USW union holds talks with oil and petrochemical industry represented by Marathon; Shell sees Pennsylvania resin plant startup before year's end; Mexico-based Alpek pays $620 million for Oman-based PET sheet producer; U.S. Silica to raise prices
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USW union holds talks with oil and petrochemical industry represented by Marathon
United Steelworkers (USW) said in mid-February that its petrochemical and refining worker members and colleagues from different industries planned to stage a mid-February rally outside Marathon Petroleum's headquarters in Findlay, Ohio as wage negotiations are ongoing.
“The USW represents approximately 30,000 members in the oil and petrochemical industry who are a part of the union's national oil bargaining program (NOBP) and negotiate contracts based on a pattern settlement for wages, benefits and working conditions,” according to the Feb. 14 statement.
The USW has been in talks over wages and benefits with Marathon, which represents the industry as its lead negotiator since Jan. 13, the statement said.
“The union rejected the company's most recent proposal on Jan. 31 and offered rolling 24-hour extensions of the current labor agreements. Since then, USW members across the country have been holding rallies and other solidarity actions in support of bargaining,” it said.
The USW represents 850,000 workers in metals, mining, pulp and paper, rubber, chemicals, glass, auto supply and the energy-producing industries, along with a growing number of workers in health care, public sector, higher education, tech and service occupations.
Shell sees Pennsylvania chemical plant startup by year´s end
Shell will complete the startup of its new 1.6-million-tonnes of polyethylene Pennsylvania plant before the end of 2022, said Jessica Uhl, the company´s chief financial officer, on Feb. 3.
The company is “finishing up the Pennsylvania Chemicals project this year, which should hopefully be up and running by the end of the year,” Uhl said during the company´s fourth quarter 2021 earnings discussion, according to a transcript by Motley Fool.
Shell had not provided an estimate for the cost of the construction project but industry sources estimated it anywhere from $6 billion to $10 billion, including plant and related pipeline work.
The project includes tapping ethane from Northeast shale formations to turn into polyethylene and the plan is to supply nearby markets with a unique cost advantage due to cheap feedstock and market proximity. Most U.S. petrochemical productions takes place in the Gulf Coast and is shipped north.
In other comments, Shell officials also estimated a capital expenditure budget ranging between $23 billion to $27 billion in 2022 for all projects.
“We expect to be on the low end of that,” said Uhl. The budget is an increase from $20 billion last year.
The year 2021 was “exceptional” for Shell in terms of cash generation, with $40 billion of free cash flow that helped not only finance projects like the chemical plant but also to pay debt.
“We've paid down our debt by some $23 billion. I can honestly say we didn't anticipate that. We were still in the 40s in terms of Brent prices as we were leaving 2020. And so we're in a very, very different place than we expected, a very strong place financially,” Uhl said. Brent traded at over $91 per barrel on Feb. 3.
“We're continuing to look at growth opportunities. And there's other energy transition spend that we're doing because we're looking to drive the overall carbon profile of the company to a very different place,” she added, according to the Motley Fool transcript.
Shell has reduced its exposure to assets with high carbon emissions like the 340,000 barrels-per-day Deer Park refinery in Texas which was transferred earlier this year to Mexican state oil company Pemex.
The company announced in 2020 plans to reduce its properties to only a handful of integrated chemical and refining facilities. Company officials had anticipated a startup this year back in 2021, citing some Covid-related challenges.
Mexico-based Alpek pays $620 million for Oman-based PET sheet producer
Monterrey, Mexico-based Alpek said on Feb. 1 it signed an agreement to buy Oman-based PET sheet producer OCTAL for $620 million.
“Through a single acquisition we’re able to access the profitable and growing PET sheet segment, acquire differentiated technology that provides a sustainable competitive advantage, significantly advance towards meeting our ESG goals,” said Jose de Jesus Valdez, Alpek CEO.
The acquired business owns direct-to-sheet technology that eliminates several energy-intensive conversion steps and lowers production costs, according to Alpek.
In addition, the acquired company has a customer base across the Americas, Middle East, and Europe, “through a logistically advantaged position centered in Oman,” Alpek said.
The acquisition adds over a million tonnes of installed capacity in four sites, the company said.
The acquired plants include 400,000 tons in Salalah Free Zone, Oman for PET sheet and a 33,000-tons plant in Cincinnati. A PET thermopackaging plant in Riyadh, Saudi Arabia and a 576,000-ton PET resin plant in Oman were also included in the transaction.
“PET sheet represents a highly attractive opportunity for Alpek, serving the growing needs for 100% recyclable packaging and providing solid margins,” the statement said. The strength of 2021 allowed Alpek to complete the acquisition, it added.
U.S. Silica increases prices of products used in petrochemical processes
U.S. Silica Holdings said on Feb. 2 that a portion of its Industrial and Specialty Products business will increase prices for the majority of its non-contracted engineered clay products used primarily in edible oils, industrial oils and petrochemical processes.
“This increase is driven by ongoing inflationary pressures around raw materials, packaging, logistics and maintenance expenses,” the company said. Prices will increase up to 15% starting in March.
Silica, founded 121 years ago, operates 24 mines and production facilities and has headquarters in the greater Houston area.
Consumer prices rose 7.5% between January 2021 and January 2022 resulting in the biggest annual increase in four decades, according to U.S. consumer price index data for January released in mid-February.
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