Nova Chemicals Corp. will build two new, major polyethylene production lines in Canada to take advantage of newfound supplies of oil and natural gas in the region.
The firm will build a world-scale plant making high density and linear low density PE and a similar plant making linear low density PE, officials with Calgary, Alberta-based Nova said in a June 29 news release.
Nova produces ethylene feedstock in Corunna, Ontario, and Joffre, Alberta, but officials did not say where the PE plants will be built. The new plants — as well as a capacity addition at a LDPE plant in Mooretown, Ontario — are set to be completed between late 2014 and 2017.
The HDPE/LLDPE unit will use Nova's Advanced Sclairtech technology, while the new LLDPE line will use the firm's Novapol-brand technology.
“Our ability to meet our customers' needs for higher performance polyethylene products is fundamental to this commitment,” Nova CEO Randy Woelfel said in the release.
International Petroleum Investment Co., the Abu Dhabi firm that owns a majority stake in Nova, “fully supports these plans that will enhance Nova Chemicals' leading technology and market position,” said IPIC Managing Director Khadem Al Qubaisi. Al Qubaisi also serves as Nova's chairman.
Nova did not provide information on costs or jobs creation estimates. To meet the needs of the projects, Nova also is expanding its ethylene cracker in Corunna and increasing utilization of a similar cracker in Joffre. Officials said the ethylene increases “will be supported by emerging, cost-competitive feedstock supply … linked to both shale oil and shale gas development.”
Nova is one of several plastics and chemicals firms to announce expansion plans this year based on new feedstock supply. But it's the first to announce specific resin projects. Shell Oil Co. recently announced plans to build a new ethylene cracker in the Appalachian region of the U.S. that would include new PE production, but the firm supplied no details.
Dow Chemical Co., Westlake Chemical Corp. and Chevron Phillips Chemical Co. LP also have announced ethylene expansions, but have not confirmed plans for similar resin moves.
But such details likely are only a formality, said market analyst J.N. Swamy with Chemical Market Resources Inc. in Houston.
“If you look at it, these are all going to include polyethylene, whether they've said it or not,” he said. “And Nova has a big advantage in Canada, since they've already got facilities there and they've already invested in a pipeline project. They don't have to make a grass-roots investment.”
In early 2010, Nova reached an agreement with Buckeye Partners of Houston to develop a pipeline to carry natural gas liquids from the Marcellus Shale natural gas deposits in Pennsylvania to its operations in Corunna. Then in mid-2010, the firm improved its feedstock supply situation in Joffre by agreeing to buy the total ethane output of a Hess Corp. plant in Tioga, North Dakota.
Nova's activity continued earlier this year when it entered into a contract with Williams Cos. of Tulsa, Okla., under which Williams would expand two sites in Alberta to supply Nova with ethane and ethylene on a long-term basis. Williams is developing natural gas assets there as well as in other parts of North America.
CMR's Swamy said that a key issue surrounding the flurry of natural gas development is whether demand for methane — the core segment of natural gas – will continue to be strong from use in heating and electricity generation. If that growth doesn't keep pace with demand for natural gas-based ethane, Swamy said, prices for ethane may decouple from those of natural gas.
If that happens, some of the material's cost advantage might lessen. North American natural gas “will still be competitive — but will it be at the same level?” he asked.