Braskem picks mechanical subcontractor for Texas polypropylene project; Projects boosted by tax reform; US Gulf Coast port limitations levy costs on crude exports
Our pick of the latest petrochemical news you need to know
Braskem picks mechanical subcontractor for Texas polypropylene project
Braskem and The Linde Group, the lead engineering, procurement and construction (EPC) contractor for Braskem's new world-scale North American polypropylene (PP) production line “Delta”, announced that Bilfinger Westcon Inc. has been selected as the lead mechanical subcontractor.
Bilfinger Westcon will be responsible for the installation of structural steel, piping, and industrial process equipment through the completion of the facility construction.
Braskem has committed up to $675 million towards the design and construction of the new PP production line, which is being constructed next to Braskem's existing production facilities in La Porte, Texas.
The new Delta line will represent additional production capacity of homopolymers, random copolymers, impact copolymers, and reactor TPOs, building upon Braskem's current PP production plant which has a production capacity of 354,000 tonnes/year.
Braskem also maintains a UTEC Ultra High Molecular Weight Polyethylene (UHMWPE) production plant located at the same La Porte site.
With the initial steel erection phase now underway, the final phase of main construction remains on track and targeted for the first quarter of 2020.
The construction of Braskem’s Delta production line is expected to employ 1,000 development and construction workers to construct the facility.
Capital projects boosted by tax reform
Republican leaders began 2018 by putting the finishing touches on the Tax Cuts and Jobs Act, the most comprehensive overhaul of the tax law in decades.
The legislation will give nearly $1.5 trillion in tax cuts to corporations, small business owners, and workers over the next decade.
The American Chemistry Council (ACC) issued the following statement in advance of the May House Ways and Means Committee hearing examining the economic benefits of the Tax Cuts and Jobs Act (H.R. 1).
“Tax reform is accelerating growth and employment opportunities in U.S. manufacturing, including the chemistry industry, where an unprecedented expansion continues. Thanks to enactment of the Tax Cuts and Jobs Act, our nation has an opportunity for a fairer, simpler and internationally competitive system that can help to attract investment and create jobs."
Since 2010, 325 projects representing $194 billion in capital investment have been announced, about half of which is in the planning stages.
“A modernized tax code can help sustain and grow this momentum,” the ACC continued.
Chemistry provides 811,000 skilled U.S. jobs and accounts for 14% of the nation’s exports, according to the ACC.
More than a quarter of U.S. GDP is generated from industries that rely on chemistry, from agriculture and electronics to textiles, vehicles, and energy-efficient materials used in building and construction.
“We believe tax reform significantly improves America’s global competitiveness and will support a vibrant and competitive U.S. chemical industry and manufacturing sector for the long term,” the ACC said.
US Gulf Coast port limitations levy costs on rising crude exports
The inability to fully load larger and more cost-effective vessels at U.S Gulf ports has pricing implications for U.S. crude oil exports, the U.S. Energy Information Administration (EIA) reported.
U.S. crude oil exports averaged 1.1 million barrels/day in 2017, an increase of 527,000 barrels/day from 2016, according to the EIA.
This acceleration in export growth happened even though U.S. Gulf Coast ports cannot fully load Very Large Crude Carriers (VLCC), the largest and most economic vessels used for crude oil transportation.
Instead, export growth was achieved by using smaller and less cost-effective ships.
Capable of carrying approximately 2 million barrels of crude oil, VLCCs require large ports with sufficient width and depth of waterways for safe navigation.
All U.S. ports in the Gulf Coast that actively trade petroleum are located in inland harbors and connected to the open ocean via shipping channels or navigable rivers.
Although these channels and rivers are regularly dredged to maintain depth and safe navigation, they are not deep enough for the safe navigation of deep draft vessels, such as fully loaded VLCCs.
To circumvent depth restrictions, VLCCs transporting crude oil to or from the U.S. Gulf Coast have typically used partial loadings and ship-to-ship transfers.
The ship-to-ship transfer process known as lightering occurs when a larger vessel partially unloads onto a smaller vessel, while reverse lightering occurs when smaller vessels load onto a larger vessel.
These transfers take place in designated lightering zones and points that exist outside many of the largest U.S. petroleum ports.
Currently, most U.S. Gulf Coast petroleum ports can accept vessels with capacities of approximately 500,000 barrels of crude oil (AFRAMAX), while the number of ports that can accept vessels with capacities of approximately 900,000–1 million barrels (SUEZMAX) are limited.
Therefore, four AFRAMAX sized vessels or two SUEZMAX vessels are required to carry the same amount of crude oil as a single VLCC.
The inability to fully load larger and more cost-effective vessels has pricing implications for U.S. crude oil exports.
Using several smaller ships requires a wider price spread between U.S. crude oil and international crude oil prices to compensate for the lower economies of scale and costs associated with reverse lightering and partial loadings.
The costs associated with using a smaller vessel are less of a factor for exports over shorter distances such as within the Atlantic basin than exports over longer distances such as to Asia.
As exports to Asia are a growing share of total U.S. crude oil exports, these costs will grow in importance.
By comparison, other nations that export large volumes of crude oil generally have deeper and wider navigable waterways that are not located in inland/onshore harbors.
For example, in Yanbu, Saudi Arabia, located along the Red Sea, the crude oil export facility uses a jetty trestle that extends out to berths in water deep enough to fully load VLCCs.
In addition, the largest crude oil export facility in Saudi Arabia, located at Ras Tanura, uses a combination of jetty trestles, single point mooring facilities, and other facilities to load multiple sizes of vessels.
(Source: EIA)
South Carolina port container volumes reach historical level
South Carolina Ports Authority (SPCA) announced the highest April container volumes in its history, with growth of 4% over the same month last year.
SCPA handled 196,439 twenty-foot equivalent container units (TEU) in April. The Port has moved 1.8 million TEUs across the docks of its Wando Welch and North Charleston container terminals since the fiscal year began in July, an increase of nearly 2% over the same period last year.
"Our strong April volumes were driven in part by significant growth of loaded export containers, which reflects the fact that shippers are utilizing Charleston's deepwater harbor as a last port of call for heavy export cargo," said Jim Newsome, SCPA president and CEO. "Container volume during the spring months puts SCPA in a good position to achieve strong fiscal year results that will exceed FY17 volumes."
Inland Port Greer handled 9,577 rail moves in April, pushing fiscal year-to-date volumes slightly ahead of last year with 96,937 rail moves since July.
Fiscal year-to-date breakbulk volume in Charleston reached 608,829 tons in April, with 51,426 tons of non-containerized cargo moved in March.