May 07 Chemical Update

The chemical processing industry (CPI) of the United States has continued to outperform expectations of many over the past several years, despite plant closures, company mergers and the loss of an estimated 22,000 jobs. At this time last year, Industrial Info was tracking approximately 3,575 operational CPI plants located in the United States as part of its North American Plant Database employing more than 494,000 people. Those numbers have declined over the past year to 3,504 CPI plants as of April 2007, employing an estimated 472,000 people.

Despite the sharp decline in employment counts, the CPI has experienced an increase in total capital and maintenance spending for the past several years.

The top 10 employers of the CPI in the United States employ an estimated 18.4 percent, nearly 86,900 at 143 individual plant locations, of all CPI jobs. These numbers are down slightly from last year when the top 10 employers represented 91,500 jobs and 19 percent of the industry’s employment. The top 10 employers, based on salary and hourly employees, are Dow Chemical, Dupont, Eastman Chemical, INVISTA Inc., Eastman Kodak, ExxonMobil Chemical, BASF Corp., Rohm and Haas, PPG Industries, and Lyondell Chemical.

Looking to the rest of this year, Industrial Info is tracking only a handful of plants with closure dates already identified and the employment loss should be minimal, roughly 1,600 jobs in total. It is early in the year and the effect of still unannounced mergers, acquisitions and buyouts is unknown to the CPI although expectations are nothing drastic will unfold. Huntsman Corporation has openly said they will consider the sale of some assets while Dow Chemical Company has made it clear they are not in the market to discuss any dramatic changes in their ownership or portfolio after several rumors emerged over the past couple of months.

Source: www.industrialinfo.com.

VA Chemicals to Expand Joint Venture with INEOS to North America

NOVA Chemicals to Expand Joint Venture with INEOS to North America

NOVA Chemicals Corporation signed a letter of intent with INEOS to expand the two companies' existing European joint venture to include North American assets. Under the terms of the proposed agreement, the newly expanded 50:50 joint venture will include NOVA Chemicals' STYRENIX unit and other styrenic polymer assets. The STYRENIX unit includes NOVA Chemicals' North American styrene and solid polystyrene assets, as well as the company's interest in the existing European joint venture with INEOS, called NOVA Innovene. INEOS will contribute its North American styrene and polystyrene assets, as well as its interest in the existing NOVA Innovene European joint venture.

The expanded joint venture will also include solid polystyrene-based NAS®, ZYLAR® and DYLARK® polymers from NOVA Chemicals and the AVANTRA® specialty products of INEOS.

"We are very pleased with this path and believe this larger, stronger JV will quickly build on the success of our recent work with INEOS in Europe. It provides a clear opportunity to significantly reduce costs and participate in industry consolidation," said Jeffrey M. Lipton, President and CEO of NOVA Chemicals. "We expect the expanded JV to add value for our shareholders and we will continue to look for further consolidation opportunities."

The transaction to form the expanded joint venture is expected to close in the third quarter of 2007, subject to approvals and completion of definitive agreements. The expanded venture is expected to have revenues of approximately U.S. $3.5 billion per year. Upon completion, the newly expanded joint venture is expected to have the following capacity rankings:

	North America	Europe	Global
Styrene	#1	-	#5
Solid Polystyrene	#1	#2	#2
Expandable Polystyrene	-	#1	#4

NOVA Chemicals will retain full ownership of its olefins/polyolefins unit, industry-leading North American expandable polystyrene business, ARCEL® advanced foam resin, and new expandable polystyrene-based business ventures.

RiverWright Energy Ethanol Plant in Buffalo River Gets Key City Approval

A proposal to build an $80 million ethanol plant on the Buffalo River took a big step forward when the city Planning Board determined that all environmental issues have been addressed.

Despite pressure from project opponents, the board determined no further environmental studies are needed and that the plan should move forward. The board adopted a "negative declaration," meaning members are convinced the plan to turn a dormant cluster of grain elevators into a plant that will distill corn for use as fuel will not have a harmful impact on the community.

The project must still be approved by the city's Zoning Board. Also, the Common Council must approve the plan because the 18-acre site along Childs Street is in a Costal Review District.

Still, some city officials and project developers predicted today's action by the Planning Board will pave the way for the remaining approvals. Rick Smith III, co-founder of RiverWright Energy, hopes preconstruction work can begin next month on a project that developers say will eventually employ 67 people.

Matrixx Group to Open Plastics Manufacturing Facility in Bedford, Virginia

The Matrixx Group, a supplier of compounded products to the plastics industry, will invest $9.85 million to open its first Virginia facility in the Bedford Center for Business, an industrial park jointly developed by Bedford County and the City of Bedford, Va. The company, which will manufacture thermoplastic compounds, will create 40 new jobs.

According to state economic development officials, Virginia successfully competed with North Carolina and West Virginia for the project.

Headquartered in Evansville, Ind., The Matrixx Group is a privately held company that, for more than 25 years, has been supplying the plastics industry with high quality compounded products.

ConocoPhillips Establishes Biofuels Research Program at Iowa State

ConocoPhillips will establish an eight-year, $22.5 million research program at Iowa State University dedicated to developing technologies that produce biorenewable fuels. The grant is part of ConocoPhillips’ plan to create joint research programs with major universities to produce viable solutions to diversify America’s energy sources.

ConocoPhillips will make an initial $1.5 million grant in 2007 to support Iowa State researchers, with additional grants of $3 million per year for seven years.

Robert C. Brown, the Iowa farm bureau director of Iowa State’s Office of Biorenewables Programs, said ConocoPhillips is especially interested in converting biomass to fuel through fast pyrolysis, a process that uses heat in the absence of oxygen to decompose biomass into a liquid product. This so-called bio-oil can be used as a heating oil or can be converted into transportation fuel at petroleum refineries.

Brown said ConocoPhillips also will sponsor studies of other thermochemical technologies that produce biofuels.

RAG Subsidiary Degussa Announces Further Investments

Expertise and Innovation in Paint and Coating Systems

“Degussa is seeking to consolidate further its already strong position in the attractive growth market of coatings,” said Dr. Manfred Spindler, a member of Degussa's Management Board, on the occasion of the European Coatings Show in Nuremberg between May 8 and 10.

The global leader in specialty chemicals plans to invest a total of €2.2 billion in property, plant, and equipment during the period 2007–2009. About one third of this amount, more than €700 million, will flow into developing the three large integrated facilities producing, among other things, raw materials for novel coatings.

The integrated production systems for methacrylate at the Degussa sites in Shanghai, Fortier (USA), Worms, and Wesseling, for isophorone in Herne und Mobile (USA), and for silicones in Essen und Hopewell (USA) provide a secure base for the manufacture of valuable intermediates for the plastics, cosmetics, electrical, and electronics industries as well as raw materials for paint and coating systems.

Just a few weeks ago, the People’s Republic of China gave Degussa the green light for construction of an integrated production facility for methylmethacrylate and methacrylate specialties in Shanghai by 2009. The annual capacity will be 100,000 metric tons. With a volume of €250 million, this represents the company’s largest single investment at the present time. Technical service will also be stepped up, and centers for this purpose have been established in the U.S. and Asia over the last few years.

Coatings—a core competence of Degussa

With high-performance coating components and industry-specific expertise, Degussa generated sales of €1.2 billion, representing over 10 percent of Group sales, in the area of coatings in fiscal 2006. All of the leading coatings producers worldwide are supplied by a total of eight Degussa business units. On account of its research and development (R&D) expertise, the specialty chemicals group focuses on the innovative and environmentally friendly—and therefore high-growth—segments of the coatings market.

Degussa invests more than €40 million annually on R&D for coatings applications. This corresponds to about 4 percent of the sales revenue from the coatings segment, and lies well above the Group average of 2.8 percent for R&D investment. R&D focuses on the development of additives, raw materials, color systems, and specialty binders for high-end, environmentally friendly, and high-performance systems. These include, for example, nano-modified raw materials for scratch-resistant coating systems.

The global coatings market has grown by about 40 percent since the year 2000, with certain Asian countries showing the highest growth rates. Market volume, which at the end of the millennium was US$60 billion, now exceeds US$80 billion. While growth rates for the global coatings market develop for the most part in line with gross domestic product, Degussa shows growth above the average as a result of its focus on the most attractive market segments.

Dow and Saudi Aramco to Build Integrated Plastics and Chemicals Plant in Saudi Arabia

Saudi Aramco, a fully-integrated, global petroleum enterprise and the world’s leading energy supplier, and The Dow Chemical Company, the world’s leading science and technology company, providing innovative chemical, plastic and agricultural products and services to consumers around the globe, today announced the signing of a detailed Memorandum of Understanding regarding the construction, ownership and operation of a world-scale chemicals and plastics production complex in Saudi Arabia, named the Ras Tanura Integrated Project. The parties will now enter the final negotiation phase for the formation of a joint venture company to build, own and operate the facility to be located near Ras Tanura in Saudi Arabia’s Eastern Province. The Ras Tanura petrochemical joint venture will be operationally integrated with Saudi Aramco’s Ras Tanura Refinery complex and its Ju’aymah gas processing plant, two of the largest facilities of their kind in the world. The latter two facilities will supply feedstock to the joint venture and continue to be owned and operated by Saudi Aramco.

The proposed JV partnership will bring together the world’s largest oil company with the world’s leading chemicals and plastics producer and marketer. The Ras Tanura integrated complex will produce an extensive and diversified slate of plastics and chemicals and introduce new value chains and performance products to the Kingdom. When fully operational, the new complex will be one of the largest grassroots plastics and chemicals production facilities in the world and will be ideally positioned to serve major world markets.

The Ras Tanura petrochemical complex will produce a broad range of both basic and performance products, including ethylene, propylene, aromatic and chlorine derivatives. Initially, the project scope includes world-scale production units for polyethylene, ethylene oxide and glycol, propylene oxide and glycol, chlor-alkali, vinyl chloride monomer, polyurethane components, epoxy resins, polycarbonate, amines and glycol ethers.

Libya’s National Oil Corporation and Dow Chemical Announce Joint Venture Plans

National Oil Corporation of Libya (NOC) and The Dow Chemical Company (DOW) have announced plans to participate in a joint venture to operate and expand the Ras Lanuf petrochemical complex in Libya.

The Country (Libya) recently embarked on a policy of attracting foreign expertise and investments which will lead to further reintegration into the global economy. Dow is the first global chemical company to participate in such economic development of the Libyan petrochemical industry.

The investment supports the Libyan government’s economic policy in diversifying its domestic economy by expanding its downstream industries; including petrochemical and basic product manufacturing. Enhancements at the Ras Lanuf petrochemical complex on the Mediterranean coast will position the joint venture for future growth as a world-class supplier of polyethylene and polypropylene.

Through the joint venture, Dow will help upgrade and modernize existing assets to develop more high-skilled jobs in country and stimulate investments in associated industries by utilizing its technical capabilities.

The joint venture agreement encompasses the Ras Lanuf site’s existing naphtha cracker, two polyethylene production facilities and associated infrastructure. The project will include refurbishment and expansion of the existing units, followed by construction of an ethane cracker and additional polyethylene and polypropylene facilities. Later phases will include construction of additional hydrocarbon, plastics and chemical production facilities based on natural gas.

The Ras Lanuf petrochemical complex is on the Mediterranean coast of Libya and was built in the 1980s. More information about the complex is available at http://www.raslanuf.com/.

NOC was established in 1970 to implement the strategy of the Country’s policy in upstream and downstream oil and gas activities. NOC, through wholly and partially owned subsidiaries, runs a network of onshore/offshore oil, gas, and product facilities for domestic and export markets. Presently NOC produces about 1.7 million bls/day of crude oil and about 2.7 TSCFD of raw gas. NOC 5 petroleum refineries having a total refining capacity of 380,000 lbs/day of methanol, ammonia, urea plants, producing 2000 t/day, 2200 t/day and 2750 t/day respectively as well as petrochemical facilities at Ras Lanuf based on Naphtha cracking producing about 330 kt/year Ethylene, 170 kt/year Propylene, 130 kt/year mixed C4’s and 325 kt/year Pyrolysis Gasoline. Part of Ethylene is used to produce about 80 kt/year LLDPE and 80 kt/year of HDPE. Also affiliated to NOC is a petroleum research center which carries out research and technical studies related to the oil industry and conducts technical analysis and tests for the various stages of exploration and production of oil and petroleum products to ensure quality control.

Clariant Sells Custom Chemicals Business to ICIG

Swiss specialty chemicals producer Clariant is about to complete its exit from custom manufacturing. It is selling, for an undisclosed sum, its custom manufacturing business to International Chemical Investors Group (ICIG), formed in 2004 by a team led by Achim Riemann.

The unit supplies intermediates and active ingredients for the agrochemicals, pharmaceuticals, and polymers industries from sites in Germany and the U.S. Last year, it had sales of about $180 million and about 490 employees.

The difficult conditions for fine and custom chemicals, in fact, had led the company to sell its pharmaceutical fine chemicals business in June 2006 to the private equity firm TowerBrook Capital Partners. It put the custom manufacturing unit up for sale in September. According to Clariant, the sale to ICIG is the latest step in its strategy to focus on colors, surface chemistry, and performance chemicals.

Clariant expects to record a loss of just under $60 million on the deal, which is expected to close by midyear. The deal transfers all assets and personnel to the buyer.

ICIG plans to combine the Clariant operations with its other fine chemicals manufacturing activities, particularly WeylChem, the former Rütgers Chemicals business that ICIG acquired in 2005 from the German energy company RAG.

Source: Chemical & Engineering News

Ashland and Cargill Intend Biobased Chemical Joint Venture

Ashland Inc. (NYSE:ASH) and Cargill have agreed in principle to create a new joint venture devoted solely to the development and production of biobased chemicals. The parties intend for the new stand-alone entity to become a leading global supplier of chemicals from renewable sources.

The venture’s first product will be propylene glycol (PG). Using both licensed and proprietary technology, the joint venture will produce high-grade propylene glycol from glycerin, an abundant co-product of biodiesel production. The joint venture expects to provide global manufacturing and marketing of biobased PG, starting with a 65,000 metric ton-per-year plant at a yet-to-be-finalized location in Europe.

With a 50-50 ownership structure, Cargill and Ashland will bring to the new venture their unique technology, innovation and expertise in bioprocessing, along with chemical formulation, supply chain management and market analysis. The venture anticipates a combined initial capital investment in the range of $80 million to $100 million. Details on the name, leadership and development plans are expected to be announced later in 2007.

“We believe the chemical market has reached a tipping point where biobased and petroleum-based options are both desired by the market and practical to produce. To be in a position where Ashland can offer biobased specialty chemical products in the future, we need to help foster the creation of biobased basic chemicals now,” said Walter Solomon, vice president and chief growth officer, Ashland Inc. “We are creating our future and we’ve found a terrific partner in Cargill to do so.”

"For well over a century Cargill has been all about adding value to products that come from the earth. Developing high-performing chemicals from renewable sources fits perfectly in that philosophy," said K. Scott Portnoy, Cargill corporate vice president overseeing its biobased industrial businesses. "As an industry leader, Ashland is the ideal partner to help bring these products to market on a commercial scale."

The joint venture will combine the complementary experience and skill sets of both parent companies. “Cargill’s expertise in converting vegetable-based oils is world-class, its global reach is unmatched and its glycerin supply chain expertise will promote a quick market rollout. All this will provide a competitive advantage over other manufacturers attempting to produce any product derived from vegetable oils,” said Dave Jones, director of bioproducts, Ashland Inc.

“Ashland brings the new joint venture expertise in global chemical marketplace understanding, formulation and marketing,” said Jim Stoppert, senior director of Industrial Bioproducts for Cargill. “Ashland’s experience in formulating PG into a variety of specialty chemical applications will lead our efforts to produce a renewable product that is a seamless, high-grade solution for all PG end use applications.”

According to Ashland market consultants, annual global production for propylene glycol totals more than 1.4 million metric tons, and research shows that global demand growing at a 3-percent to 7-percent rate. Propylene glycol is a common ingredient in a variety of resins, lubricants, cosmetics, paints, detergents and antifreeze. Today, propylene glycol is produced from propylene oxide, a petroleum-based intermediate.

Laboratory tests of the proprietary production method have shown the biobased propylene glycol product will feature a high level of purity. In testing, the process to be used by the joint venture is efficient and produces fewer byproducts than other alternative approaches to making renewable propylene glycol.

The Ashland and Cargill joint venture will offer manufacturers who use propylene glycol alternatives to the current petroleum-based products. Furthermore, biobased products offer the promise of long-term sustainability.

Rosneft Purchases Angark Petrochemical Company

Rosneft closed the deal on purchasing Angark petrochemical company OJSC (APC), said in APC announcement.

According to the announcement, Neft-Active ltd., the only shareholder, terminated authorities of the plant's managing organization. Fedor Serduk was appointed GD.

Also the new company' Charter was approved during the extra meeting.

OJSC Angarsk Petrochemical Company (Angarsk Refinery) was established in August 1993. Primary refining capacity is 16.4 million tonnes. In 2006, the refinery processed 8.7 million tonnes of oil with a capacity utilization rate of 53%, producing 1.4 million tonnes of gasoline, 0.5 million tonnes of jet fuel, 2.5 million tonnes of diesel and 1.8 million tonnes of fuel oil. The refinery is equipped with primary distillation, reforming, hydrotreatment of diesel fuels and catalytic cracking units. The refinery is able to produce Euro-2 quality gasoline as well as GOST 305-87 quality diesel fuel with 0.2% sulphur content. Usage of secondary processes, such as catalytic cracking and tar production, has allowed the refinery to increase refining depth in the last five years from 73.5% to 78.1%. The Angarsk Refinery plays an important role in the Siberian oil products market and is the ninth largest producer in Russia.

Sipchem Launches $1.87b Project in KSA

The Chairman of the Saudi International Petrochemical Company (Sipchem) announced that the company has launched a new project, the Acetyls Projects Complex, at a total value of $1.87 billion, Arab News reported.

The chairman, who was speaking at a press conference, indicated that the new initiative marks the second phase of Sipchem's major project which will consist of three plants for producing acetic acid (AA), vinyl acetate monomer (VAM) and carbon monoxide.

He added that the total production of AA and VAM by the company's International Acetyl Company (IAC) and International Vinyl Acetate Company (IVAC), respectively, will amount to 800,000 tons per year.

During the first quarter of 2007, Sipchem posted net profits of $40.8 million, up 54.6 percent over the same period last year.

Jose Petro Project to Include 1.3 million tons Ethylene Cracker

Braskem signed an agreement aiming at the formation of two joint ventures to develop Jose Petrochemical Complex with Pequiven. The first project includes the construction of an ethylene cracker from natural gas with an annual capacity of 1.3 million tons of ethylene, 1.1 million tons of polyethylene and other petrochemical products. The second project includes the construction of polypropylene plant with an annual capacity of 450,000 tons.

Shaw Ethylene Technology Selected for New Grass Root Plant in China

The Shaw Group announced that its Shaw Stone and Webster technology has been selected for a new grass root ethylene plant by Liaoning Huajin Chemicals Corporation. The plant will have a capacity of 450,000 metric tons of ethylene per annum. Shaw will provide the process design package, engineering package and will also supply its proprietary equipment, technical services and training to the client. Over 3 million tons of ethylene is produced in China use their technology including BASF-YPC

SK Corp & Sinopec to Set Up a US$2.2 billion Cracker

SK Corp of Korea and Sinopec Corp are considering to establish a naphtha cracker in China. The investment of US$ 2.2 billion could generate up to US$ 3.2 billion in sales for SK Corp from 2010. The naphtha cracker is to be set up in China. This deal could attract other major petrochemical companies to the lucrative Chinese market.

Petroleos and Braskem Form Petrochemical JV in Venezuela

Presidents of Venezuela and Brazil laid the keystone for new petrochemical complex, a 50:50 joint contract between Petroleos de Venezuela (PDVSA) and Brazilian petrochemical giant Braskem. The petrochemical complex will enhance the capacity to convert gas into liquid, liquid into solid, and solid into thousands of products. The contract also involves the construction of petrochemical facilities which consist of ethylene and polypropylene plants in Jose Cryogenic Complex. US$3.4 billion will be investment outlay for the complex project that will exploit the region's fossil fuel resources.

South Korean Building Orders in Saudi Arabia Reach $3B

South Korean contractors' construction orders in Saudi Arabia are expected to top $3 billion this year, according to Seoul's Construction and Transportation Minister Lee Yong-sup.

"Korean companies have already secured at least $3 billion in orders for various Saudi infrastructure, including petrochemical and power plants, this year," said Lee, who visited Saudi Arabia as part of the entourage of South Korean President Roh Moo-hyun on his official visit to the Kingdom.

The minister told reporters that in 2006, South Korea was the world's biggest winner of Saudi construction orders, with its annual volume of orders in Saudi Arabia totaling $3.6 billion."President Roh's visit is expected to provide further momentum to South Korean contractors' business activities in Saudi Arabia," Lee said.

He said that Hyundai Heavy Industries is scheduled to sign a formal contract this month with Saudi Arabia's Marafiq for the construction of a $1.1 billion power plant.

Daelim Industrial Co. signed a letter of intent with Saudi Kayan, a subsidiary of Saudi Arabian conglomerate Saudi Basic Industries Corp. (SABIC), for the construction of a $1 billion polycarbonates production plant and is expected to seal the formal contract in July.

Mutlaq Al Morished, SABIC Vice-President for Corporate Finance and Chairman of Saudi Kayan explained that the company plans to go live in 2009 with an annual capacity exceeding 4 million tonnes of varied petrochemical products.

"These products will strengthen SABIC's competitiveness, introduce specialty products for the first time in Saudi Arabia, provide wide opportunities for the growth and diversity of national downstream industries and create promising job opportunities for Saudi citizens, he said. Saudi Kayan is currently under construction. SABIC holds 35 per cent of the company's capital of $4 billion (SR 15 billion) and the Kayan Petrochemical Company holds 20 per cent. The remaining 45 per cent will be offered for public subscription.

Samsung Engineering has obtained an order from Saudi Kayan for a $330 million petrochemical plant, while the Hanwha Corp of Seoul has won an estimated $500 million engineering, procurement and construction contract from Safra Co for an aromatics complex in Yanbu.

The contract includes the supply of two naphtha processing streams with 1.5 mt/y of capacity. The first stream is dedicated for the manufacture of benzene, toluene and xylene; the second stream will yield propane, butane, and motor gasoline.The complex will have a design capacity of 220,000 tonnes/y for xylene, 250,000 tonnes/y for benzene and 160,000 tonnes/y for toluene. The aromatics technology will be provided by Axens. The Zeoforming technology from Zeosit will be adopted at the site to make high-octane, lead-free gasoline. Naphtha feedstock will be provided by Saudi Aramco.

Qatar Petrochemical’s Plant on Schedule for 2008 Completion

Qatar Petrochemical Co says that a US $1.2 billion polyethylene plant that it is building with Total is on schedule for completion by late-2008.

The facility will have a capacity of 450,000 tonnes of low density polyethylene with a potential to expand output to 600,000 tonnes.

The company also confirmed that work to raise the capacity of its Mesaieed ethylene plant from 525,000 tonnes to 720,000 tonnes will be completed this year.

Construction Work for Two Petrochemical Complexes to Begin in Iran

The construction work on two petrochemical complexes at Gachsaran and Dehdasht is to commence in Iran. The two petrochemical plants are to be built along the ethylene pipeline earlier laid in western Iran.

The plant at Gachsaran will have a capacity to produce over one million tons of ethylene and propane. An estimated 1.3 million tons of ethane will be the feedstock requirement and will be supplied by Bidboland.

Upon completion, Dehdasht complex will produce 300,000 tons of heavy polyethylene and its 305,000 tons of required feedstock (butane-1) will be provided by the west ethylene pipeline and other petrochemical plants in the region.

The two complexes are scheduled to come on stream in 2010.

McIlvaine Company

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