18 February 2016
Western Europe’s chemical sites have been struggling to clinch investment deals in major chemical projects despite low oil prices helping to stimulate global chemicals demand and improving producers’ margins, particularly those of bulk chemicals.
Instead, with a few exceptions in waste processing, most of the big schemes for new or expanded production capacity are being planned or built in eastern Europe, particularly in Russia, which has an eye out for the future opportunities for exporting chemicals into China.
Western Europe is still being handicapped by high energy and feedstock costs. But its big appeal is the extent of both backward and forward integration, a lot of it within the region’s chemical sites and clusters.
“I firmly believe that Europe is attractive (to investors) and will remain so,” says Sietse Wiersma, president of the European Chemical Site Promotion Platform (ECSPP), an association for European chemical clusters and sites.
A stable political climate and a huge and mature market of consumers in excess of 500m are among the investment benefits he lists. A key advantage is the existence of integrated chemical clusters dedicated to the production of chemicals, their feedstocks and raw materials.
As a result, a lot of investment is going into strengthening Western Europe’s high level of international competitiveness in the area of integration. This is seen through improvements in infrastructure and logistics, particularly rail and inland waterway transportation.
Also, chemical sites are looking ahead to the low carbon era by preparing for the transition to a circular economy in which materials and products are reused, remanufactured and recycled as much as possible to give one or more additional life cycles.
This is a strategy backed by a growing number of EU countries and since last year by the EU itself. Policies on the circular economy are being closely linked with those on the bioeconomy with both coming under the broad umbrella of sustainability.
Chemical sites and clusters are beginning to show they can play an important role in the transition to a circular economy by becoming hubs for the processing of waste into chemicals or at least into energy products.
This is particularly the case with chemical clusters in coastal areas which have ports able to bring in waste and biomass not only from elsewhere in Europe but from around the world for local processing. Most of these sites are in northwest Europe, which has the biggest concentration of chemical clusters.
Some of the largest current investment projects on European sites involve waste processing. Perhaps the biggest is a €3.7bn scheme by Saudi Arabian-based waste-to-chemicals specialist Energy Recovery Systems Co (ERS) to convert industrial waste to ammonia and urea at Antwerp, Belgium.
ERS aims to process 3.45m tonnes/year of industrial and non-recyclable waste into 645,000 tonnes/ear of ammonia and 1.2m tonnes/year of urea. The ammonia will be used as a raw material in Antwerp which has Europe’s biggest petrochemicals cluster while the urea will be sold as a fertilizer.
The non-recyclable waste will be shipped to Antwerp port to be gasified for conversion to syngas at a 150-hectare site at Delwaide dock on which ERS was negotiating a deal with the port authorities last year.
In the Netherlands a similar scheme is being planned at Rotterdam or Delfzijl by a consortium headed by AkzoNobel and Enerkem, a Canadian waste-to-chemicals company. The consortium was expanded to comprise 12 partners last year with expertise along the value chain from waste collection to conversion to industrial plants and sales.
Enerkem’s technology can be used to manufacture syngas from domestic and other waste for conversion into feedstocks such as methanol and ammonia.
“Waste is a low-cost unconventional feedstock that can be used to produce chemicals,” explains Vincent Chornet, Enerkem’s chief executive. “The advantage of Enerkem’s process is that it is fully compatible with the existing waste infrastructure.”
At Delfzijl’s chemical park, OCI, one of the world’s largest nitrogen fertilizer producers, acquired BioMCN last year, a pioneer in bio-methanol production with two methanol plants on the site. “This acquisition gives us a foothold in both the European methanol market and in the bio-methanol market,” said Nasserf Sawiris, chief executive of Netherlands-owned OCI.
Reym Group and its sister company ATM, both owned by UK-based Shanks, has been planning to build a waste management unit at Delfzijl at a plant formerly owned by Dow Chemical. The facility will be similar to a waste processing facility at Botlek in Rotterdam which can handle 365,000 tonnes/year of waste.
In Scotland Celtic Renewables, a spin-out from Edinburgh Napier University, is planning to build with the help of a UK government grant of €15m a fermentation plant at or near the Grangemouth petrochemicals and refinery complex to convert waste from whisky distillation to make acetone-butanol-ethanol (ACE) initially for biofuels production. The technology was originally developed in the UK in the early 20th century before the arrival of petrochemicals.
“Our aim is to reintroduce (the) process but in a modern context to use the leftovers from the whiskey industry to create a fuel source that contributes to the low carbon future we all want,” says Professor Martin Tangney, the company’s founder. “We are committed to developing a new industry right here in the UK that will be worth more than £100m (€130m) a year.”
Also in Grangemouth, INEOS, the owner of the complex, is spending some $550m on a project to import US ethane as feedstock for the site’s ethylene cracker as well as another ethylene unit at nearby Mossmorran, owned jointly by ExxonMobil and Shell. The aim is not to introduce a feedstock with lower carbon content but to replace – at lower cost – ethane from the North Sea where natural gas reserves have become considerably depleted.
The UK has been at the forefront in Europe of efforts to develop carbon capture and sequestration (CCS) technologies. But these endeavours were put in jeopardy by a decision by the UK government to withdraw £1bn in funds for CCS schemes in Scotland and northern England.
A £1.5bn project to establish Europe’s first industrial CCS operation in Teesside, northeast England – the UK’s largest chemicals cluster – is excluded from the funding cut. But because of an evident change in government policy on CCS, its future is now in doubt because it will require government financial support. The captured Teesside carbon would be stored in aquifers or former oil and gas fields in the North Sea.
Like other European chemical clusters. Teesside regards itself as a centre of innovation, especially in low carbon technologies but also in advanced manufacturing, industrial biotechnology and biologics. It is already the location for the Centre of Process Innovation and a Material Processing Institute .and will be the site of a National Biologics Manufacturing Centre.
In a recent UK government-commissioned study it was named as one of the country’s best performing areas for innovation.
With Teesside responsible for half the UK’s hydrogen production there are plans to use it to provide the basis for a hydrogen economy in the North East of England with cars and commercial vehicles running on hydrogen fuel. Elsewhere chemical sites have been launching schemes for the capture and use of carbon as a raw material and energy source.
Antwerp Port Authority has been conducting a feasibility study, partly financed by the EU, on plans for a pipeline network to move emitted carbon monoxide (CO) from its port and chemicals cluster so that it can be used, for example, to react with slag from steel production to make building materials, to be combined with hydrogen to produce essential intermediates and for enhanced oil or gas recovery. In Dormagen, Germany, Covestro is constructing a 5,000 tonnes/year plant, due to come on stream this year, for using carbon dioxide to make polyols for the manufacture of polyurethane foam mattresses.
Sappi, the South African paper manufacturer, announced last year it is building a pilot-scale plant at the Brightlands R&D campus on the Chemelot site in the Netherlands for low-cost nanocellulose production.
The project fits well with Sappi’s strategy of entering new business fields with renewable materials and Brightlands’ focus on bio-based materials and on opportunities for giving innovators easy access to multiple co-development partners.
The next step in the consolidation of international networks of sites. The Antwerp-Rotterdam-Rhine-Rhuhr Area (ARRRA) – a cluster embracing Belgium, Netherlands and Germany – can with the help of pipeline connections make up 40% of EU petrochemicals production. Europe continues to be well positioned to reinforce its global leadership in the mechanics of integration.