

Great Lakes is Planning Plant in Michigan
Great Lakes Ethanol LLC has plans to construct a 50-million-gallon-a-year facility in Riga Township.

Liquid Resources to Complete Ethanol Plant in Ohio

 Liquid Resources of Ohio said it will use expired beer and soda to make ethanol, a fuel additive usually made from corn. The company acquired the final permits it needed and expects to get its first shipment of raw materials in a few days. Chief executive Tim Curtiss said he's still waiting for more equipment but he expects to start making ethanol next month. It would be the state's first ethanol plant in 25 years.

Although Ohio ranks second in ethanol use, it doesn't produce any. Two years ago, lawmakers started awarding financial incentives to companies to produce ethanol. The director of the Ohio Air Quality Development Authority said fewer than ten have started projects.

Cascade Grain is Slating Ethanol Plant for Longview, Washington
Cascade Grain hopes to have financing in place this year for a $230 million ethanol plant, and to break ground in the spring.

American Synthetic Rubber to Install Thermal Incinerator in Louisville
A control device planned for the region's largest source of cancer-causing 1,3-butadiene could sit idle for up to 36 days a year, according to a draft permit.

While the time that the equipment might not be in operation concerns environmentalists, the "thermal oxidizer" planned for the American Synthetic Rubber Co. plant on Camp Ground Road in Rubbertown would be capable of destroying at least 99.5 percent of the butadiene that it processes.

And when the equipment is turned off, a backup system with an estimated efficiency of 98 percent will remove butadiene. That backup system — a flare stack — is what the company currently uses to burn emissions of the chemical.

These plans, designed to reduce the plant's butadiene emissions by as much as 51,000 pounds a year, are detailed in a 30-page draft construction permit released this week by the Louisville Metro Air Pollution Control District. The permit also establishes how the company must operate the equipment and ensure that it works properly.

The agency is seeking written comments on the permit through Oct. 14 and has scheduled an Oct. 20 public hearing. Company officials have been urging the district to approve the permit quickly so they can install the equipment next year.

One air pollution control board member, however, said it may be better to move more slowly.

Board member Carolyn Embry, who also tracks environmental issues for the American Lung Association of Kentucky, said she questions whether the proposed device is the best technology available, and whether the board should approve the construction permit before it knows more about how a pending citywide toxic air control plan might affect the company. "We need to make sure we aren't locked into something that may have unintended consequences," Embry said.

Art Williams, director of the air district, said the company would still fall under the toxic air control program, scheduled for board consideration starting next month. Williams has acknowledged, however, that companies that install the "best available" technology would be eligible for an exemption.

A senior official at American Synthetic Rubber said yesterday that he hopes that the pollution control device will meet any toxic air health standard imposed by the air board, but that he can't say because the district has not yet made public its package of proposed regulations.

"We anticipate that it (the device) is state of the art," said Ron Musgnug, executive director for environmental standards at the company.

Burn at 1,600 Degrees

Musgnug said the thermal oxidizer will burn butadiene and other chemicals from the plant at temperatures of up to 1,600 degrees. The burning will occur in enclosed chambers, where gases are retained long enough for greater destruction.

By comparison, the flare that burns butadiene atop the current stack is not as hot, and there's no chamber to ensure more complete burning before venting, he said.

The district's attention to American Synthetic Rubber follows a health-risk study completed last year that identified butadiene as the community's top toxic air concern. That study, conducted for the West Jefferson County Community Task Force, reported cumulative risks from long-term maximum exposure to 18 chemicals in Louisville air that were higher than the U.S. Environmental Protection Agency had estimated for anywhere in the country.

Responding to pressure from activists and the air pollution control board, the company in May pledged to spend up to $3million to install the new control device and take other steps that together will cut its yearly butadiene emissions by 60,000 pounds. That's about half its 2003 emissions of the chemical.

`A vast improvement'

Environmentalists this week said that they were pleased that the company and air district are moving closer to installing the device.

"The installation of (this) control technology is a vast improvement over what they have now," said Wilma Subra, a Louisiana chemist and EPA advisory board member who assists local advocacy groups, including Rubbertown Emergency Action.

Subra contends that if the existing flare stack were 98 percent efficient — as the company and local regulators calculate — butadiene would not continue to be measured at local monitors at unacceptable levels.

One Louisville activist, however, said he doesn't understand why the air district would allow the device to be turned off for more than a month every year. "We'll certainly be challenging that," said Tim Duncan, a board member of Rubbertown Emergency Action, which has been advocating pollution cuts at 11 Rubbertown-area chemical plants.

Williams said he tried to reach a "reasonable" agreement with the company over how long the device may be shut down, such as for maintenance or repairs. If the company exceeds the limit it could be fined, he said.

"There's no plan to specifically shut it down for 36 days," added Lynn Mann, company spokeswoman.

Williams said the company currently sends "several millions of pounds" of butadiene to its flare stack. Even a small percentage increase in efficiency should add up to a significant cut in emissions, he noted.

Regarding the broader toxic air control program, Williams said recently that as many as 18 new regulations will be posted on the district's Web site for public review.

The proposed program, if approved by the air board, would require 173 Louisville companies to estimate what effect their emissions of 38 pollutants have on the health of neighbors.

If any of the industrial sites discovers unacceptable risk, it will have to show how it can reduce that risk to approved levels, or seek an exemption, according to a program outline.

Exemptions would be granted only after scrutiny by regulators following public comment.

St. Lawrence Cement Could be Forced to Install RTO
The state Department of Environmental Conservation has determined that St. Lawrence Cement's proposed $350 million Greenport project must undergo a full environmental review and that several additional issues related to permits the company needs to build the plant must be reviewed in trial-like hearings before a panel of administrative law judges. Commissioner Crotty  issued a 134-page Second Interim Decision on September 8, in which she discusses additional issues to be adjudicated in hearings. The administrative law judges presiding at the first round of hearings made specific recommendations on those issues based on previous testimony from experts for both SLC and opposition groups.

Both sides will have an opportunity to present witnesses or other evidence on the issues during the hearings and to file legal briefs in support of their positions.

The issues to be adjudicated are:

Oxidiers for Brookwood Laminating in Rhode Island

The State approved the installation of a thermal oxidizer at Brookwood Laminating in South Kingston.

 

Montana Fiber Board Plant Considering Biofilter for Formaldehyde Reduction

Plum Creek's medium density fiberboard plant in Columbia Falls emitted about 710,000 pounds of toxic chemicals in 2002 Company spokesperson, Kathy Budinick confirmed the numbers but qualified the report by saying the company does not actually monitor its emissions at the plant per se. The emission numbers are based on calculations

Budinick said there is a bio-filter on one line of the MDF plant that's designed to reduce emissions and the company is considering another filter on the other line, she said.

Plum Creek is permitted by the state for the MDF plant and it is required to meet federal air quality standards. There isn't, however, an air quality standard for formaldehyde or methanol and the state doesn't test for those substances said Dan Walsh, air compliant section coordinator for the state. The MDF plant was last permitted in 2003.
 

East Kansas Agri Energy to Double Ethanol Capacity

Three years after Anderson County farmers and business people first embraced the concept of building an ethanol plant, construction has begun — at nearly twice the scale initially proposed.

 

The Garnett plant, about 80 miles southwest of Kansas City, will be the seventh ethanol processing operation in the state and the first in southeast Kansas when it opens in mid-2005.

 

East Kansas Agri-Energy LLC, a small corporation created by farmers in October 2001, originally planned an operation that could produce 20 million gallons of ethanol a year for use in gasoline.

 

By January of this year, when the corporation announced it had raised the $16 million in seed money required by lenders, the design had been revised so the plant would produce 26 million gallons a year.

 

It has since grown again. Last week, on the eve of groundbreaking, investors voted for a 37 million gallon plant that would cost an extra $10 million to build, bringing the total cost to $47 million. The corporation's major lenders agreed to the larger design.

 

Engineers suggested the larger capacity after a study showed a plentiful regional supply of corn and milo, which are among the grains processed for ethanol.

 

"They said we could do that without too much impact on the plant," said Bill Pracht, a Westphalia farmer and rancher who chairs the board of East Kansas Agri-Energy. "It made sense."

 

Pracht noted that the additional capacity won't require a significantly larger payroll at the plant, about 32 employees, compared to the 30 that would be needed to run a plant producing 26 million gallons a year.

 

Construction is expected to continue through the winter if the contractor gets all the concrete poured during the fall, Pracht said.

 

 

McIlvaine Company,

Tel:  847-784-0012; Fax:  847-784-0061;

E-mail:  editor@mcilvainecompany.com;
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