U.S. Second Wave petchem project updates; Impact of China’s retaliatory tariffs explained

Our pick of the latest petrochemical news you need to know

Enterprise considers additional PDH unit

Enterprise Products is considering building a second new propane dehydrogenation plant, because of short supply and growing demand for propylene, the company’s chief executive said.

"We see opportunities for another PDH, and in fact we're working that hard,” Chief Executive Jim Teague said during the company's quarterly earnings call. "When we look at how short the market is on propylene, and given the demand growth, we think there's a strong possibility we'll build another PDH."

Production issues and refinery outages pushed propylene prices up to the highest level since 2014 during the first half of the year, according to price reporting agency S&P Global Platts.

Enterprise recently started up its first PDH unit, which is in Mont Belvieu, Texas, and has a capacity of 750,000 tonnes/year.
The unit was originally planned to start up in 2016 but ramped up during the second quarter this year after repeated delays including Hurricane Harvey impacts.

Methanex awards EPC contract for potential methanol project

KBR has been awarded a reimbursable Engineering, Procurement and Construction Management (EPCM) contract by Methanex Corporation for providing Front End Engineering Design (FEED) services for a 5,000 tonne/day world-scale methanol plant to be located adjacent to their existing Geismar, Louisiana facilities.

Under the terms of the contract, KBR will work closely with Methanex to provide FEED services for a third methanol operating plant at the site.

“The award of this project demonstrates KBR's strength and capabilities in Gas Monetization projects,” Farhan Mujib, President, Hydrocarbons Services Americas said in a statement.

The FEED work is expected to be completed over the next 12 months with Final Investment Decision (FID) expected by mid-2019. If the plant is approved, production would begin in 2023.

Earlier this year, Methanex said it would make a final decision on whether to build the plant as early as mid-2019. The Vancouver-based Methanex is also considering Medicine Hat, Alberta, Canada. 

The price of natural gas feedstock and export options will play a key role in the decision-making process for Methanex.
Louisiana government officials signed off on giving Methanex a break on property taxes for the new plant. 

Methanex CEO John Floren said in a recent earnings call that production from the new plant being considered would all go to exports markets.

Construction begins on Dow’s Texas cracker expansion

DowDupont has begun construction on the expansion of its steam cracker in Freeport, Texas, which will push its capacity to the largest in the U.S., a company executive said.

“We recently began construction on the expansion of our new Texas-9 ethylene facility, which will increase its capacity to 2 million tonnes,” Jim Fitterling, chief operating officer of Dow's materials science division, said during the company's quarterly earnings call.

DowDupont started up ethylene and plastics complex in Freeport, Texas at the end of 2017, making it the first to debut a major ethylene project along the Texas Gulf Coast.

The cracker currently produces 1.5 million tonnes/year ethylene, and expansion phase will increase that capacity to 2 million tonnes/year, making it the world's largest ethylene production plant.

Exxon’s Texas ethane cracker starts up

Exxon Mobil said it has begun operations at its 1.5 millon tonne/year ethane cracker at the integrated Baytown petrochemical complex in Texas, following delays caused in part by Hurricane Harvey in 2017.

The new cracker will provide feedstock to its new polyethylene lines at Exxon’s Mont Belvieu, Texas plastics plant.

Last year, Exxon Mobil completed two new plastics facilities at its Mont Belvieu plastics plant.

The Baytown expansion includes producing an additional 1.5 million tonnes/year of ethylene, while the Mont Belvieu is one of the largest polyethylene plants in the world, with manufacturing capacity of about 1.3 million tons per year.

Most of that plastic is headed for export to emerging markets in Asia and elsewhere.

Exxon Mobil also has a joint venture with SABIC to build a $10 billion chemicals and plastics complex north of Corpus Christi, Texas.

China 25% retaliatory tariffs to hit petchems, LNG

The Chinese commerce ministry announced retaliatory tariffs on August 8 on U.S. goods, including liquefied natural gas (LNG) and key petrochemicals, which will be subject to a 25% tariff, the agency said.

China said it will begin imposing 25% tariffs on $16 bn of US goods starting August 23.

The tariffs are in response to the July decision by the U.S. government to impose tariffs of 10% on $34 bn worth of Chinese goods, as well as an additional list of U.S. tariffs which was issued on August 7.

The announcement from China’s Ministry of Commerce came a day after the U.S. finalized its second list, of which $16 bn of Chinese goods will be assessed 25% tariffs starting August 23.

The tariffs come at a time when LNG exports are just beginning to ramp up.

China has been the third-biggest importer of U.S. LNG so far this year, behind South Korea and Mexico, according to January-July figures from LNG Edge.

Cheniere’s Sabine Pass plant in Louisiana and the Dominion’s Cove Point in Maryland are now operating in the U.S.

Additional plants could come online in the next two years including Kinder Morgan’s Elba Island LNG in Georgia, Cheniere’s second project, Corpus Christi LNG in south Texas, Freeport LNG in Texas and Cameron LNG in Louisiana.