NWIW drops Tacoma project; US gas output rose 5% in 2015

Petrochemicals news you need to know.

INEOS, Rex Energy sign new NGLs deal

INEOS Europe and Rex Energy Corporation have reached a new natural gas liquids (NGLs) sale and purchase agreement covering ethane, propane and butane, Rex Energy announced on April 11.

The NGLs will be transported through Sunoco Logistics’ Mariner East pipeline to the the Marcus Hook deep-water terminal near Philadelphia, Pennsylvania, and exported by sea to INEOS's European cracker complexes.

Transportation of ethane supplies started earlier in April while propane and butane supplies will start with the completion of Mariner East 2 pipeline in 2017.

On March 23, INEOS confirmed that its INEOS Intrepid vessel had arrived at its petrochemical plant at Rafnes in Norway, carrying 27,500 cubic meters of U.S. shale gas ethane. This was the first time that U.S. shale gas had been shipped to Europe.

US gas production hit record high in 2015

US natural gas production hit a record high of 79 billion cubic feet per day (Bcf/d) in 2015, up 5% year on year, even as natural gas prices remained relatively low, according to the U.S. Energy Information Administration (EIA).

Production from five states – Pennsylvania, Ohio, West Virginia, Oklahoma and North Dakota – accounted for most of the growth and for 35% of total US natural gas production in 2015, offsetting declines in much of the rest of the United States.

In most cases, production in these states continued to increase in 2015 but at a slower pace than in the previous year.

Source: Source: U.S. Energy Information Administration, Natural Gas Monthly.

Meanwhile, total natural gas production in the federal Gulf of Mexico (GoM) grew 6% in 2015, reaching 3.6 Bcf/d, after declining for five consecutive years. The long-term decline in GoM natural gas output likely resulted from the higher cost of offshore production compared with onshore production.

According to EIA's Short-Term Energy Outlook, natural gas production growth in the U.S. will slow to 0.9% in 2016 as low natural gas prices and declining rig activity temporarily reduce production. However, the EIA expects production growth to increase to 2.2% in 2017 on the back of rising gas prices, growing industrial demand and increasing gas exports.

Pembina eyes Canada PDH project; LyondellBasell, Westlake begin turnarounds

Pembina Pipeline Corporation and Petrochemical Industries Company K.S.C. (PIC) – a subsidiary of the Kuwait Petroleum Corporation – have begun a joint feasibility study for a proposed world-scale combined propane dehydrogenation (PDH) and polypropylene upgrading facility in Alberta, Canada, Pembina announced on April 11.

The project could consume approximately 35,000 barrels per day of propane and produce up to 800,000 metric tons per year of polypropylene, which will be transported in a pellet form to markets across North America and internationally.

The feasibility study is expected to take about six months, followed by Pembina and PIC approval to proceed to Front End Engineering Design.

The final investment decision for the project is expected by mid-2017, and the project could be operational by 2020, subject to regulatory, environmental company approvals.

Meanwhile, LyondellBasell has begun shutdown activities at its 771 KTA ethylene plant in Corpus Christi, Texas, Argus Media reported on April 13. The planned turnaround could last as long as 120 days.

Operators will route benzene, butane, butylene, ethylene, pentane, propane, propylene, toluene and xylenes to the flare during the shutdown, according to a Texas Commission on Environmental Quality emissions report. Flaring could last through 13 May.

Westlake Chemical has also started its scheduled turnaround and expansion project at its Petro 1 olefins unit in Lake Charles, Louisiana, according to market sources.

The turnaround is expected to last 80 days, and the expansion project will add around 113 KTA to the site’s ethylene capacity.

NWIW drops Tacoma methanol project; OCI, CEL take 50:50 stake in Natgasoline methanol project

G2X Energy announced on April 12 that its parent company, Consolidated Energy Ltd. (CEL), had entered into definitive agreements for an investment in a 50% stake in the 1.75 mtpa Natgasoline methanol project in Beaumont, Texas, in participation with OCI.

CEL will inject $630 million in equity and an additional $50 million shareholder loan. The investment will be made via G2X Energy.

The injection of $680 million into the project, combined with OCI's existing equity of $520 million and shareholder loans of $511 million, will complete the entire funding requirements for the project.

On April 21, OCI and CEL announced that investment banks Citi and Morgan Stanley had underwritten a $250 million bond issue to fund a portion of the project costs.

The plant, which is slated to begin production in the second half of 2017, will be the largest methanol production facility in the U.S.

Meanwhile, On April 19, Northwest Innovation Works said it is cancelling its proposed methanol project in Tacoma, Washington, citing “business considerations particular to the Port of Tacoma site.” The company said it will continue to develop methanol projects in Kalama, Washington and St. Helens, Oregon.