All the Majors Go Crackers

abarrelfull wrote on 05 May 2010 06:38
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I don't look at petrochemicals very much, but this week's combination was too interesting to miss.

Shell has completed its largest petrochemicals project.

Shell today announced the successful completion of the Shell Eastern Petrochemicals Complex (SEPC) project in Singapore. SEPC is Shell’s largest petrochemicals investment to date and the second world-scale petrochemicals project the company has completed in Asia in four years. The completion of the project reinforces Shell’s intention to remain a leading player in the expanding Asian petrochemicals market.

The new complex is part of the Shell Pulau Bukom Refinery. The project includes a world-scale ethylene cracker, which started up in March.

At the same time, Shell's peers are not standing still. Its neighbour in Singapore is following a very similar strategy.

A significant milestone in the development of ExxonMobil’s largest integrated chemical and refining complex was reached with the arrival of seven world-scale furnace modules at the Singapore facility.

Each furnace module is about 15 stories (50 meters) tall and weighs over 2,000 tons, the equivalent of the combined take-off weight of five Boeing 747 airplanes. Employing ExxonMobil’s state-of-the-art, proprietary furnace technology, the furnaces are part of a feed-flexible steam cracker that will have an ethylene production capacity of one million tons per year.

So Singapore will have not one, but two enormous petrochemical plants.

As if that were not enough, Total has got in the act as well.

Total announces the inauguration of the world’s largest olefin cracker based on ethane in Ras Laffan, Qatar.

It is another manifestation of the natural gas bounty in Qatar.

The ethane feedstock used in the Ras Laffan cracker comes from the North Field,a giant offshore gas field in which Total holds interests through the Dolphin and Qatargas I and II projects. The natural gas (methane) is treated for export in the liquefaction plants also based in Ras Laffan and the associated ethane produced at Dolphin will be valorized by the Ras Laffan cracker as raw material for the petrochemical industry.

There are a few important points to notice when looking at these stories.

Scale: Each of the projects is on a massive scale, small is not beautiful in this business.
Location: Where economic growth is rapid
Raw Materials: In Total's case, there is a big raw material cost advantage

Like the refining industry, petrochemicals is moving to where the customer is, and countries with raw materials, are becoming more significant players. The market is already dominated by the likes of Sabic, a company with huge raw materials procurement advantages, and this is a trend that seems to be continuing.