Chexpress - December 6, 2011

North America

Indefinite Closure

NuStar Energy LP has closed its refinery in San Antonio, Texas after a fire at the plant sent a plume of dense black smoke into the air. No one was injured in the blaze, but the plant’s 60 employees and contractors were evacuated. Fire officials said the blaze was contained in about 10 minutes. The exact cause of the fire hasn’t been determined, but a preliminary report shows that a fire broke out when a contractor was installing some tubing and dislodged a valve at the plant’s crude unit, causing some kerosene to escape. The plant can process 14,500 barrels of oil/day.

Gas Deal

BP has sold its natural gas liquids business in Canada to Plains All American Pipeline for $1.67 billion. Plains will pick up 4,000 kilometers of pipelines, 21 million barrels of storage capacity in Canada, 232,000 barrels/day of fractionation capacity, and NGLs produced from 8.3 billion cubic feet/day of gas processing capacity. The business employs approximately 450 people who will transfer to Plains Midstream upon completion of the deal. Completion of the transaction is subject to closing conditions including the receipt of all necessary governmental and regulatory approvals. The transaction is expected to be completed by the end of the first half of 2012.

Ownership Transfer

CHS Inc. and the two minority owners (GROWMARK, Inc. and MFA Oil Co.) of the National Cooperative Refinery Association (NCRA) have reached an agreement to transfer full ownership of the petroleum refiner to CHS, currently its majority shareholder. CHS will purchase the additional interest in the McPherson, Kansas refinery in annual increments beginning on Sept. 1, 2012. The four transactions will culminate on Sept. 1, 2015. CHS currently owns 74.4% of NCRA, with GROWMARK and MFA Oil holding 18.6% and 6.9% respectively. NCRA’s 650 employees will become CHS employees when the purchase is completed in 2015.

LEED-Certification

Volkswagen’s manufacturing plant in Chattanooga, Tennessee has been named a LEED-certified factory, making it the only auto-making plant in the world to receive the platinum designation. LEED promotes sustainable building and development practices through rating systems. The $1 billion plant builds the 2012 Passat sedan with a target of producing 150,000 vehicles annually for the American market. Its paint shop will save 50 million gallons of water in 10 years. The plant has six inches of insulation using mineral rock wool and special exterior lighting will help it use 68% less energy. Rainwater is collected and reused to flush toilets and cool welding machines. The plant was also built on a brownfield property to minimize disturbance of nature nearby.

Investment

Rio Tinto will invest an additional $2.7 billion to modernize and expand an aluminum smelter in western Canada. The $3.3 billion project at the smelter in Kitimat, British Columbia will be completed in 2014 and will boost capacity by 48% to 420,000 tons/year. The planned changes will boost the plant to the top one-fourth in costs and cut greenhouse gas emissions by about half.

Plant Idling

Sunoco is idling a refinery in Marcus Hook, Pennsylvania and laying off about 490 employees, with about 100 employees being placed elsewhere within the company. The deteriorating market conditions are what is forcing the move. Sunoco had announced in September it was getting out of the refining business and said two Philadelphia-area facilities would be idled by July 2012 if they couldn’t be sold. The Marcus Hook refinery is being idled immediately because of the weak outlook for motor fuel demand and refining margins.

World

Acquisition

Marubeni Corp. and Investissement Quebec have reached an agreement where Marubeni will acquire an additional 6.66% ownership interest in the Alouette Aluminum Smelter. The additional ownership interest comes at a price of approximately $180 million. Following the transaction, Marubeni’s ownership interest in Alouette will increase from 6.67% to 13.33% and its annual allocation of metal will also increase from 38,000 tons to 76,000 tons. Alouette plans to expand its annual production capacity up to 930,000 tons and is expected to begin a full-scale feasibility study in 2012. The total investment for this project is estimated at around C$2 billion.

Capacity Boost

Sibur plans to expand its polypropylene production capacity 250% by 2015, an increase from 240,000 tons/year to 850,000 tons/year. Sibur is currently implementing a project to build a polypropylene complex with 500,000 tons in production capacity in Tobolsk, with construction expected to finish in the third quarter of 2012. In addition, Sibur plans to expand its polypropylene capacity at Neftechimia, a joint venture with Gazprom Neft, from 110,00 tons to more than 150,000 tons. The company is also interested in expanding production at Tomskneftekhim from 130,000 tons to 200,000 tons.

New Plant

Sabic has a memorandum of understanding (MoU) with two Chinese parties to establish an engineering thermoplastics compounding plant in Chongqing, China. The MoU was signed with Chongqing Xiyong Micro-electrics Industrial Park and the Chongqing Economic and Informatisation Commission. The new compounding plant is expected to be online in 2013. It will produce several of Sabic’s polycarbonate, polycarbonate blends and other high-quality engineering thermoplastics to provide easier access for southwest China customers. The site will have compounding lines, color development capabilities, and advanced equipment to enable Sabic to work with its customers and partners to create new applications for engineering plastics.

Technology in Use

UOP LLC has been selected by Zhejiang Shaoxing Sanjin Petrochemical Co., Ltd. to provide key technology to produce propylene in China. The new propane dehydrogenation unit will use Honeywell’s UOP C3 Oleflex process technology to produce 450,000 metric tons/year of propylene. The unit is expected to start up in 2013. Honeywell’s UOP will also provide engineering design, catalysts, adsorbents, equipment, staff training and technical service for the project. The Oleflex process uses catalytic dehydrogenation to convert propane to propylene.

Olefins Plant

Kuwait Petroleum Corporation (KPC) is expected to go ahead with the country’s long-planned third olefins project. KPC has completed the project’s feasibility study and the unit will be based on a mixed-feed cracker, using gas and liquid feedstocks. The complex is expected to be built at Al Zour, downstream from a new refinery being built by Kuwait National Petroleum Corporation.

Joint Venture

The Dow Chemical Company and Saudi Arabian Oil Company have officially formed Sadara Chemical Company, a joint venture between the two companies. Once complete, the JV complex now being built in Jubail will be one of the world’s largest integrated chemical facilities, and the largest ever built in a single phase. The first production units are expected to come on line in the second half of 2015. All units are expected to be up and running in 2016. The manufacturing units will produce a wide range of performance products such as Polyurethanes (isocyanates, poyether, poyols), Propylene Glycol, Elastomers, Linear Low Density Polyethylene, Low Density Polyethylene, Glycol Ethers and Amines.