Ascend shelves PDH project; Polyethylene market faces oversupply

Petrochemicals news you need to know.

Crude oil prices to average $41/b in 2016

Brent crude oil prices are projected to average $41/b in 2016 and $51/b in 2017, according to the Short-Term Energy Outlook (STEO) released by the U.S. Energy Information Administration (EIA) on May 10.

This is $6/b and $10/b higher, respectively, than forecast in April’s STEO.

West Texas Intermediate (WTI) crude oil prices are forecast to average slightly less than Brent in 2016 and to be the same as Brent in 2017. However, the current values of futures and options contracts suggest high uncertainty in the price outlook.

Henry Hub natural gas spot prices are forecast to average $2.25/million British thermal units (MMBtu) in 2016 and $3.02/MMBtu in 2017, compared with an average of $2.63/MMBtu in 2015.

Ineos proceeds with Texas LAO plant; Ascend halts plants for 1 mtpa PDH project

Ineos has made a final investment decision to build a new world-scale linear alpha-olefins (LAO) plant at its Chocolate Bayou site at Alvin, Texas, the company announced on May 16.

The facility will have a production capacity of 420,000 metric tons a year – 20% larger than when the project was originally announced – and is expected to come on stream in November 2018.

The new plant is part of the growth plans for Ineos’s LAO business, complementing existing units in Canada and Belgium. Once the Chocolate Bayou unit comes on stream, Ineos’s global LAO production capacity will reach about 1 million metric tons, according to the company.

Among other things, the new unit aims to supply the significant new polyethylene capacity being built on the Gulf Coast over the next several years.

The plant will be based on Ineos’s own LAO technology and will also include process technology improvements that will reduce variable costs, according to the company.

Meanwhile, Ascend Performance Materials has paused plans to build a 1 mtpa propane dehydrogenation (PDH) plant in Chocolate Bayou, Texas because of market conditions, IHS Chemical Week reported on May 12.

The proposed two-train plant was expected to become the largest such facility in the United States and cost an estimated $1.2 billion.

The project had already been delayed once from the original start-up date of 2016, to mid-2019.

The facility plans have been developed and include licensing, permitting, engineering and a lump-sum turnkey bid, according to Alison Jahn, Ascend's director of global communications.

Ascend also said they are continuing to look for a strategic owner for the plant and could complete the project within about three years of identifying a suitable partner.

Global polyethylene market faces supply glut

A surge in new plastics capacity coming on stream in North America, the Middle East and China in the next few year is driving the global market for polyethylene (PE) and polypropylene (PP) to overcapacity, which will pressure margins for producers and change the global competitive landscape, according to new analysis from IHS published on May 16.

More than 24 million metric tons of new PE capacity will be added globally between 2015 and 2020, some 8 million metric tons of which will come from the U.S., according to IHS estimates. The additions will boost the U.S. net export position for PE and PP and other chemicals relative to low-cost exporters from the Middle East.

Meanwhile, China is expected to add about 17 million metric tons of new polyethylene and polypropylene capacity during the next five years, which IHS predicts will drive further market volatility.

According to the company, the capacity expansion means there will be significant uptick in chemical trade activity – both in the solid plastics trade and the trade for bulk liquids chemical products – and logistics considerations for not only producers and traders, but also the key ports, terminals and logistics providers in the U.S. and globally.

LyondellBasell to restart Houston refinery coker by mid-June

A 42,000 barrels per day (bpd) coking unit at LyondellBasell Industries' Houston refinery is expected to restart between late May and mid-June for the first time since being damaged in an April 8 fire, Reuters reported on May 16, citing Gulf Coast market sources.

The coker was one of four units shut between April 8 and April 15 in a series of unit outages and accidents at the facility that cut production to 85,000 bpd.

Between May 1 and May 8, Lyondell restarted the small crude distillation and two vacuum distillation units, which were shut due to leaks. The large CDU remained in operation, though at smaller throughput.

The 263,776 bpd refinery is expected to reach a daily crude oil intake of 200,000 barrels this week for the first time since mid-April, the sources said.

There are two cokers at the refinery. The 57,000 bpd coker remains operational, according to Reuters.