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May 12, 2016 02:00 AM

Ascend delays Texas project

Frank Esposito
Senior Staff Reporter
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    Ascend Performance Materials is putting its Texas PDH project on hold.

    “Given the uncertainty in the energy markets, we have put the project on pause,” a spokesman for Houston-based Ascend said in a May 12 email to Plastics News. “It's important to understand that Ascend is not unique in this type of action in this environment.

    “While now is not the right time to move forward, PDH continues to have strategic importance to Ascend and others,” he added.

    The $1.2 billion project would have had annual production of 2 billion pounds of propylene monomer feedstock, which is used to make polypropylene resin. The Ascend project at the Chocolate Bayou complex in Alvin, Texas, first was announced in early 2014 with an expected opening date of late 2016.

    That opening date later was pushed back to 2019. The project would have been the largest propylene production site in the U.S.

    Several firms had announced PDH (propane dehydrogenation) projects as propylene supplies tightened, partly as a result of natural gas being used more than crude oil in petrochemical production. Natural gas produces less propylene when processed than crude oil does. Dow Chemical Co. in mid-2015 opened a major PDH unit in Freeport, Texas with annual propylene production capacity of almost 1.7 billion pounds.

    Propylene supplies, however, have been on the rise since mid-2014, as lower oil prices made that material more attractive, although natural gas remains favored.

    Market analyst Scott Newell said that only two of the 12 PDH propylene projects that have been announced are expected to come online — the Dow project and one under construction by Enterprise Products in Mont Belvieu, Texas. Five of the other ten have been postponed, while the remaining five are up in the air, said Newell, who's with Resin Technology Inc. in Fort Worth, Texas. He added that the Ascend move "shouldn't have much impact in the short term."

    "The Dow unit has added a very nice boost to supply as well as the increased yields at the cracker there," he said. "Then we have Enterprise coming soon. We'll have plenty of propylene to supply demand in the short term. Our prices are already competitive to the globe and even low cost at times."

    Earlier this year, market analyst Samantha Hartke of PetroChem Wire quoted industry sources saying that narrowing propane-to-propylene margins were a reason for the Ascend delay, along with the project's budget. That price tag “was deemed to be too large in the face of softer commodity prices,” Hartke said in a market report.

    In a May 12 email, Hartke said that in the longer term, the Ascend delay "is likely to keep PP markets tight and propylene/PP margins quite stout.

    "It would be logical to think that had this unit come online, propylene prices would have buckled from the added supply influx," she said. "But it's interesting to note that when the most recent PDH unit came online [Dow's unit at Freeport], propylene prices have remained quite range-bound in the low 30s [in cents per pound[ ...That unit has had issues...but it could suggest the appetite for propylene is quite healthy."

    Ascend had planned to use some of the propylene made there to make its own nylon resins. Ascend is the only major nylon maker to use propylene-based technology. The firm currently buys propylene to make acrylonitrile for use in its nylon products. Propylene not consumed internally by Ascend was to be sold to outside customers.

    The company spokesman said that the firm's PDH plant plans have been fully developed and include licensing, permitting and engineering. “We will continue to evaluate the timing of this project and we will continue to discuss with potential strategic partners,” he added.

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