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Splitter for Inter Pipeline's HPC project during move in 2019. Photo courtesy of Inter Pipeline

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Canada’s Inter Pipeline increases by 14% projected cost for polypropylene project

Canada’s Inter Pipeline said on May 7, 2020 its projected cost for a plant to process propane into propylene and then polymerize it to yield polypropylene (PP) rose 14% because of Covid-19 construction delays.

“The Covid-19 pandemic has affected Inter Pipeline's near-term construction execution plans, which will impact capital costs and may extend the construction schedule,” it said.

The estimated cost of the project known as Heartland Petrochemical Complex (HPC) is now C$4 billion,” it said. The original estimate was C$3.5 billion.

The project involves building capacity to produce 525,000 tonnes annually of polypropylene through the processing of 22,000 barrels per day of propane using Propane De-Hydrogenator (PDH) technology.

The projected in-service date “may shift to early 2022. However, mitigation plans to address this are under development,” Inter Pipeline said. The original startup date was before the end of 2021. Most incremental costs will come in 2021 and 2022, it added.

The C$500 million corresponds to C$100 million in revised PP/PDH design and construction; C$170 million in added commissioning; C$150 million attributed to Covid-19 impact, and C$80 million in added interest.

First quarter 2020 expenditures for this project were C$255 million, bringing the total project spending so far to about C$2.5 billion, the company added.

“The project construction site remains active, with rigorous sanitation and social distancing,” it said.

“To date there have been no reported Covid-19 cases at HPC. However, increased precautionary measures have lowered construction site staffing and impacted near-term planned productivity,” it added.

Inter Pipeline said on March 30 that it is looking for a partner to share this project.

(C$1=US $0.71)

Pemex petrochemical production drops on-year

Mexican state oil company Pemex said in its first quarter earnings filing on April 30 that during the January-April period its total petrochemical production reached 423,000 tonnes, 55,000 tonnes less than in the same period a year earlier.

Ethane derivatives output in the first quarter of 2020 declined to 91,000 tonnes compared with 149,000 tonnes in the first quarter a year earlier. This was because “the swing plant at the Morelos petrochemical complex presented operational problems,” Pemex said.

Pemex said that its aromatics and derivatives production increased on-year as the Cangrejera petrochemical complex production stabilized.

Aromatics and derivatives production at Pemex rose to 69,000 tonnes in the first quarter of 2020 from 53,000 tonnes a year earlier.

Propylene and derivatives production fell more than half to 18,000 tonnes in the first quarter from 39,000 tonnes a year earlier.

Methane derivatives production in the first quarter was 49,000 tonnes or a 7,000 tonnes on-year increase. It resulted from “the reactivation of the ammonia plants,” Pemex said.

Other petrochemical products at Pemex include sulfur, carbon black and smaller volumes of hexane, pentane, butanes, raw butadiene and other chemicals. 

Braskem delays U.S. filings due to Covid-19, warns of risks

Latin America’s biggest petrochemical company, Braskem, told the United States Security and Exchange Commission (SEC) on April 30 that it would not meet an end-April deadline to file statements due to delays associated with Covid-19, while it also warned of revenue risks.

The company cited a relief offered by the SEC in late March to public companies that due to Covid-19 may face difficulty in timely filings, adding it applies to its current situation. It also warned of risks.

“Braskem cannot foresee with certainty the impact on operations from the pandemic but believes it can negatively affect its sales and revenue,” it said.

“We may not be able to respond to all impacts on a timely basis to prevent adverse effects on our business, financial condition and results of operations,” Braskem added.

The company filed a 6-K report to alert about the delay in the 20-K annual report filing.

In May 2019 the company faced de-listing proceedings of its ADRs (American Depositary Receipts) traded in the United States after failing to timely file annual statements for the previous year. The de-listing was suspended on October 21, 2019, Braskem said at the time.

Braskem’s ADRs traded at $7.15 on May 8, down from a high this year of $18.55 on January 23.  

American Chemistry Council says STB brings more clarity in rail demurrage 

The American Chemistry Council (ACC) said that the Surface Transportation Board (STB), based in Washington and that oversees U.S. railroads, provided greater “clarity” regarding charges to shippers that hold railcars longer than expected.

“Shippers have recently been subjected to a dramatic increase in demurrage charges, which led to several recent hearings by the STB and Congress to examine potential abuses,” the ACC said on May 4.

Demurrage charges compensate rail carriers for delays by shippers in taking product into and from warehouses.

“In its new policy statement, the board has sent a strong message that rail carriers may not simply use demurrage charges as another revenue stream,” said the ACC president and CEO Chris Jahn.

A logistics expert recently told Petrochemical Update that in the absence of enough silos for plastic resins some manufacturers rely on railcars for temporary storage after significant resin production increases in recent years.

U.S. resin production rose in March

U.S. production of major plastic resins totaled eight billion pounds during March 2020, a 6.4% on-year increase, according to statistics released on May 1 by the American Chemistry Council.

Production during the first three months of the year was 23 billion pounds, also a 6.4% on-year increase from the same period in 2019, it added.

By Petrochemical Update