Inter Pipeline to build first integrated PDH, PP complex in Canada

MOSCOW (MRC) -- Inter Pipeline Ltd. has announced that its board of directors has authorized the construction of a world-scale integrated propane dehydrogenation (PDH) and polypropylene (PP) plant, as per Hydrocarbonprocessing.

The facilities, collectively referred to as the Heartland Petrochemical Complex, are estimated to cost USD3.5 B in aggregate and will be located in Strathcona County, Alberta near Inter Pipeline’s Redwater Olefinic Fractionator.

The Heartland Petrochemical Complex will be designed to convert locally sourced, low-cost propane into 525 Mtpy of polypropylene, a high value, easy to transport plastic used in the manufacturing of a wide range of finished products. Construction of the complex will continue in early 2018 with completion scheduled for late 2021.

The PDH facility will be designed to convert approximately 22,000 bpd of propane into 525 Mtpy of polymer grade propylene. Propane feedstock for the PDH plant will be sourced from Inter Pipeline’s Redwater Olefinic Fractionator as well as several other third-party fractionators in the region.

Detailed engineering for the plant was awarded to Fluor Corporation in 2013 and is now approximately 85 percent complete. Inter Pipeline has also completed early civil work at the site in preparation for facility construction activities in early 2018.

The integrated PP plant will utilize propylene from the PDH plant to produce 525 Mt of polypropylene per year. Linde Engineering was awarded the front-end engineering design contract for this facility in 2017, and work is currently approximately 70% complete. Construction of this component of the complex is scheduled to begin in the second half of 2018.

Other construction activities associated with the project include product storage facilities and rail loading assets to facilitate the transport of polypropylene pellets to various North American markets.

Inter Pipeline is conducting a two phase contracting process to underpin this investment. Phase 1, which has been completed, resulted in Inter Pipeline securing certain take-or-pay contracts with an average term of 9 yr. Phase 2 contracting will commence in early 2018 with the objective of securing between 70% and 85% of total petrochemical processing capacity under take-or-pay contracts over the next 4 yr.

Inter Pipeline intends to utilize the remaining uncontracted plant processing capacity for its own commercial purposes.

The take-or-pay agreements are structured to provide a fixed return on capital payment to Inter Pipeline, plus a recovery of variable and fixed operating and transportation costs. Inter Pipeline has no exposure to propane or polypropylene commodity price fluctuations under these agreements.

When contracting is complete and the complex is in operation, Inter Pipeline expects to earn approximately $450 MM to USD500 MM per year in long-term average annual EBITDA. This represents a strong return on invested capital and is expected to be accretive to forecast funds from operations per share.

Inter Pipeline will also benefit from $200 MM of royalty credits received from the Government of Alberta’s Petrochemical Diversification Program. The credits were provided in support of the construction of the propane dehydrogenation plant and will be monetized over a three-year period once the complex is operational.

Funding for this petrochemical facility is expected to be provided through a combination of debt and equity financing sources. At present, Inter Pipeline's financial position is supported by a strong balance sheet, investment grade credit ratings and excellent access to capital markets.

Inter Pipeline anticipates that capital commitments over the next four years will be met through a combination of capacity available under an existing $1.5 B committed credit facility, undistributed cash flow from operations, the periodic issuance of new term debt, hybrid debt securities and proceeds from existing dividend re-investment programs. Inter Pipeline does not expect the need for material, underwritten equity offerings to finance its funding obligations.

We remind that, as MRC wrote before, in H2 of October, 2017, TransCanada Corp said it expected to take a CUSD1 B charge in the current quarter after deciding to abandon its Energy East and Eastern Mainline pipeline projects, after intense scrutiny by Canada's energy regulator. The termination comes after the National Energy Board (NEB) expanded the scope of its review of Energy East in August, saying it would consider the pipeline's indirect greenhouse gas contributions. Energy East's importance has somewhat diminished for TransCanada since US President Donald Trump this year signed an order reviving the company's Keystone XL pipeline, which would run from Alberta's oil sands to US refineries.


MRC

SK completes acquisition of Dow Chemical packaging business

MOSCOW (MRC) -- SK Global Chemical on Friday completed its acquisition of Dow Chemical’s packaging product business, reported The Korea Herald with reference to the company's statement Monday.

SK Global Chemical, the chemical unit of SK Innovation, signed a deal with Dow Chemical to acquire the US chemical firm’s polyvinylidene chloride (PVDC) unit in October. PVDC is used for clear film packaging including plastic food wrap.

With the deal completed, SK Global Chemical now has full control of properties previously owned by Dow Chemical. They include Michigan-based facilities, related technologies and intellectual assets, as well as the trademark right to the plastic wrap brand Saran.

The latest acquisition of Dow Chemical’s packaging unit is reportedly expected to reach some 82 billion won (USD75 million). The sale price of the packaging unit is undisclosed by the company, as it is not legally bound to make a public report on deals worth less than 98 billion won or 2.5 percent of the company’s capital ratio.

In September, the chemical affiliate of SK Innovation finished the transaction of Dow Chemical’s ethylene acrylic acid business, of which the company announced in early February 2017, for USD370 million.

The latest acquisition is in line with SK Innovation’s future strategy that aims to expand the company’s packaging and automotive materials businesses, the company’s officials said.

SK Global Chemical is a pioneering petrochemical company in Korea, being the first in the country to build a naphtha cracking facility in 1972. Through continuous facility investment, R&D and technological improvement, the company has maintained its position as the leader of the petrochemical industry in Korea.

The Dow Chemical Company is an American multinational chemical corporation. Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber.
MRC

GE awarded service contract for biorefinery

MOSCOW (MRC) — GE Power was selected by Alco Bio Fuel, one of Belgium’s major biorefineries, to deploy its Predix-based Asset Performance Management (APM) solution to future-proof the refinery’s power-generation unit’s refinery field operations, as per Hydrocarbonprocessing.

The service contract will last for 10 yr, and GE will also be responsible for providing on-site service support. When an electric rotating machine (ERM), such as the generator in the power-generation unit, fails, the consequence can be significant. Digital transformation is a necessary and inevitable step to improve operational efficiency and reduce risks of power outages.

Traditionally, vibration sensors are used to detect failures in rotating machines, but their ability is limited to detecting mechanical failures only, neglecting common electrical failures. Industry advancements in big data analytics and new software applications such as GE’s Predix-based APM solution, combined with new sensing techniques, have enabled new ways to more effectively monitor and fine-tune the performance of an ERM.

GE’s APM solution, powered by Predix, the application development platform for the Industrial Internet, connects, monitors and provides predictive analytics to the generator inside the plant. When deployed, it will collect data from electric sensors built into the generator asset.

The APM application analyzes streams of data with key intelligence about the health and performance of the generator asset while searching for signs of mechanical or electrical anomalies, which may lead to potential failure or inefficiency. These insights can, in turn, help operators to fine-tune parameters of the generator to improve its performance. More importantly, it will allow operators to solve potential problems before they occur, reducing costly unplanned downtime, mitigating risk and improving productivity. The data-driven operation method will also enable predictive maintenance, which means fixing machines before failures arise, without wasting time servicing them on a fixed schedule, and it will reduce excessive maintenance costs.
MRC

Ineos sticks with 2-4 week Forties pipeline repair estimate, assessing damage

MOSCOW (MRC) -- Repairing Britain's Forties crude oil pipeline in the North Sea is still expected to take two to four weeks, operator Ineos said on Monday, as assessment continues a week after it was closed down, reported Reuters.

The system, which carries around 450,000 bpd of Forties crude to Britain, along with a third of the UK's total offshore natural gas output, has been closed since last Monday after a routine inspection revealed a crack in an onshore section of the pipe.

"We are currently monitoring the pipeline and working through some of the solutions for repair," spokesman Richard Longden said, adding the crack had not grown in the last week.

Ineos on Dec 13 was forced to declare force majeure on deliveries of Forties crude oil, natural gas and condensate, suspending its contractual obligations to customers due to circumstances beyond its control.

The privately-owned chemicals company based in Switzerland bought the pipeline system from BP in late October.

It has told clients it expects any repair work to take between two and four weeks, an estimate that has not changed in the last week.

Forties is the biggest of the five North Sea crudes that underpin Brent, a benchmark for oil trading in Europe, the Middle East, Africa and Asia.

Brent crude oil futures were up around 0.25% on the day at USD63.39/bbl by 1132 GMT, having touched USD65 following the outage last week, the highest since mid-2015.

As MRC informed before, 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. 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 in March 2016. Additional polypropylene and alpha-olefins capacity may be added at the site.
MRC

PetroRabigh restarts LLDPE unit

MOSCOW (MRC) -- PetroRabigh, a joint venture between Saudi Aramco and Japan's Sumitomo Chemical, has brought on-stream its No.2 linear low density polyethylene (LLDPE) unit following a prolong shutdown, as per Apic-online.

A Polymerupdate source in Saudi Arabia informed that the company has resumed operations at the unit early last week. The plant was taken off-stream for maintenance in early-October 2017.

Located in Jubail, Saudi Arabia, the No. 2 unit has a LLDPE production capacity of 350,000 mt/year.

As MRC wrote previously, PetroRabigh took off-stream its LLDPE plant in Saudi Arabia for maintenance from March 16 to late March 2016.

Located in Rabigh, Saudi Arabia, the LLDPE plant has a production capacity of 600,000 mt/year.

PetroRabigh, a joint venture between Saudi Aramco and Japan's Sumitomo Chemical, has an annual output capacity of 18 million tonnes of refined products and 2.4 million tonnes of petrochemicals. Thus, the complex currently has a cracker to produce 1.3-million t/y of ethylene and 900,000 t/y of propylene, as well as downstream production of polyethylene, polypropylene, propylene oxide, ethylene glycol and butene-1.
MRC