CHEMICAL UPDATE
APRIL 2011
McIlvaine Company
TABLE OF CONTENTS
US Fracking Chemical Registry to Go Live
Oil-attracting Foam Big for Opflex
Befar Group, Dow Chemical to Establish Perchloroethylene Mfg. Facility in China
Huntsman Plans to Expand in India
Solvay to Acquire Rhodia for $4.8 Billion
Bayer MaterialScience to Build New Facility in Shanghai
Dow Develops, Licenses Flame Retardant for PS Insulation
BASF’s Foam Insulation Keeps Liquefied Natural Gas Cool
Sabic Improves Heat Resistance of Extem
An online registry in which exploration-and-production companies will voluntarily disclose the chemicals they use in their US hydraulic fracturing operations is set to be activated, but questions remain as to whether this will satisfy the many critics of fracking.
The registry, part of a website created as a joint effort of the Interstate Oil & Gas Compact Commission and the Ground Water Protection Council, "will go live in the second week of April," Mike Nickolaus, GWPC special projects director, said Thursday.
The architects of the website hope that its creation will help calm some of the concerns expressed by property owners and environmental groups over the potential threat that the drilling of natural gas wells could pose to groundwater supplies.
Nickolaus said the chemical registry will allow visitors to access information, on a well-by-well basis, on the components of fracking fluids used in oil- and gas-producing basins across the US. To date, about 75 E&P companies, representing about 80% of US shale gas production, have signed up to take part in the registry program.
"We're getting more companies all the time," Nickolaus said.
The website's search function will allow visitors to conduct broad-based searches of fracking activity by state and county or by operator. It will also allow interested parties to identify hydraulic fracking jobs conducted on individual wells by identifying the well by its unique American Petroleum Institute number or by well name and lease number, Nickolaus said.
Reporting companies will identify every chemical by its mass in each additive that goes into the fracking fluid, using the ingredient's Chemical Abstracts Service identifying number. Visitors will also be able to determine how much of each chemical is used in proportion to the total volume of fracking fluid.
However, chemical data that is considered part of a well servicing company's proprietary business information will not be posted on the website, Nickolaus said.
Nickolaus said the release of the chemical information on the website will complement the efforts of the individual producing states to regulate the process of fracking.
The registry "goes beyond what some of the states are doing," he said.
Nickolaus said the advantage of having a national chemical registry is that it will establish a standardized format for reporting the data.
If each state were to adopt the use of the registry as part of its regulations on the reporting of frack fluid chemical data, members of the public would not have to deal with trying to interpret individual data sets compiled by each state, he said.
The Dow Chemical Company (NYSE: DOW) recently announced comprehensive plans to increase the Company’s ethylene and propylene production—and to integrate its U.S. operations into feedstock opportunities available from increasing supplies of U.S. shale gas in the Marcellus and Eagle Ford shale regions.
“The improved outlook for U.S. natural gas supply from shale brings the prospect of competitively priced ethane and propane feedstocks to Dow – and the promise of new manufacturing jobs to America,” said Jim Fitterling, Dow executive vice president and president of Corporate Development & Hydrocarbons. “Our plan is to further integrate Dow’s businesses with the advantaged feedstocks, based on shale gas deposits and long-term ethane and propane supply agreements. These actions will strengthen the competitiveness of our Performance Plastics, Performance Products and Advanced Materials businesses, for example the Elastomers product family and the full Acrylates chain, as we continue to capture growth in the Americas.”
Dow is currently finalizing plans to increase the Company’s ethylene supply and increase its ethane cracking capabilities at existing U.S. Gulf Coast facilities by:
· Re-starting an ethylene cracker at the Company’s St. Charles Operations site near Hahnville, LA by the end of 2012;
· Improving ethane feedstock flexibility for an ethylene cracker at the Company’s Louisiana Operations site in Plaquemine, LA in 2014;
· Increasing ethane feedstock flexibility for an ethylene cracker at the Dow Texas Operations site in 2016;
· Constructing a new, world-scale ethylene production plant in the U.S. Gulf Coast, for start-up in 2017.
Dow is currently finalizing plans to increase the Company’s propylene supply by:
· Constructing a new, world-scale, on-purpose propylene production facility at Dow Texas Operations, for start-up in 2015;
· Exploring an option to commercialize its own technology to produce propylene from propane, with the potential start-up of a new production unit in 2018.
Dow plans to supply the required ethane and propane for these projects through a variety of supply arrangements, including: a possible joint venture fractionator in Texas, supply from existing fractionators, supply from future new fractionators to be built within the industry, and potential supply deals from various shale gas opportunities such as the Eagle Ford and Marcellus shale regions. Dow has signed ethane and propane supply contracts based on the Eagle Ford shale gas and is pursuing several more agreements from this area.
In addition, Dow has signed a Memorandum of Understanding with a wholly-owned subsidiary of Range Resources Corporation (NYSE: RRC), stating plans to enter into a long-term supply agreement for the delivery of ethane from the Marcellus Region in southwest Pennsylvania to Dow’s existing operations in Louisiana.
Range Resources Corporation is among the leading independent natural gas companies operating in the United States through subsidiaries in both the Appalachia and Southwest regions of the country. The Company has pioneered the Marcellus Shale development since 2004, with a dominant position in the southwestern portion of the Marcellus Shale development associated with the liquid-rich area which will be the source of the ethane production.
A whirlwind trip to the Gulf Coast last year was only supposed to last a few days, but Scott Smith ended up spending the summer and refining an oil-collecting foam that has his company, Opflex Solutions LLC, considering expansion possibilities.
The cross-linked polyolefin foam, also known as “the Green Stuff,” has shown an ability to attract oil while repelling water. The oil can then be extracted and the foam used again and again. It has even gained a following on YouTube, where the company has a number of videos illustrating its uses.
The product has been used for cleanups in the Gulf of Mexico and for China’s worst oil spill in Dalian. Smith will be a speaker at the Gulf Coast Leadership Summit in New Orleans from April 19-21, the anniversary of the BP plc oil spill.
Opflex Solutions is considering Worcester, Mass., as a site for its headquarters and a new manufacturing facility.
Hyannis, Mass.-based Opflex currently operates Cellect Technologies LLC in St. Johnsville, N.Y., and Smith indicated that it will continue to operate and that it is looking for a second facility to handle the growing demand for Opflex, which he estimated could grow to a $50 million market.
“We’re evaluating a lot of options. The product is so simple and so huge. We see a significant momentum,” he said. He noted that the Environmental Protection Agency is listing Opflex as a product to use for oil removal.
He did not reveal sales, but said BP has used more than 2 million square feet of Opflex for Gulf oil-spill operations and it continues to get more orders.
The properties of Opflex also has attracted interest from other industries and Smith said that the firm is working on waste-water applications as well.
A facility in Worcester would put Opflex close to Advanced Environmental Solutions Inc. of Worcester, which has been granted an exclusive license for all marketing and sales of Opflex contamination-control devices — such as pom-poms, booms, mops, sweeps and pads — to government agencies, including the U.S. military and state agencies.
William Picard, CEO of AES, said the products are especially useful in emergency response situations in an aqua environment.
He said that collecting oil without taking in water is something he will promote.
Befar Group and The Dow Chemical have signed a memorandum of understanding for establishment of a new 50:50 joint venture to manufacture perchloroethylene (PCE), a major building block substance for non-ozone depleting refrigerants utilized in construction, commercial, industrial, consumer and automotive applications.
As per the terms of the agreement, the two firms will construct a new large-scale PCE production plant in Binzhou, Shandong Province, China. The initial annual production capacity of the new plant will be 40,000 metric tons. The firms have plans to increase the production capacity of the plant to two fold to 80,000 metric tons in the future. The plant will begin production in 2014.
Carol Williams, President of Chemicals & Energy at Dow Chemical, stated that as part of its business strategy, the company has established the new joint venture with Befar Group. The Chairman of Befar Group, Zhang Zhongzheng is also expressed his happiness about the proposed joint venture.
Worldwide requirement for PCE as a raw material is augmenting the production of non-ozone-depleting fluorocarbon refrigerants. Especially in China, the PCE market is expanding aggressively. However, there is a shortage in local production. Both firms are planning to use this opportunity through the new joint venture operation.
Huntsman Plans to Expand in India
Huntsman Corp. plans to expand and acquire companies in India to keep up with customer demand. The company expects to double revenue from India in the next four to five years, chief executive Peter R. Huntsman said in an interview.
The company will invest $10 million to develop a full-fledged office with research and development facilities and hire around 400-500 people in the next two to three years in India.
Recently, Huntsman completed the acquisition of Gujarat-based chemicals manufacturer Laffans Petrochemicals Ltd, and has taken ownership of the manufacturer’s 60kt ethylene oxide derivatives facility in Ankleshwar, Gujarat. The purpose-built plant produces specialty intermediates for use in agrochemicals, household and personal care products, oil and gas applications and automotive lubricants and brake fluids. In 2010 Laffans had revenues in excess of $50 million.
Laffans is its fourth Indian acquisition. Another recent Asian announcement from Huntsman Performance Products outlined a $70 million investment in a capacity expansion program at its polyetheramine plant in Singapore.
Huntsman is expanding capacity to meet demand from clients that have set up factories in India. The company's clients include Procter and Gamble Co. and competitors include BASF SE, Bayer AG and Dow Chemical Co.
Huntsman Corporation 2010 revenues were $9.2 billion.
Solvay has agreed to acquire Rhodia for €3.4 billion ($4.8 billion) in cash. Solvay will launch a friendly cash offer for Rhodia at €31.60/share under the terms of the deal, a 50% premium over Rhodia's closing price on April 1 and a 44% premium over Rhodia's three-month average price. The offer represents a multiple of 7.3 times recurring Ebitda and it has the unanimous approval of Rhodia's board. The deal has an enterprise value of €6.6 billion.
Solvay expects to close the deal in late August 2011 subject to antitrust approval in Europe and the U.S. Solvay will file a tender offer in the coming days.
The merged company will have combined sales of €12 billion/year. Solvay reported 2010 sales of €7.1 billion and Rhodia posted 2010 sales of €5.23 billion. About 40% of combined sales will be in emerging markets. Solvay expects the deal to add to earnings from 2011. The company says the transaction should create synergies leading to annualized cost savings of €250 million within three years. About two-thirds of the savings will be achieved through external cost optimization and "no major downsizing is planned," the companies say. Solvay says it will keep the Rhodia name following the acquisition.
About 90% of the combined company's sales will be generated by businesses in which it has a top-three position worldwide. In Solvay's case, these businesses include specialty polymers, soda ash, and hydrogen peroxide. For Rhodia these include silica, rare earths, surfactants, acetate tow, and nylon-6,6 engineering plastics. Combining Solvay and Rhodia will create "a major global chemicals platform under the banner of Solvay," says Solvay CEO Christian Jourquin. The merged group will aim to double combined annual Rebitda to almost €2 billion, he says.
Since Solvay sold its pharmaceuticals business to Abbott Laboratories for €4.5 billion in February 2010, the company has been seeking a new investment. Solvay has made several bids for other companies in the intervening period including, reportedly, an unsolicited offer for Danisco, which triggered DuPont's proposed takeover of Danisco.
Rhodia chairman and CEO Jean-Pierre Clamadieu will join Solvay's executive committee as deputy CEO once the offer is closed. Clamadieu is intended to succeed Jourquin as Solvay CEO on Jourquin's retirement. Clamadieu will be proposed for election to the Solvay board at Solvay's annual meeting in May 2012. Gilles Auffret, COO at Rhodia, will become Rhodia CEO and a member of the Solvay executive committee. Solvay and Rhodia have "similar cultures" and this should pave the way for a "successful integration," Clamadieu says.
Bayer MaterialScience will construct a new world-scale production facility for the coating raw material isophorone diisocyanate (IPDI) at its integrated site in Shanghai, China.
IPDI is used as a raw material primarily in high-grade polyurethane coatings for applications such as for automotive finishing.
The company will invest $92 million. The plant is scheduled to opne in 2015.
The project is part of the company's expansion of its production capacities in China.
Bayer MaterialScience has 30 production sites and employed approximately 14,400 people around the globe.
Dow Global Technologies LLC has developed a high molecular weight brominated polymeric flame retardant for extruded and expanded polystyrene foam insulation.
The company, a subsidiary of Midland-based Dow Chemical Co., said the new material is the result of search for a flame retardant that can replace hexabromocyclododecane (HBCD).
The first licensee for the product is Chemtura Corp., whose Great Lakes Solutions unit will make and sell the product, dubbed Polymeric FR, for use in PS foam. Dow expects to add additional licensees by the end of the year.
In a recent news release, Dow said Polymeric FR is a stable, high molecular weight, non-PBT (persistent, bioaccumulative, toxic) substance that has been subjected to extensive environment, health and safety testing.
BASF has announced a new application for its Basotect melamine resin speciality foam, which has been used for the first time to insulate pipework in a liquefied natural gas (LNG) tank terminal at Gwangyang, Korea. Since LNG must be kept below -162°C during storage and transport, thermally efficient insulation is essential, notes BASF, which also cites easy handling and excellent flame retardancy for the foam.
According to SKI Insulation, the system supplier of the removable insulation cover, the pipe cover made from Basotect is more energy-efficient than would be the case with competitive foams, as it is 20% thinner and provides up to 50% better thermal insulation. than conventional counterparts.
Dr Peter Wolf, head of global business management for Basotect at BASF, said: "Basotect shows a high degree of stability at low temperatures. In laboratory tests, even at temperatures of around 200°C, the material retains its physical properties. The high degree of elasticity and thermal insulation capacity of the foam remain unaffected, by contrast with conventional foam insulation, which becomes brittle when exposed to such extreme cold."
SKI Insulation found that the lightweight and flexible Basotect insulation can easily be removed for regular inspection of pipe integrity and later reused, unlike rigid conventional foams that are hard to replace.
Basotect can be found in numerous construction projects in Asia, including the National Aquatics Centre (China), the Hefei Grand Theatre (China) and in stations on Seoul's Metro Line 9 (Korea).
Sabic has extended its range of Extem thermoplastic polyimide (TPI) resins with a new grade that can withstand temperatures of up to 260°C.
Extem UH resin is designed for automotive, aerospace, semiconductor, electrical and chemical applications and has a better mechanical performance thank PEEK, says Sabic. The material can be used as a metal replacement in applications where no previous resins were available and is cheaper to use than PAI, adds the firm.
The new Extem UH 1019 resin has a continuous-use temperature rating of 260°C and offers eight times better stiffness than PEEK, meaning it can be used for thin walls and complex shapes with high dimensional stability, says Sabic.
The material can be injection moulded or extruded and is recyclable.
McIlvaine Company
Northfield, IL 60093-2743
Tel: 847-784-0012; Fax: 847-784-0061
E-mail: editor@mcilvainecompany.com
Website: www.mcilvainecompany.com