12-06-2013

Chevron Phillips Chemical executive says innovation is key to europe’s ability to compete

Development of energy sources around the world drives the availability of petrochemical feedstocks, and for most of the past two decades, much of that development has been in the Middle East leading to a surge in petrochemical production in that region. If the European petrochemical industry hopes to remain competitive, it must continue to capitalize on its historic advantage in innovation and further work on developing its specialty products portfolio, according to Benny Mermans, Europe and Africa region general manager at Chevron Phillips Chemicals International N.V.
 
In his presentation “Adapting in a Changing Feedstock Environment: U.S. Driving the Way” at the Global Petrochemical Conference, Mermans said, “Focusing on innovation is even more important in light of the prolonged economic crisis which continues to impact demand and margins in much of Europe. The mega complexes being built today will likely have difficulty effectively competing in this highly specialized area.”

As an example of this emphasis on specialty products, Chevron Phillips Chemical announced it will expand its Tessenderlo, Belgium plant by adding the capability to manufacture sulfur-based organic products starting with elemental sulfur.  In 2011, Chevron Phillips Chemical acquired a PAO plant located in Beringen, Belgium from Neste Oil, NV. This is a strategically important acquisition because it establishes a European production base for PAOs and expands its PAO capacity to better serve our customers and growing demand.

Mermans also understands the challenges European producers face. He said, “Many regions in the world have shale formations and potential shale gas and shale oil resources, and we expect that these will be developed, providing petrochemical investment opportunities in the future. The challenges that must be overcome to fully develop these resources in Europe include land access, regulatory hurdles, infrastructure development, and continued development of drilling and completion technologies.”

“To get access to competitive feedstock within its borders, European producers must encourage development of European energy resources, creating an environment of plentiful gas supply. This would take substantial cooperation and development,” Mermans continued.

During his presentation in Frankfurt, Germany, Mermans highlighted that Chevron Phillips Chemical has filed permit applications to build an ethane cracker with an annual capacity of 1.5 million metric tons at its Cedar Bayou facility in Baytown, Texas and two polyethylene units each with annual capacity of 500,000 metric tons in Old Ocean, Texas. Final approval for the project is expected this year. 
 
“The proposed investment reflects our strong confidence on the opportunity that development of abundant shale resources affords the United States and the world,” said Mermans.  “We estimate that global demand growth for ethylene over the next ten years could support the equivalent of 3-4 new world-scale crackers per year, and we believe the development of shale energy resources around the world will also catalyze new investments in petrochemicals and plastics. Satisfying global demand growth will require continued high investment in petrochemicals and plastics globally,” he continued.