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Shale Magic: SABIC, ExxonMobil break ground on US Gulf Coast petrochemical project

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SABIC, ExxonMobil break ground on US Gulf Coast petrochemical project

 

 

A joint venture of Saudi Arabian Basic Industries Corp. and ExxonMobil Corp. has started construction of the JV’s Gulf Coast Growth Ventures project, a 1.8 million-tonne/year ethane cracking complex in San Patricio County, Tex., near Corpus Christi.

 

 

A joint venture of Saudi Arabian Basic Industries Corp. (SABIC) and ExxonMobil Corp. has started construction of the JV’s Gulf Coast Growth Ventures (GCGV) project, a 1.8 million-tonne/year ethane cracking complex in San Patricio County, Tex., near Corpus Christi

A groundbreaking ceremony for the proposed project took place at the Texas construction site on Sept. 13, SABIC said on official Facebook account.

The ExxonMobil-SABIC JV received final environmental regulatory approval in June to proceed with construction of the GCGV project, which—alongside the ethane steam cracker and two polyethylene units—also will include a 1.1 million-tpy monoethylene glycol unit

Upon announcing regulatory approval, the JV also confirmed it has let engineering, procurement, and construction contracts for the GCGV project to John Wood Group PLC as well as a consortium of McDermott International Inc. and Turner Industries Group LLC (

Project approval follows ExxonMobil and SABIC’s 2018 formation of the 50-50 GCGV JV—under which ExxonMobil will act as site operator—and the April 2017 selection of the San Patricio County site, which will allow ExxonMobil and SABIC to take advantage of the region’s existing infrastructure to capture competitive pricing for US natural gas feedstock as well as access to rising demand for ethylene-based products in overseas export markets.

Alongside forming part of SABIC’s growth strategy to build petrochemical installations in key markets—including the Americas—to address industry demand and achieve the company’s 2025 strategy, the proposed multibillion GCGV project also is one of the developments included as part of ExxonMobil’s 10-year, $20-billion “Growing the Gulf” expansion initiative announced in early 2017.

 

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In the last 12 months, a record volume of LNG projects reached final investment decision. These totaled more than 80 million tonnes/year of new production, or 25% of the current market, according to an outlook by McKinsey & Co.

According to the report, “Global Gas & LNG Outlook to 2035: H1 2019,” more than half of global natural gas supply growth until 2035 will be sourced from the US: 380 billion cu m (bcm) out of 635 bcm.

McKinsey’s report, released in September as part of its Energy Insights series, went on to note that China, South Asia, and Southeast Asia will account for 95% of global LNG demand growth through at least 2035. More than 100 LNG liquefaction projects totaling 1,100 million tpy are competing to fill a 125 million-tpy supply shortfall projected over that period. Only 1 in 10 of these will be competitive enough to reach FID, the consultancy said.

“We see abundance of supply, going forward,” McKinsey partner Dumitru Dediu told Oil & Gas Journal at Gastech 2019 in Houston. “We also see Qatar making progress towards FID. Demand continues to grow, but supply is likely to grow even faster. This creates a very difficult situation for suppliers trying to secure demand [in advance of FID].”

Dediu continued, “We don’t see the becoming easier, especially for single-source suppliers. The ones who will actually benefit most will be portfolio players, who can absorb the volumes while taking on and managing the risk.” LNG producers “can only find certainty in projects which can deliver into Asia at below $7/MMbtu,” he said.

Dediu divides LNG importing countries with potential interest in floating regasification into two categories: those replacing or supplementing their own production with LNG (Thailand, Pakistan) and therefore already having the support infrastructure in place and those where grid and other development is still needed. In the latter case, many opt for a direct gas-to-power option with the power then delivered through the electrical grid. Others, such as Brazil, position regasification near an already active industrial site and use the gas there. Either of these options requires engaging a broader spectrum of stakeholders than do new sales into more established LNG buyers.

On the liquefaction side, Dediu expects the modularization of processes undertaken for the Prelude floating LNG project offshore Australia to continue being adapted for both floating and land-based developments, citing nearshore gravity-based Arctic LNG 2 and Coral LNG prime examples. “Going forward, many of the pure floating solutions will be relatively expensive” leading to a mix of floating, nearshore, and gravity-based approaches made possible by the increased modularization.

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Gulf Coast Express pipeline starts gas flow

The Gulf Coast Express (GCX) pipeline project has started full commercial operation on Sept. 25, says Kinder Morgan Inc. (KMI), the natural gas system’s builder and operator.

Sep 25th, 2019

The Gulf Coast Express (GCX) pipeline project has started full commercial operation on Sept. 25, says Kinder Morgan Inc. (KMI), the natural gas system’s builder and operator. Construction on the line began in early 2018 (OGJ Online, Jan. 3, 2018).

The pipeline will deliver gas from the Waha Hub near Coyanosa, Tex., in the Permian basin to Agua Dulce, Tex. The $1.7-billion project was originally expected to be online in October.

The GCX project mainline portion consists of 82 miles of 36-in. pipe and 365 miles of 42-in. pipe. The system’s 2-bcfd capacity is fully subscribed under long-term contracts, KMI said.

 

KMI subsidiary Kinder Morgan Texas Pipeline LLC holds 34% in the project. Equity holders include Altus Midstream Co., DCP Midstream LLC, and an affiliate of Targa Resources Corp.

 

 

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Enterprise Products Partners L.P. reported Thursday that it will build a second propane dehydrogenation (PDH) plant at its complex in Mont Belvieu, Texas.

The decision to build the “PDH 2” plant stems from recently executed long-term polymer grade propane (PGP) supply contracts between Enterprise and LyondellBasell Industries N.V.

“As we aim to meet the growing demand for our products, ensuring a long-term supply of feedstock is critical,” LyondellBasell CEO Bob Patel said in a written statement. “These agreements allow us to leverage Enterprise’s construction expertise, operating experience and robust network as we continue to deliver an outstanding value proposition for our customers.”

According to Enterprise, PDH 2 will consume up to 35,000 barrels per day (bpd) of propane to product up to 1.65 billion pounds per year of PGP. The company added that it has licensed Honeywell’s UOP Oleflex propane process to produce PGP.

“PGP is a primary petrochemical that can be converted into hundreds of products that improve the daily lives of people around the world,” stated A.J. “Jim” Teague, CEO of Enterprise’s general partner. “Demand growth for these propylene-based products is strong and PDH 2 will provide cost-advantaged supply assurance to our customers, enabling expansion of their downstream businesses to satisfy this global market.”

Enterprise also reported that it has negotiated terms with S&B Engineers and Constructors, Ltd. for a fixed-cost engineering, procurement and construction (EPC) contract to build PDH 2.

“With the combination of LyondellBasell as an anchor customer, our use of UOP’s Oleflex technology and S&B providing engineering and construction services, I am highly confident of a successful project that will grow Enterprise’s cash flow per unit and enhance the value of our partnership,” concluded Teague.

Enterprise expects PDH 2 to begin service during the first half of 2023.

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US shale and a glut of crude will prevent Saudi oil shock

Texas’ thriving oil production could be to thank for the world avoiding an economically crippling, triple-digit spike in crude prices following attacks on facilities in Saudi Arabia less than two weeks ago.

Fears of soaring prices and panic buying at petrol pumps failed to materialize, despite the temporary loss of 6% of the world’s supply from Saudi oil wells. Instead of an oil shock spiraling out of control after prices initially surged by a record 20%, crude was trading on Friday only fractionally higher than its $64/b year-to-date moving average.

 

Saudi Aramco can claim some of the credit for steadying the ship. The kingdom’s national oil company has pledged to restore its capacity to 11 million b/d by the end of the month, after losing half of its output following the attacks. Meanwhile, it will honor all of its contracts to supply customers with crude from existing stockpiles, while engineers try to rebuild bombed out facilities at Abqaiq and Khurais.

 

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Polyethylene investment still surging in North America

Posted on Oct 2, 2019

 

 

The investment in North American polyethylene (PE) has already resulted in the addition of over 4.5 million tonnes/year of new capacity since 2017. At least 30% of that new capacity is marked for export.

 

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Sasol Lake Charles Chemicals Complex

Sasol’s 1.5 million tonne/year cracker in Lake Charles, Louisiana, began startup operations in July, but the company's new associated 420,000 tonne/year low density polyethylene (LDPE) plant was delayed.

The project will roughly triple the company's chemical production capacity in the U.S. but has experienced multiple cost and schedule overruns.

The estimate for the Lake Charles Chemicals Project (LCCP) is now $12.6-12.9 billion, including a contingency of $300 million, Sasol said in a stock exchange announcement in August 2019. Costs at the site have climbed from an initial projection of $9 billion. The challenges are a result of weather, engineering and staffing difficulties, Sasol said.

In February, the company announced that the cracker and derivative units would start up several months later than planned because of incomplete engineering work, inclement weather and worker absenteeism, after the cracker and a 470,000 tonne/year linear low density polyethylene (LLDPE) plant had been slated to start up by December 2018.

The LLDPE plant came online in February, followed by a 380,000 tonne/year ethylene oxide/monoethylene glycol unit in June.

Sasol in 2016 revised the project cost to $$11.1 billion from $9 billion because of issues with labor retention and other costs. Then in February pushed costs to $11.6 billion to $11.8 billion because of incomplete engineering work, bad weather and worker absenteeism. In May, overall costs climbed again.

The first of seven units started production earlier in 2019, and by second quarter 2019, Sasol said the complex was 96% complete. However, issues with a heat exchanger and the acetylene reactor system interrupted the planned start-up for some of the units.

The project will, once complete, boost the part of chemicals in Sasol’s sales mix to 70%. It’s one of two massive plants that it had planned in the U.S., but the second – a gas-to-liquids (GTL) operation –was abandoned during the oil-price crash.

LCCP was approved in 2014. Mechanical, electrical and instrumentation work began in 2016.

In 2015, Sasol announced its local contractors. Cajun Constructors Inc. and James Industrial Constructors were hired to do site work, including site preparation, piling and foundations. ISC Constructors LLC and MMR Constructors Inc. were contracted to perform electrical and instrumentation work. Turner Industries was hired to conduct mechanical, structural steel and piping work.

Fluor Technip Integrated of Texas was contracted as the primary engineering, procurement and construction (EPC) management contractor.

ExxonMobil – Beaumont, Texas

ExxonMobil announced in July it started production on a new PE line at its Beaumont plant.

The new high-performance line is part of an expansion that increases the PE plant's production capacity by 65% or 650,000 tons annually.

The capacity for the facility is now 1.7 million tonnes/year. The project supported 2,000 temporary jobs and will add 40 permanent jobs to the facility.

The expansion makes Texas the company's largest PE producer.

Zachry Group was originally hired to manage the project in 2016. Details of Zachry’s responsibilities include providing constructability and execution planning, electrical and instrumentation design, and direct-hire responsibilities for in-plant

LyondellBasell – La Porte

LyondellBasell is constructing its 500,000 tonne/year Hyperzone high density polyethylene (HDPE) project in La Porte, Texas. The project is slated for start-up by the end of 2019.

The La Porte Complex is one of LyondellBasell's largest manufacturing facilities spanning approximately 550 acres. The complex has two docks on the Houston Ship Channel and truck and rail transportation capabilities.

Once the Hyperzone PE plant is complete, the La Porte Complex will more than double its annual PE capacity to 2 billion pounds (900,000 tonnes).

Formosa – Point Comfort

Formosa Plastics is in the middle of a major production capacity expansion, which will add a third olefins unit, a propane dehydrogenation (PDH) unit, a LDPE resin plant, another HDPE resin plant and an additional polypropylene (PP) line.

The company said it intends to achieve steady state commercial operations at its two new PE plants in Point Comfort, Texas during the second half of 2019.

Its third olefins plant at Point Comfort is under construction, and gas feed is expected also in the second half of 2019. The cracker will have a capacity of 1.25 million tonnes/year.

For the PE plants, one will have a capacity of 400,000 tonnes/year of low-density PE (LDPE). The other will be able to produce both high density PE (HDPE) and linear low-density PE (LLDPE), with a combined capacity of 400,000 tonnes/year.

Total Borealis Nova – Bayport

Bayport Polymers (Baystar) - a 50/50 joint venture owned by Total and Novealis, itself a joint venture of Borealis AG and NOVA Chemicals announced the final investment decision to build a 625,000 tonne/year polyethylene unit at its production site in Bayport, Texas.

The JV started construction of the Borstar Bay3 project earlier this year. The unit is scheduled for start up in 2021.

The contract for the engineering, procurement and construction was awarded to McDermott and is expected to employ 1,750 staff during peak activity.

The $1.7-billion ethane steam cracker—which will supply feedstock both for Baystar’s existing 400,000-tonne/year PE unit as well as the new Borstar unit—remains on schedule for commissioning in late 2020.

Nova Chemicals -Canada

Nova Chemicals, the Calgary-headquartered company, owned by the Emirate of Abu Dhabi, is also busy advancing work in its new Rokeby Site, in Sarnia-Lambton, Ontario, located with access not just to Canada’s markets but also to the north-central U.S. The project is within 65 miles of Detroit.

Piling work began in the fall. Work in the past year has included new roadways and parking lot construction. Nova bought in 1988 the Corunna petrochemical facilities, located next to the Rokeby construction site.

The project involves adding capacity of approximately one billion pounds of PE per year by the end of 2021. Work includes a cracker expansion to increase the existing unit’s current ethylene capacity by more than 50 percent.

Shell Pennsylvania

Shell Chemical has installed most of the major components of its new plant in Beaver County, Pennsylvania. Roughly 5,000 workers are on site building the plant now, and up to 6,000 are expected to be on site by year end. Work is expected to take another 18 months to complete, an executive told the local television station WKBN 27.

The Shell cracker is the first major U.S. major petrochemical complex outside of the U.S. Gulf in more than 30 years.

The plant sits on more than 300 acres bounded by I-376 and the Ohio River, where barge traffic can be seen bringing equipment for the plant that was too large to get there any other way.

The plant’s supply chain has access to highway, rail lines and the river.

The plant also sits near the center of the Marcellus Shale natural gas play for its upstream resources, as well as a big chunk of Shell’s potential customer base.

The plant will eventually hire about 600 operators, engineers and safety and environmental workers. Bechtel is the project manager for the Shell Chemicals plant.

 

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Which company is doing the Engineering/Procurement/Construction on this project? 

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Sur de Texas flows reach record high, shifting US, Mexico gas balance

 

Mexico deliveries from pipeline hit 750 MMcf/d Friday

US supply displaces domestic gas, activates latent demand

 

 

Transmission volumes on the Sur de Texas-Tuxpan Pipeline climbed to a record high late last week as the cross-border route continues to move more South Texas gas supply into central Mexico.

 

Deliveries Friday from the new pipeline climbed to their highest yet at 750 MMcf/d.

Since entering commercial service September 17, supply delivered to Mexico on Sur de Texas has averaged about 580 MMcf/d. Deliveries from the pipeline Tuesday were estimated at roughly 640 MMcf/d, the most recently available S&P Global Platts Analytics data showed.

Now the largest cross-border pipeline in operation, the 2.6 Bcf/d Sur de Texas route has already begun affecting supply-demand dynamics, both inside Mexico and in the South Texas gas market.

 

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According to Platts Analytics, that additional supply in central Mexico has actually activated latent demand from industry and power generators, which has grown about 200 MMcf/d since Sur de Texas entered service. In southern Mexico, demand has grown about 100 MMcf/d over the same period.

SOUTH TEXAS

In South Texas, the near-simultaneous startup of Kinder Morgan's 2 Bcf/d Gulf Coast Express -- an intrastate pipeline not required to report flow volumes publicly -- has largely obfuscated the market impact of Sur de Texas exports.

One clear result of the pipeline's startup, though, has been the displacement of export volumes on other pipelines -- most notably NET Mexico.

 

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