MOSCOW (MRC) -- Ineos Group Ltd. is considering expansion of its plants in USA to take advantage of low-cost natural-gas liquids as feedstock for ethylene production, reported Bloomberg.
The company is likely to add 250 mln-1 bln lbs of annual ethylene production at its Chocolate Bayou site south of Houston, Dennis Seith, chief executive officer of the company’s U.S. olefins and polymers unit, said. Additional polypropylene and alpha-olefins capacity may be added at the site. Decisions on all three investments will be made within a year, with the expanded ethylene output available early next decade, he said in an interview.
Abundant shale gas has made the U.S. among the least expensive places to produce ethylene, the most used petrochemical, and derivative products, such as polyethylene plastic, which is used in bags and food packaging. The advantage has "diminished somewhat," however, as crude’s decline has cut prices for naphtha, an alternative raw material for making ethylene, Seith said. Low oil prices are causing delays in investment decisions that could lead to "a very tight market" for ethylene at decade’s end, he said.
"It’s not a predictable environment for investments," he said. Cheap oil could spur more mergers and acquisitions, particularly if state-owned oil companies in the Middle East decide to shed some of their chemical units, Seith said. Ineos may consider purchasing those assets, as well as any that may become available from the pending combination of Dow Chemical Co. and DuPont Co., the chemical industry’s largest merger ever, he said.
Ineos is weighing acquiring its own shale-gas fields in the U.S., complementing its activities in the U.K., he said. The company is working with the British government and local communities to begin extracting gas from shale formations to supply its Grangemouth ethylene plant in Scotland, he said.
Ineos this month began shipping U.S. ethane to Grangemouth, becoming the first European chemical maker to tap U.S. gas. A 1bln lb expansion of polyethylene plastics production at a joint-venture site on the Houston Ship Channel is scheduled to start production in Q4, Seith said.
As MRC informed previously, Ineos is expected to deliver its first US shale gas shipment into Rafnes, Norway on March 23. Ineos said this is the first US shale gas to be shipped to Europe and represents the culmination of a long-term investment by Ineos. To receive the gas, Ineos has built the largest two ethane gas storage tanks in Europe at Rafnes in Norway and Grangemouth in Scotland. Ineos will use the ethane from US shale gas in its two gas crackers at Rafnes and Grangemouth, both as a fuel and as a feedstock.
At Rafnes, Ineos operates the Noretyl cracker with a capacity to produce 570,000 mt/year ethylene and around 80,000 mt/year of propylene, which are used as feedstock for the company’s polypropylene (PP), low density polyethylene (LDPE) and high density polyethylene (HDPE) plants at Bamble.
At Grangemouth, Ineos operates a 1 million mt/year Kinneil Gas (KG) gas cracker using mainly ethane and propane to feed its 330,000 mt/year linear low density polyethylene (LLDPE) plant and 235,000 mt/year PP plant.
INEOS Group Limited is a privately owned multinational chemicals company consisting of 15 standalone business units, headquartered in Rolle, Switzerland and with its registered office in Lyndhurst, United Kingdom. It is the fourth largest chemicals company in the world measured by revenues (after BASF, Dow Chemical and LyondellBasell) and the largest privately owned company in the United Kingdom.