Concern about the virus spreading in construction sites, where up to several thousand workers congregate and share facilities, have had immediate consequences and in some cases indefinitely extended timelines.
While petrochemical companies did not report output declines in March 2020, construction projects have dramatically slowed or even crawled to a halt due to the Covid-19 pandemic.
Unlike operating plants that appeared to have largely continued production after enforcing safety measures such as remote working, social distancing and intensified disinfecting, construction sites concentrate a much bigger number of workers.
According to an April 2 report from Patrick Kirby, Wood Mackenzie principal analyst, and Matthew Chadwick, vice president for global head of petrochemicals, “in the medium term, new petrochemical capacity additions are likely to be lower.”
“Existing projects under construction will be postponed by labor restrictions,” it said.
LyondellBasell slows PO/TBA plant
LyondellBasell said on March 30 it informed contractors that it will slow construction of its propylene oxide (PO) and tertiary butyl alcohol (TBA) plant in the Gulf Coast due to the Covid-19 pandemic.
"We believe it is prudent to limit construction activities at this time," said Torkel Rhenman, vice president for intermediates and derivatives.
"Over the next several weeks, we will be working with our contractors and suppliers to develop a revised project timeline," he added.
Construction started in August 2018 and is more than 30% complete. There is currently ongoing installation of key equipment and towers, the company said.
The PO/TBA plant construction is in the company’s Channelview, Texas complex. It is associated to an ethers unit in nearby Pasadena. Annual capacity will be 470,000 tonnes of PO and a million tonnes of TBA.
LyondellBasell had on Nov. 12 projected the plant would be online by 2021, three years after construction started.
The company, with headquarters in the Netherlands, is one of the world's biggest producers of polymer compounds and biggest licensor of polyolefin technologies.
PO is used to make polyols that in turn go into polyurethane, a material in mattresses. PO is derived from propylene. Propylene is obtained as a co-product of ethylene in ethane cracking, or by de-hydrogenating propane.
TBA is used as a solvent, as an octane booster, and as an intermediate for methyl methacrylate (MMA). When polymerized, MMA produces a plastic that serves as an alternative to glass, with uses such as for commercial plane windows.
Nova Chemicals cuts 90% PE plant construction workforce
Nova Chemicals said on March 27 it is “adjusting construction work” on its new polyethylene (PE) facility and cracker expansion project in Ontario, Canada.
This “will result in a reduction of approximately 90% of our total construction workforce. It is too early to say what impact Covid-19 will have on our overall construction schedule,” it added.
“A phased ramp-up will be considered at the appropriate time,” said Nova Chemicals, owned by Abu Dhabi-based Mubadala Investment.
The project includes a 50% expansion of a cracker and new PE capacity for 450,000 tonnes annually at a cost of C$2 billion. It was set for completion in late 2021.
Shells suspends construction of polymers plant in Pennsylvania
“We have made the decision to temporarily suspend construction activities at Shell’s Beaver County site, effective March 18,” according to a statement signed by Hillary Mercer, vice president at Shell Pennsylvania Chemicals.
The company planned to install additional mitigation measures aligned with Center of Disease Control guidance.
“Once complete, we will consider a phased ramp-up that allows for the continuation,” it said.
“The decision to pause was not made lightly. But we feel strongly the temporary suspension of construction activities is in the best long-term interest,” Shell added.
The release mentioned 8,000 workers were involved in construction, that sources familiar with the project have estimated at a $6-billion cost. Construction started in 2017. It was set for completion in the early 2020s.
The plant includes a new cracker with 1.5-million-tonnes annual capacity of ethylene and 1.6 million tonnes of PE. It is located in Monaca, Pennsylvania.
Experts see FID decisions likely to slip
The Shell project is the biggest project underway as part of plans for a new petrochemical hub in the U.S. Northeast based on shale gas supplies available in the area as well as market proximity.
Thailand’s PTT Global Chemical has been considering for the past five years a project similar to Shell's in Belmont County, Ohio just down the Ohio River from the Monaca, Pennsylvania project.
According to reports earlier this year, a Final Investment Decision (FID) decision was to be announced in 2020.
According to the Wood Mackenzie report on April 2, any decisions to add capacity may see delays.
“Decision-making on pre-FID projects will slip, perhaps indefinitely,” the report said.
Over $200 billion in projects had been approved and considered until recently.
Ongoing operations do not report impacts on output
Formosa Plastics Corp. said on March 20 that as of that date it had “not experienced any significant impacts.”
Manufacturing and distribution of polyethylene, polypropylene, polyvinyl chloride, caustic soda, bleach or other products it makes continued, it added.
Similarly, Latin America’s biggest petrochemical company, Braskem, said on a statement on March 20 in Sao Paulo that as of that date it had not identified impacts in operations or sales.
“Our manufacturing sites remain operational and there are currently no impacts to our supply chain,” Nova Chemicals said on March 27.
LyondellBasell’s “ongoing operations at Channelview or Bayport, designated as part of the United States' critical infrastructure” continue unaffected, the company said.
By Renzo Pipoli
