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MOSCOW (MRC) -- FG LA, a division of
Taiwan's Formosa Plastics Group, has indefinitely suspended construction on a
USD9.4 billion petrochemical complex in Louisiana until the global coronavirus
pandemic subsides and/or a vaccine is widely available, reporte S&P Global with reference to a
spokeswoman's statement Nov. 23.
"The widespread impacts of a global
pandemic, including the challenge it creates in evaluating construction costs
and the restrictions it has placed on international travel, are being felt
across all industries and businesses, including FG," said Janile Parks, director
of community and government relations, said in an email. "As a result, FG has
deferred major construction until the pandemic has subsided and/or an effective
vaccine is widely available."
Work on multiple major petrochemical
projects in the US was temporarily suspended or slowed in April and May, during
the height of pandemic-related shutdowns that stymied construction activity.
Startup dates were pushed back as much as a year for some projects, while others
saw delays of a quarter or more.
But FG LA's deferral of a final
investment decision on what the company has dubbed the "Sunshine Project"
project marks the first indefinite delay of a major project because of pandemic
fallout.
The announcement came after the US Army Corps of Engineers
earlier in November suspended a key permit issued for the project in 2019,
according to federal court filings. The Corps of Engineers informed the company
of the permit suspension Nov. 10, pending a reevaluation.
On Nov. 20, FG
LA said in a statement that the Corps told the company that some activity
related to the project could resume despite the permit suspension, such as
relocation of a local water line and highway improvements.
"FG will
continue to comply with all notices and guidance from the Corps during the
permit suspension and re-evaluation process," the company said.
The
permit suspension emerged in a federal lawsuit filed against the Corps in
January by the Center for Biological Diversity and other groups. The lawsuit
alleges that the Corps issued a permit in September 2019 allowing dredge and
fill activity without fully examining environmental fallout from wetland
destruction and discharge of pollutants from the complex.
The Corps did
not prepare an environmental impact statement and issued the permit based on an
inadequate environmental assessment that "failed to take the legally required
'hard look' at the direct, indirect and cumulative impacts of the Corps'
decision to authorize the construction of the plastics facility and failed to
analyze a reasonable range of alternatives to that decision," the lawsuit
said.
The case had been headed for summary judgment, where a judge issues
a decision without a trial, when the Corps Nov. 4 asked for a stay until the
agency could notify FG LA of its intent to suspend the permit pending
re-evaluation of alternatives analysis under Clean Water Act
provisions.
The Corps told the company that any work authorized by the
permit had to cease pending results of the re-evaluation, which would include a
decision "either to reinstate, modify or revoke" it, according to a Corps letter
to the company dated Nov. 10 included in the Nov. 13 filing.
In March, FG
LA suspended major construction activity at the complex because of coronavirus
pandemic concerns, to reduce the number of workers on site.
By May, the
company had resumed work on a rail line and re-opened the site's office, but
more substantive work remained on hold pending the final investment decision
expected in the second half of 2020.
The first of the Sunshine Project
phase, originally targeted for a 2024 startup, includes a 1.2 million mt/year
ethane-fed cracker, a 600,000 propane dehydrogenation plant, a 600,000 mt/year
polypropylene unit, linear-low-density (LLDPE) and high-density polyethylene
(HPE) plants with capacities of 400,000 mt/year each, and a 900,000 mt/year
ethylene glycol unit.
The second phase, originally targeted for startup
by 2029, includes a 1.2 million mt/year cracker, LLDPE and HDPE plants with
capacities of 400,000 mt/year each, and a second 900,000 mt/year ethylene glycol
unit.
Permitting documents showed the EG plants will make monoethylene
glycol, diethylene glycol, and polyethylene glycol.
As MRC informed
before, Formosa Plastics USA, part of Formosa Petrochemical, has left a force
majeure on polyvinyl chloride (PVC) supplies from its Texas and Louisiana plants
in force as of 9 November. The force majeure circumstanses were announced
in mid-August, 2020, due to difficulties to produce the product amid upstream
steam cracker problems.
Ethylene and propylene are feedstocks for
producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report,
Russia"s estimated PE consumption totalled 1,594,510 tonnes in the first nine
months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE)
shipments increased. At the same time, PP shipments to the Russian market
reached 880,130 tonnes in the nine months of 2020 (calculated using the formula:
production minus exports plus imports, exluding producers" inventories as of 1
January, 2020). Supply increased exclusively of PP random
copolymer.
Formosa Petrochemical is involved primarily in the business of
refining crude oil, selling refined petroleum products and producing and selling
olefins (including ethylene, propylene, butadiene and BTX) from its naphtha
cracking operations. Formosa Petrochemical is also the largest olefins producer
in Taiwan and its olefins products are mostly sold to companies within the
Formosa Group. Among the company's chemical products are paraxylene (PX), phenyl
ethylene, acetone and pure terephthalic acid (PTA). The company"s plastic
products include acrylonitrile butadiene styrene (ABS) resins, polystyrene (PS),
polypropylene (PP) and panlite (PC). |
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