The separate technology alliances announced recently by Exxon Chemical Co. and Dow Chemical Co. show both resin suppliers are looking at new profit-making strategies, industry analysts said last week. Exxon of Houston announced Aug. 8 plans to form a joint venture with Union Carbide Corp. of Danbury, Conn., to promote metallocene catalyst and supercondensing - mode technologies to make polyethylene.
Dow of Midland, Mich., announced Aug. 5 it intends to form an alliance with the chemical division of London's British Petroleum plc, to promote the uses of its metallocene catalyst technologies in gas-phase polyethylene reactors.
Through these ventures, Exxon will couple its metallocene and supercondensing-mode technologies with Union Carbide's Unipol PE production and condensing-mode technologies, while Dow will combine its metallocene technologies with BP's Innoprene PE production technologies.
This sort of pooling of technologies with the goal of revenue generation will be common in the future as companies strive to get profits out of their technologies before their patents expire,'' Kenneth Sinclair, an industry analyst and proprietor of STA Research Inc. of Sunnyvale, Calif., said in a telephone interview Aug. 12.
Sinclair said the move marks a major departure for Dow, a firm that previously developed technological advances internally.
Maybe this is a part of the new Dow Chemical, and we will see them letting go of some of their technology in similar ventures,'' he said.
Sinclair and Donald Bari, vice president for technology for ChemSystems Inc. of Tarrytown, N.Y., see Exxon's plan-ned venture with Union Carbide as a bonanza for both companies.
This makes it much easier for Exxon to get around any potential legal issues with Union Carbide over supercondensing-mode technology, Bari said Aug. 13 by telephone.
While he also said the Dow and Exxon deals mark departures from avenues both firms took before, Bari said the announcements also raise questions.
The key now will be this: What will the perceived value of licenses be for these technologies?
Dow and Exxon obviously have technology ready to transfer, but the question will be: At what fees? Certainly, this will allow PE producers to do more in using metallocenes, but at what price?'' Bari asked.
He and Sinclair said they can envision PE producers making licensing arrangements to use metallocene catalyst technologies to make new PE resins, but Bari added that he believes other companies will have a tough time catching up to developments already made by Dow and Exxon.
Sinclair said he believes those two firms will provide basic production recipes to their licensees, and that the race to develop new products will be spirited.
Neither Exxon's nor Dow's technology yields specialty products, but they both make value-added products.
The applications and market development work will have to be done by the licensees, and the question,'' said Sinclair, will be: Who has the smarter batch of licensees?
Both analysts also believe the Dow/BP and Exxon/Union Carbide alliances will set new standards for all PE producers and for other firms, such as Phillips Petroleum Co. of Bartlesville, Okla., Mobil Chemical Co. of Mount Olive, N.J., BASF AG of Ludwigshafen, Germany, and Mitsui Chemical Co. of Tokyo. All those firms compete with Union Carbide and BP in licensing PE production technology.
Any PE producer and any PE production technology licensing company will have to demonstrate competitive technology, and that looks like it will be very hard to do, now that the leaders have joined up, Sinclair said.
Exxon and Dow are the leading developers of metallocene catalyst technology, and Union Carbide and BP Chemicals are leaders in PE production technology.
Don Brady, Phillips' general manager for PE products, said by telephone Aug. 12 that he does not expect the Exxon and Dow alliances to affect Phillips's licensing of PE production technology in the near future.
Phillips licenses a loop slurry process for the production of high density polyethylene and, with 34 percent market penetration throughout the world, claims to be the leading licenser of HDPE production technology.
The potential [for metallocene catalyst technology to affect HDPE production] is there, but I don't see anyone moving in that direction very soon.
Most of [Dow's and Exxon's] developments are at the bottom of the density spectrum, for low and linear low density PE, and I believe that is where their initial commercial pushes will be,'' Brady said. However, he acknowledged that Exxon's announcement with Union Carbide said those companies intend to address licensing technologies for producting HDPE.
Brady also said Phillips is working on metallocene catalyst technology that could be used with its production technology, and he expects Phillips will offer it to its licensees in the future.