Alberta Propylene Upgrade Prospects

ALBERTA
PROPYLENE UPGRADING PROSPECTS
prepared for
ALBERTA DEPARTMENT OF ECONOMIC DEVELOPMENT
by
T. J. MCCANN AND ASSOCIATES LTD.
in conjunction with
SIGURDSON & ASSOCIATES
MARCH 2000
TABLE OF CONTENTS
PAGE
GLOSSARY ................................................................................................................................................................................... vii
DISCLAIMER...............................................................................................................................................................................viii
1.0 EXECUTIVE SUMMARY............................................................................................................................................... 9
2.0 INTRODUCTION .......................................................................................................................................................... 11

2.1 Terms of Reference ......................................................................................................................................... 11
2.2 General Bases.................................................................................................................................................. 11
2.3 Propylene Only ............................................................................................................................................... 11
3.0 BYPRODUCT PROPYLENE ........................................................................................................................................ 12
3.1 Availability ..................................................................................................................................................... 12
3.1.1 Overall............................................................................................................................................. 12
3.1.2 Incremental Propylene from Ethylene Production........................................................................... 14
3.1.3 Lack of Flexibility ........................................................................................................................... 14
3.2 Byproduct Propylene Processing..................................................................................................................... 14
3.2.1 Preamble.......................................................................................................................................... 14
3.2.2 Feedstock Handling......................................................................................................................... 15
3.2.3 Product Propylene Qualities ............................................................................................................ 16
3.2.4 Byproduct Processing...................................................................................................................... 17
3.2.5 Excess Product Sales ....................................................................................................................... 17
3.2.6 Byproduct Propylene Valuation ...................................................................................................... 18
4.0 PROPYLENE FROM PROPANE .................................................................................................................................. 20
4.1 Preamble ......................................................................................................................................................... 20
4.2 Technology...................................................................................................................................................... 20
4.3 Integration Potential ........................................................................................................................................ 21
4.4 Hydrogen Use ................................................................................................................................................. 22
4.5 Propylene Handling......................................................................................................................................... 22
4.6 Production Cost............................................................................................................................................... 22
4.7 Propane from Propylene Cost.......................................................................................................................... 24
5.0 PROPYLENE CHEMICAL OPPORTUNITIES IN ALBERTA.................................................................................... 26
5.1 Propylene Derivatives in an Alberta Context .................................................................................................. 26
5.2 Polypropylene (PP) ......................................................................................................................................... 26
5.2.1 North American Market for Polypropylene (PP)............................................................................. 26
5.2.2 Major Producers of Polypropylene (PP).......................................................................................... 27
5.2.3 Production Technology for Polypropylene (PP).............................................................................. 27
5.2.4 Technical Business Trends in Polypropylene (PP) .......................................................................... 28
5.2.5 Potential for Alberta ........................................................................................................................ 29
5.3 Acrylonitrile (ACN) ........................................................................................................................................ 29
5.3.1 North American Market for Acrylonitrile (ACN)............................................................................ 29
5.3.2 Major Producers of Acrylonitrile (ACN)......................................................................................... 30
5.3.3 Production Technology for Acrylonitrile (ACN) ............................................................................ 30
5.3.4 Technical Business Trends in Acrylonitrile (ACN)......................................................................... 31
5.3.5 Potential for Alberta for Acrylonitrile (ACN) ................................................................................. 31
5.4 Cumene and Phenol......................................................................................................................................... 32
5.4.1 North American Market for Phenol and Cumene ............................................................................ 32
5.4.2 Major Producers of Cumene and Phenol ......................................................................................... 32
5.4.3 Production Technology for Cumene and Phenol ............................................................................. 33
5.4.4 Technical Business Trends in Cumene and Phenol ......................................................................... 35
5.4.5 Potential for Alberta in Cumene and Phenol ................................................................................... 35
5.5 Propylene Oxide (PO) and Glycol................................................................................................................... 36
5.5.1 North American Market for Propylene Oxide (PO) and Glycol ...................................................... 36
5.5.2 Major Producers of Propylene Oxide (PO) and Glycols.................................................................. 37
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5.5.3 Production Technology for Propylene Oxide (PO) and Glycol ....................................................... 37
5.5.4 Technical Business Trends in Propylene Oxide (PO) and Glycol ................................................... 40
5.5.5 Potential for Alberta with Propylene Oxide (PO) and Glycol ......................................................... 40
5.6 Propylene Ethers ............................................................................................................................................. 40
5.6.1 North American Market for Propylene Ethers................................................................................. 41
5.6.2 Major Producers of Propylene Ethers.............................................................................................. 41
5.6.3 Production Technology for Propylene Glycol Ethers ...................................................................... 41
5.6.4 Technical Business Trends in Propylene Glycol Ethers .................................................................. 42
5.6.5 Potential for Alberta with Propylene Glycol Ethers ........................................................................ 42
5.7 n-Butanol......................................................................................................................................................... 42
5.7.1 North American Market for n-Butanol ............................................................................................ 42
5.7.2 Major Producers of n-Butanol ......................................................................................................... 42
5.7.3 Production Technology for B-butanol ............................................................................................. 43
5.7.4 Technical Business Trends in n-Butanol ......................................................................................... 44
5.7.5 Potential for Alberta for n-Butanol.................................................................................................. 44
5.8 Acrylic Acid (AA)........................................................................................................................................... 44
5.8.1 North American Market for Acrylic Acid (AA) .............................................................................. 44
5.8.2 Major Producers of Acrylic Acid (AA) ........................................................................................... 45
5.8.3 Production Technology for Acrylic Acid (AA) ............................................................................... 45
5.8.4 Technical Business Trends in Acrylic Acid (AA) ........................................................................... 46
5.8.5 Potential in Alberta for Acrylic Acid (AA) ..................................................................................... 46
5.9 Isopropanol/Acetone ....................................................................................................................................... 46
5.9.1 North American Market for Isopropanol/Acetone........................................................................... 46
5.9.2 Major Producers of Isopropanol/Acetone........................................................................................ 47
5.9.3 Isopropanol Production ................................................................................................................... 47
5.9.4 Technical Business Trends in Isopropanol/Acetone........................................................................ 48
5.9.5 Potential for Alberta with Isopropanol/Acetone .............................................................................. 48
5.10 2-Ethyl Hexanol .............................................................................................................................................. 49
5.10.1 North American Market for 2-Ethyl Hexanol.................................................................................. 49
5.10.2 Major Producers of 2-Ethyl Hexanol............................................................................................... 49
5.10.3 Production Technology for 2-Ethyl Hexanol................................................................................... 49
5.10.4 Technical Business Trends in 2-Ethyl Hexanol............................................................................... 50
5.10.5 Potential for Alberta for 2-Ethyl Hexanol ....................................................................................... 50
5.11 Atactic Polypropylene (APP) .......................................................................................................................... 50
5.11.1 Production of Atactic Olefins .......................................................................................................... 50
5.11.2 Process Technology......................................................................................................................... 51
5.11.3 Markets and Outlook ....................................................................................................................... 51
5.11.4 Investment Potential ........................................................................................................................ 52
5.12 Ranking of Propylene Product Potential ......................................................................................................... 52
6.0 THREE PRODUCTS WITH POTENTIAL FOR ALBERTA ........................................................................................ 55
6.1 Chemicals Selected for Further Analysis ........................................................................................................ 55
6.2 Polypropylene (PP) ......................................................................................................................................... 55
6.2.1 Market Potential .............................................................................................................................. 55
6.2.2 Trade in Polypropylene (PP) ........................................................................................................... 56
6.2.3 Technology Shifts in Polypropylene (PP) Resins............................................................................ 57
6.2.4 Cost Competitiveness of Alberta in PP Resins ................................................................................ 58
6.2.5 Alberta Potential for Polypropylene (PP) Resins............................................................................. 59
6.3 Acrylonitrile (ACN) ........................................................................................................................................ 59
6.3.1 Market Potential for ACN ............................................................................................................... 59
6.3.2 Trade in Acrylonitrile (ACN) .......................................................................................................... 60
6.3.3 By Product Potential in Canada....................................................................................................... 61
6.3.4 Technology Shifts in ACN Production............................................................................................ 62
6.3.5 Cost Competitiveness of Alberta for ACN Production.................................................................... 62
6.3.6 Alberta Potential for Acrylonitrile (ACN)....................................................................................... 62
6.4 Acrylic Acid (AA) and Acrylates.................................................................................................................... 63
6.4.1 Acrylic Acid (AA)........................................................................................................................... 63
6.4.2 Market Potential for Acrylic Acid (AA).......................................................................................... 64
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6.4.3 Trade in Acrylic Acid (AA) and Acrylates...................................................................................... 65

6.4.4 Cost Competitiveness of Alberta for Acrylic Acid (AA) Production .............................................. 66
6.4.5 Alberta Potential for Acrylic Acid (AA) and Acrylates................................................................... 67
6.5 Phenol ............................................................................................................................................................. 67
6.5.1 Markets and Outlook for Phenol ..................................................................................................... 68
6.5.2 Producers of Phenol......................................................................................................................... 70
6.5.3 Process Technology for Phenol ....................................................................................................... 71
6.5.4 Investment Potential for Product ..................................................................................................... 71
7.0 CONCLUSIONS............................................................................................................................................................. 73
7.1 Byproduct Propylene Availability................................................................................................................... 73
7.2 Byproduct Propylene Processing..................................................................................................................... 73
7.3 Propylene from Propane.................................................................................................................................. 74
7.3.1 World Situation ............................................................................................................................... 74
7.3.2 Process for Comparison................................................................................................................... 74
7.3.3 Yields and Balances ........................................................................................................................ 75
7.3.4 Sizing .............................................................................................................................................. 75
7.3.5 Propylene Supply Cost .................................................................................................................... 75
7.3.5.1 Deliberate Propane to Propylene Base............................................................................. 75
7.3.5.2 Byproduct Propylene ....................................................................................................... 75
7.3.6 Key Selected Derivatives ................................................................................................................ 76
7.3.7 Companies....................................................................................................................................... 76
7.4 Summary ......................................................................................................................................................... 77
7.5 Recommendations ........................................................................................................................................... 77
7.5.1 Byproduct Propylene Aggregation .................................................................................................. 77
7.5.2 Other Feedstocks ............................................................................................................................. 77
7.5.3 Utilities For New Plants .................................................................................................................. 77
7.5.4 Company Attraction ........................................................................................................................ 77
REFERENCES ............................................................................................................................................................................... 79
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LIST OF TABLES
PAGE
Table 3.1.1-1. Estimated 2005 Propylene Availability .................................................................................................................. 13

Table 3.1.1-2. Current Propylene Uses .......................................................................................................................................... 13
Table 3.1.1-3. Changes at Principal Prospective Propylene Sources ............................................................................................. 14
Table 3.2.3-1. Partial Typical Propylene Specifications ................................................................................................................ 16
Table 4.6-1. Propane Dehydrogenation Capital Costs ................................................................................................................... 23
Table 4.6-2. Propane Dehydrogenation Operation Costs ............................................................................................................... 23
Table 4.6.3. Cost Summary............................................................................................................................................................ 23
Table 5.1-1. Propylene Derivatives Assessed in Study.................................................................................................................. 26
Table 5.1-2. Demand for First-step Derivatives of Propylene in North America........................................................................... 26
Table 5.2.1-1. Markets for Polypropylene in North America ........................................................................................................ 26
Table 5.2.2-1. North American Polypropylene Producers ............................................................................................................. 27
Table 5.2.3-1. Raw Materials and Utilities Consumption per 1,000-kg of PP ............................................................................... 28
Table 5.2.4-1. North American Polypropylene Capacity Expansions*.......................................................................................... 29
Table 5.3.1-1. Acrylonitrile Demand in North American .............................................................................................................. 30
Table 5.3.2-1. Major North American Producers of Acrylonitrile ................................................................................................. 30
Table 5.3.2-2. Material Consumptions per 1,000-kg of Acrylonitrile............................................................................................ 30
Table 5.4.1-1. Demand for Cumene............................................................................................................................................... 32
Table 5.4.1-2. North American Demand for Phenol, 1998 ............................................................................................................ 32
Table 5.4.2-1. Cumene Producers in North America ..................................................................................................................... 33
Table 5.4.2-2. Phenol Capacity in North America ......................................................................................................................... 33
Table 5.4.3-1. Input Consumption per 1,000-kg of Cumene.......................................................................................................... 34
Table 5.4.3-2. Input Consumption per 1,000-kg of Phenol............................................................................................................ 34
Table 5.4.4-1. Phenol Plant Expansions Planned in North America .............................................................................................. 35
Table 5.4.5-1. Canadian Imports of Phenol ................................................................................................................................... 35
Table 5.5.1-1. Propylene Oxide Markets in North America .......................................................................................................... 36
Table 5.5.1-2. Propylene Glycol Markets in North America ......................................................................................................... 36
Table 5.5.1-3. Dipropylene Glycol Markets in North America...................................................................................................... 37
Table 5.5.2-1. Propylene Oxide Producers in North America........................................................................................................ 37
Table 5.5.2-2. Propylene Glycol Producers in North America ...................................................................................................... 37
Table 5.5.3-1. Consumptions per 1,000-kg of Propylene Oxide .................................................................................................... 38
Table 5.5.3-2. Raw Materials Inputs per 1,000-kg of PO with Peroxidation ................................................................................. 38
Table 5.5.3-3. Major Inputs per 1,000-kg of Mono Propylene Glycol........................................................................................... 39
Table 5.5.1-1. Canadian Imports of PO and PG............................................................................................................................. 40
Table 5.6.2-1. P&E-type Ether Solvent Capacity .......................................................................................................................... 41
Table 5.7.2-1. Major Producers of n-Butanol in North America.................................................................................................... 42
Table 5.7.3-3. Raw Materials Inputs per 1,000-kg of Butanol from Syngas.................................................................................. 43
Table 5.8-1. Acrylic Acid Demand in North American ................................................................................................................. 45
Table 5.8.2-1. Major Producers of Acrylic Acid............................................................................................................................ 45
Table 5.8.3-1. Input Consumptions per 1,000-kg of Acrylic Acid................................................................................................. 45
Table 5.8.5-1. Acrylic Acid and Ester Imports to Canada ............................................................................................................. 46
Table 5.9.1-1. Isopropyl Demand in North American.................................................................................................................... 46
Table 5.9.1-2. Acetone Demand in North American...................................................................................................................... 47
Table 5.9.2-1. Isopropanol Producers in North America ............................................................................................................... 47
Table 5.9.2-2. Acetone Producers in North America ..................................................................................................................... 47
Table 5.9.3-1. Balance for 1,000-kg of IPA................................................................................................................................... 48
Table 5.10.1-1. 2-Ethyl Hexanol Demand in North American ...................................................................................................... 49
Table 5.10.2-1. 2-Ethyl Hexanol Producers in North America ...................................................................................................... 49
Table 5.10.3-1. Raw Materials Inputs per 1,000-kg of 2-Ethyl Hexanol by Hydrogenation.......................................................... 49
Table 5.11.1-1. Producers of Atactic Olefin Resins....................................................................................................................... 50
Table 5.11.3-1. Estimated Market Segmentation for Atactic Polypropylene ................................................................................. 51
Table 5.11.3-2. Hot Melt Adhesive Use of Atactic Polypropylene................................................................................................ 51
Table 5.11.3-3. Some Major and Potential Users of Atactic Polypropylene.................................................................................. 52
Table 5.12-1. Typical Propylene Grade Requirements .................................................................................................................. 53
Table 5.12-2. Ranking of Propylene Opportunities in Alberta....................................................................................................... 53
Table 6.2-1. Polypropylene Plant Overview .................................................................................................................................. 55
Table 6.2.1-1. Growth Outlook for PP Resins in North America................................................................................................... 55
Table 6.2.1-2. Global PP Market Segmentation............................................................................................................................. 56
Table 6.2.1-3. Asia-Pacific PP Capacity by Country ..................................................................................................................... 56
Table 6.2.2-1. U.S. Exports of Polypropylene ............................................................................................................................... 56
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LIST OF TABLES
PAGE
Table 6.2.2-2. Canadian Polypropylene Resin Export Trade ......................................................................................................... 57

Table 6.2.2-3. Major U.S. Polypropylene Export Markets, 1998................................................................................................... 57
Table 6.2.3-1. Demand Patterns for mPP Resins ........................................................................................................................... 58
Table 6.2.4-1. Competitive Cost Factors for PP Resins in Alberta ................................................................................................ 58
Table 6.3-1. Acrylonitrile Plant Overview..................................................................................................................................... 59
Table 6.3.1-1. Global ACN Markets.............................................................................................................................................. 59
Table 6.3.1-2. Regional ACN Plant Capacities.............................................................................................................................. 60
Table 6.3.1-3. ACN Planned Plant Expansions.............................................................................................................................. 60
Table 6.3.2-1. ACN Exports from U.S........................................................................................................................................... 60
Table 6.3.2-2. Major U.S. Acrylonitrile Export Markets ............................................................................................................... 61
Table 6.3.3-1. Outputs of an ACN Plant per kg of Propylene Input .............................................................................................. 61
Table 6.3.3-2. Canadian Imports of Sodium Cyanide and Cyanide Salts ...................................................................................... 62
Table 6.3.5-1 Competitive Cost Factors for Acrylonitrile Production in Alberta ........................................................................... 62
Table 6.4.1-1. Acrylic Acid Capacity in North America ............................................................................................................... 63
Table 6.4-1-2. Acrylic Acid Plant Overview ................................................................................................................................. 64
Table 6.4.2-1. Market Growth Outlook ......................................................................................................................................... 64
Table 6.4.2-2. Expansion of Acrylic Acid Capacity ...................................................................................................................... 65
Table 6.4.3-1. Major U.S. Acrylic Acid and Derivative Export Markets, 1998............................................................................. 66
Table 6.4.3-2. Imports of Acrylic Acid by the U.S. ....................................................................................................................... 66
Table 6.4.3-3. Imports of Acrylic Acid Esters ............................................................................................................................... 66
Table 6.4.4-1. Competitive Cost Factors for Acrylic Acid Production in Alberta ......................................................................... 67
Table 6.5-1. U.S. Phenol Supply/Demand, 1996 ........................................................................................................................... 68
Table 6.5.1-1. North American Demand for Phenol, 1996 ............................................................................................................ 68
Table 6.5.1-2. Canadian Imports of Phenol ................................................................................................................................... 69
Table 6.5.1-3. Regional Phenolic Resin Plants .............................................................................................................................. 69
Table 6.5.1-4. Estimated Regional* Demand Growth for Phenol.................................................................................................. 70
Table 6.5.2-1. Phenol Capacity in North America ......................................................................................................................... 70
Table 6.5.2-2. Cumene Producers in North America ..................................................................................................................... 71
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LIST OF FIGURES
PAGE
Figure 3.2.2-1. Byproduct Receipt System .................................................................................................................................... 15

Figure 3.2.4-1. Byproduct Processing............................................................................................................................................ 17
Figure 4.2-1. Propylene from Propane........................................................................................................................................... 21
Figure 4.5-1. Propylene from Byproduct Processing ..................................................................................................................... 22
Figure 6.3.2-1. U.S. Acrylonitrile Exports, 1996 ........................................................................................................................... 61
Figure 7.2-1. Overall Byproduct Propylene Processing................................................................................................................. 74
Figure 7.3-1. Propylene from Propane........................................................................................................................................... 74
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GLOSSARY
2-EH 2-ethyl hexanol

AA acrylic acid
ABS acrylonitrile / butadiene / styrene (polymers)
ACN acrylonitrile
AED Alberta Department of Economic Development
AEF Alberta EnviroFuels
AEUB Alberta Energy and Utilities Board
AIH Alberta’s Industrial Heartland (Fort Saskatchewan area)
APP atactic polypropylene
bbls. barrels (6.29 barrels (barrels) = 1-m3)
BPD barrels per day
C2 / C2= ethane / ethylene
C3 / C3= propane / propylene
C4 butanes – n-normal, i – iso (other includes olefinic C4’s)
CaCl2 calcium chloride
CO carbon monoxide
CO2 carbon dioxide
COS carbonyl sulphide
EPD ethylene / propylene / diene (polymer)
EIA Environment Impact Assessment (and Related Application to AEUB)
GDP gross domestic product
H2S hydrogen sulphide
IPA isopropyl alcohol or isopropanol
kg kilograms
ktonnes kilotonnes
kty thousands of metric tonnes per year (2,204 pounds per tonne)
lbs. pounds
m3/d cubic meters per day
MAPD methylacetylene and propadiene
MMscf millions of standard cubic feet
mPP metallocene technology polypropylene
MTBE methyl tertiary butyl ether
MW megawatts
NaCl sodium chloride (salt)
Ni nickel
OSB oriented strand board
PE polyethylene
PG polymer grade
PO propylene oxide
POSM propylene oxide with styrene monomer (process)
PP polypropylene
ppm part per million (by weight)
psig pounds per square inch
PVC polyvinyl chloride
ROI return on investment
SAN styrene acrylonitrile
SAP super adsorbent polymer
scf standard cubic feed
SCO synthetic crude oil
SIA Strathcona Industrial Association (region on East Side of Edmonton)
SM Styrene Monomer
TPG tripropylene glycol
TBA tertiary butyl alcohol
TCMS TransCanada Midstream
USGC U.S. Gulf Coast – Texas, Louisiana
VOC volatile organic compound
wt weight
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DISCLAIMER
The contents, conclusions, recommendations and numbers in this report are the sole responsibility of T. J. McCann and
Associates Ltd. and its associated consultants. They may or may not be in agreement with views and/or policies of the Alberta
Department of Economic Development (AED). It is also to be noted that this study – with the sole exception of confirmation of
one data point – has been carried out with no related rapport with TransCanada Midstream (TCMS) who are proceeding on a
byproduct propylene collection and purification system.
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1.0 EXECUTIVE SUMMARY
PROPYLENE IS THE MAJOR MISSING PETROCHEMICAL INTERMEDIATE IN ALBERTA.
INTRODUCTION
TransCanada Midstream (TCMS) is currently putting together a very significant byproduct recovery and purification scheme, but
no announcements have yet appeared of local derivative facilities. This study independently considered propylene supply options
and examined a variety of propylene derivatives to define those that appear to fit best in Alberta. At the same time, key chemical
companies with propylene derivative interests were identified.
SUPPLY
280-ktonnes a year of propylene were conservatively estimated as available from byproduct sources in 2005. As byproduct
sources have some risks, ups, and downs, a prudent chemical company would perhaps discount supply to the order of 200,000-
kty to ‘guarantee’ supply to his facility.
Oil sands upgraders, ethylene plants and refineries are the principal sources with a total production of about 400-kty – some used
now in fuel gas. Some shopped as a concentrate to the U.S. and some connected to gasoline. Each source has a different set of
supply costs and the different source types have wide ranges of impurities. Each source also has more or less need for on-site
facilities to separate propylene-rich streams for central processing. Pipeline and rail receipt is envisaged with a major central
treating and distillation facility to produce polymer grade (PG) propylene with propane and other smaller byproducts from the
raw feed. Major salt cavern storage will be needed to smooth out the plant feed and to insure highly reliable product supply.
Very preliminary estimates tend to indicate such byproduct propylene available at about two cents U.S. per pound under the price
on the U.S. Gulf Coast (USGC) before maximizing synergy with existing facilities (as at TCMS).
A route starting from propane was considered for 350-kty of propylene. However, with current propylene product cost slightly
above USGC prices, it will be attractive only as newer technology and more cost cutting lower capital costs. Such reductions are
considered quite possible over the next 3 to 5 years and the propylene to propane value difference could widen from 1998 levels
(as at present). This option appears to warrant further analysis in a year or two.
KEY POTENTIAL DERIVATIVES

From a long list of 13 chemicals, some with multiple variants and derivative options, polypropylene (PP), acrylonitrile (ACN)
and acrylic acid (AA) were singled out for special consideration. Each of these has above average growth rates and the estimated
200-kty of propylene would provide a good fit for a world-scale facility in Alberta.
Polypropylene (PP)
PP is produced as solid beads and moved in bulk rail cars to a variety of markets, e.g., injection and blow molding, fibers, films,
wire and cable. Demand for PP in several forms, some with ethylene and other comonomers, is growing at 6 to 7% a year world
wide, requiring 350 to 400-kty of added North American capacity each year. Canada currently exports $243 million of PP to the
U.S., but imports $450 (1998 figures). While Asian market growth is most pronounced, there are growing PP markets
worldwide.
Dow is moving into new PP technology/product territories, and its acquisition of Union Carbide adds major more conventional
PP technology depth. Shell Chemical is adding BASF, the world’s largest chemical company, to its Montell PP team – with two
plants already in eastern Canada. There is a long list of other major PP producers not now represented in Alberta.
New catalysts and other technological developments are dramatically broadening the range of grades and of applications.
Acrylonitrile (ACN)
ACN, a liquid product, demand is growing at 6 to 7% a year in Asia as an intermediate for fibers, various resins, and a variety of
chemicals, such as those used in water treatment. North American markets are generally remote from Alberta, but Alberta is
‘close’ to Asian markets via West Coast ports. The propylene and ammonia feedstocks are here at low cost and there are regional
markets, in mining for the byproduct hydrogen cyanide, which is often requires expensive disposal.
ALBERTA DEPARTMENT OF ECONOMIC DEVELOPMENT March 31, 2000

ALBERTA PROPYLENE UPGRADING PROSPECTS Page 9
BP Amoco is a major player both in ACN technology and production. BP Amoco is developing a new route directly from
propane, bypassing propylene, and, thus, there may be no propylene connection for an Alberta ACN facility.
Acrylic Acid (AA)

Super absorbents, in particular, are driving up AA demand with their 8% per year growth with no sign of a major let up.
Nevertheless, there is a variety of other AA derivatives with rising markets. Canada currently imports roughly $50 million U.S.
worth of AA derivatives.
It is likely that a series of derivatives would be produced at an AA facility, although AA can be railed/tankered as liquid to
Pacific Rim and to mid continent North American markets.
Dow and Celanese have a new German joint venture producing AA and various derivatives. Celanese, BASF and Union Carbide
(Dow) currently have three of the four North American plants. Degussa-Hüls has a European AA joint venture.
OTHER POSSIBILITIES
Propylene Oxide (PO)
PO and one or more series of derivatives are considered good prospects, but do require isobutane – here now – or more normally
benzene – short in Alberta – feedstocks with very major byproducts – e.g., styrene in the case of benzene as the cofeed. PO
might well have been one of the three short-listed products if the major cofeed/coproduct situation did not exist. Propylene
glycols and various ethers are good PO derivative prospects.
Phenol
Phenol has major regional markets in the production of resins used in various construction board products. Propylene can be a
key feed, along with benzene. An apparent Alberta shortage of benzene must be addressed before phenol production is
considered.
This study was not bullish on isopropanol and acetone, n-butanol, 2-ethyl hexanol (2-EH) and propyl ethers (from isopropanol)
should not be discarded as possible new small-scale Alberta chemical products.
SUMMARY
• Alberta does not have merchant propylene at this time.
• Over 200,000-tonnes a year can be made available from byproduct sources below USGC costs. (TCMS has
already started a collection and purification project.)
• This quantity well fits individual world scale PP, ACN and AA derivative prospects.
• Availabilities of benzene and certain other key chemical intermediates appear to warrant study and promotion, to
extend the list of prospective ‘new’ Alberta chemical products.
• Alberta offers low capital and operating costs and shipping costs to the Pacific Rim are below, those from the
Houston area, although marginally higher to the mid continent area.
• Propylene derivatives should have a strong place in Alberta’s future.

2.0 INTRODUCTION
2.1 Terms of Reference

The Alberta Department of Economic Development retained T. J. McCann and Associates Ltd. to undertake a screening level
study of the key prospects for propylene upgrading in Alberta. Appreciable propylene is produced in Alberta as a byproduct in
ethylene production, oil sands upgrading, and oil refining and, to a minor extent, in other petrochemical intermediate production.
However, currently there is no significant propylene chemical derivative production. This study was intended to see if economics
appear attractive for local production of three to be identified important derivatives.
TCMS is building a major propylene byproduct extension to their Redwater natural gas liquids fractionation plant. TCMS is also
constructing facilities at Suncor’s oil sands plant to recover a propylene/propane mix and potentially more or less ethane and
ethylene. The resulting liquid blend will be delivered to the Redwater site via Suncor’s oil sands pipeline and a short local line.
TCMS will be obtaining byproduct propylene from other sources, but no details were available to this study. While this study
essentially overlooks the TCMS propylene program, its very active presence must be considered by all.
2.2 General Bases

Local propylene derivative markets are, with one or two exceptions, quite small. Overall, Alberta’s current chemical industry is
export driven producing large bulk commodities and few small-scale specialty products. Thus, this study concentrated on larger-
scale propylene derivatives that have growing markets worldwide, accessible from Alberta.
Byproduct propylene is available from sites at Joffre, Edmonton (SIA—Strathcona Industrial Association—region), Fort
Saskatchewan/Redwater area (AIH—Alberta’s Industrial Heartland) and the oil sands plants north of Fort McMurray. Due to the
unique availability of salt for storage cavern development, relative central location and proximity to a variety of major chemical
production and natural gas liquids fractionation sites, new propylene processing facilities have been assumed in the AIH.
There are current expansion programs at current oil sands plants and, likely, expansions at regional refineries and an upgrader
that will enhance propylene production through to and perhaps beyond the 2005 period. In addition, the Joffre E3 world’s largest
ethylene unit comes on-stream in 2001. Thus, estimated 2005 byproduct propylene availability is considered as a base, consistent
with project development, permitting, construction, startup of collection and purification facilities, including storage cavern
development, with and propylene derivative facility completion(s).
The early screening nature of this study is to be noted.
2.3 Propylene Only

This study has not considered TCMS’s propylene collection and purification project as being in or about to be in place. A totally
grassroots approach has been assumed. Herein, only propylene and directly related materials, propane in particular, have been
considered in this study, although, some TCMS facilities appear to be planned to capture and process both C2’s and C3’s.
Certain, lighter and heavier impurities in byproduct propylene-rich streams will be important in most collection, purification and
processing scenario to be better addressed in more detailed studies.

3.0 BYPRODUCT PROPYLENE
3.1 Availability
3.1.1 Overall
Table 3.1.1-1 summarizes this study’s estimates of potentially propylene in Alberta and surrounding areas in 2005. The estimates
are by the study team, but confirmed as reasonable by verbal contacts at all but two sources. The table also notes what the team
considers as a ‘likely’ 2005 availability scenario—to be used in later sections of this report as a base case.
The byproduct availability estimates are conservative – they allow for off normal operations, such as shutdowns and related
events, occasional upsets, different catalysts and catalyst conditions (at refineries), new approaches to fouling control in ethylene
furnace tubes, below capacity operation on occasion, and below design process severities on occasion or continuing (at least at
one major source). Two sources provided ranges to cover likely operating severities with mid points used here and another
advised reduced propylene compared to earlier estimates, due to less severe operating conditions. Expansion prospects at three
sources were discussed, but it was too early to assess any increase in propylene availability.
Not all sources will be available, nor will suitable commercial terms be negotiated at all sites. We acknowledge that the ‘likely’
figure is only a judgement call.
The accuracy of the total, is perhaps, at the +20% level with individual accounts less certain. Changing conditions in source units
are to be expected over time and propylene is generally not an economically preferred product at any of the identified sources.
Table 3.1.1-2 notes current and prospective alternate uses for propylene at the various sources, without a capture/purify/chemical
derivative scheme(s). Table 3.1.1-3 provides a brief review of what facilities will be required at various sources for propylene
recovery and transfer. Scheduling of in-plant changes will be very tricky and with major turnarounds only every 2 to 2-1/2 years,
there could well be delayed availabilities from specific various sites. (However, this is roughly the same timing as for large salt
cavern development.)
Alberta EnviroFuels (AEF) currently produce more or less propylene—say 10-kty—depending on the propane content of its
feedstock C4 streams. This propylene now goes to fuel gas. AEF are reported to be considering changing the plant’s processes
and products from methyl tertiary butyl ether (MTBE), but, as yet, without a public decision. Thus, AEF propylene has been
neglected herein. Husky’s Lloydminster Upgrader expansion plans are unknown, hence, no estimate of possible propylene
availability has been made—likely small in the overall picture, in any case.
Note that the Shell Scotford and Parkland Borden refineries produce no propylene.
At the bottom of Table 3.1.1-1 is this study’s judgement of a ‘realistic’ byproduct availability. The 280-kty may appear small,
but prospects perceived to have major challenges economically or major delays to beyond 2005 have been excluded. Only
detailed buyer to supplier negotiations will resolve economically attractive availability from any source. Hopefully, it may prove
possible to attract at least another 100-kty of economic supply than has been assumed in this study.
A prudent propylene consumer is likely to discount the byproduct availability, say, up to 80-kty to assure him of supply at all
times, even if one major source drops out – leaving a ‘recognized’ availability of about 200-kty. Even then, major storage will be
required to assure that rate on a daily basis.

Table 3.1.1-1. Estimated 2005 Propylene Availability
Total That Base Case Judgement
Might be % Propylene Daily C3= Overall C3 %
Source(s) Available Propylene Annual Peak Rate Peak Rate Propylene Key
kty in C3 Mix kty kty kty (Vol.) † in Mix Impurities †
Upgrading
Syncrude 135 40 – – – – MAPD, Sulphur, Others
Suncor 60 29 – – – – MAPD, Sulphur, Others (?)
TOTAL 195 37 – – – –
Ethylene
Dow 30 90 * – – – – MAPD *
NovaChem 75 90 * – – – – MAPD *
TOTAL 105 90 * – – – – MAPD *
Alberta Refineries
Imperial 100 65 – – – – Some MAPD, Sulphur, Others
(?)
Petro-Canada 90 67 – – – – Some MAPD, Sulphur, Others
(?)
TOTAL 190 66 – – – – Some MAPD, Sulphur, Others
(?)
Overall Alberta (e) 490 60 – – – – Some MAPD, Sulphur
Out of Province 110 65 – – – – Some MAPD, Sulphur
Refineries/
Upgrader
Base Case Availability to Purification
Ethylene Industry – – 105 125 140 90 * MAPD*
Others (c) – – 180 220 345 56 <100-ppm MAPD, Sulphur,
others??
TOTAL – – 285 245 535 68 (b)
(m3/d) – – – – (2,830) –
(BPD) – – – – (17,800) – (d)
Net Polygrade – – 280 – – –
Product from
Purification
* Methylacetylene plus propadiene (MAPD) 3 to 5% – assumed converted to propylene.
† C2- and C4+ not included – some in all streams.
(a) Note year to year variations due to shutdowns.
(b) Believed conservative.
(c) Includes some out-of-province supply.
(d) C4 content excluded – possibly an additional 800-BPD (130-m3/d)
(e) Alberta EnviroFuels source may disappear – hence excluded.
Table 3.1.1-2. Current Propylene Uses

(a)
Byproduct Propylene Process Source Current Propylene Use Possible Other Use Options Notes
Upgraders
Syncrude Coking Fuel Gas Conversion to Jet Fuel or X (b)
(fluid version) Equal
Suncor Coking Fuel Gas Committed to X (b)
(delayed version) TransCanada Midstream
Mobil/Koch Å NO INFO / NEGLECTED Æ (d) N
Husky Lloydminster Coking Fuel Gas – X (d)
(delayed) (now small – neglected in
this study)
Ethylene Plants
Dow C2 Cracking Ship to USGC Own Purification
NovaChem C2 Cracking Ship to USGC Own Purification Expansion online in 2001
Alberta Refineries
Imperial Catalytic Cracking Alkylation – –
Petro-Canada Catalytic Cracking/Coking Alkylation – –
(delayed)
Other Refineries
Co-op, Regina Catalytic Cracking/Coking Polymerization Alkylation X
(delayed)
Husky, Prince Catalytic Cracking Sells (C3 C4) to U.S. refineries – –
George
Others (BC/U.S.) Catalytic Cracking/Coking Alkylation – –
(fluid and delayed) (with some polymerization)
(a) Excludes Alberta EnviroFuels propylene to fuel in each case, due to unknown futures.
(b) By 2005 another coker at each site.
(c) Also polymerization at one site.
(d) Expansion plans unknown.
X Expanding.
N New – no process data availability beyond 2005, in any case.

Table 3.1.1-3. Changes at Principal Prospective Propylene Sources
Upgraders
Suncor • Recover C3= (and C3) from gas streams originating in two cokers, including stabilizer overhead gases. Low
temperature, absorption recovery alternates with deethanizing of liquid product (at least). (Note that here
only a C3 concentrate is considered, no C2 C3 concentrate as noted in some TransCanada Midstream
documents.)
• Purify to suit pipeline (avoid contamination in batch pipelining south)—at least all H2S must be removed.
• Assemble batches and buffers if to be used.
• Modify pipeline as needed to convey batches of C3 concentrate.
Syncrude • Recovery C3= (and C3) from gas streams originating in three cokers, including related stabilizer overhead
gases.
• Purify to suit pipeline (avoid contamination of adjacent batches).
• Assemble batches for pipeline movement.
• Define pipeline need – new pipeline ‘appears’ needed.
Mobil/Koch? • Project plans indefinite as to potential propylene, hence, neglected.
Husky Lloydminster • Similar facility needs to Suncor, but not considered as future plans unknown and current C3= availability
probably too small to warrant consideration.
• Any transfer will be rail due to small quantities.
Ethylene
Dow and NovaChem • C3 concentrate facilities (and related rail car handling) are already in place.
• At Dow, a new small pipeline terminal would be needed.
Refineries
Alberta • Each of Imperial and Petro-Canada will need:
• C3 C4 splitter—these will be big.
• C3 concentrate shipping facilities (pipeline terminal).
• Additional facilities (or equivalent) to make up for lost gasoline, due to removal of propylene from
alkylation feed. Without C3=, alkylate will have a higher octane allowing reduction in severity and
increased yields in another unit, but this will only make up for a portion of the lost gasoline.
• Note new pipeline from ‘refinery row’ to AIH.
Other Refineries
Husky, Prince George • No change, now sell mixed C3 C4 to U.S. refineries, splitting at site unlikely to be economic due to small
stream, do at purification site.
Chevron, Burnaby • Some C3 concentrate shipping facilities needed.
Montana Refineries (4) • Similar to Alberta refineries, except new rail loading systems needed.
Co-op, Regina • Major changes foreseen (without much impact on gasoline volume) beyond this study.
3.1.2 Incremental Propylene from Ethylene Production

Discussions with ethylene producers indicated little potential for enhanced propylene production. While the early production at
both sites at one time was planned for up to 20% propane in the feed with ethane, subsequent expansions have not added to
propylene handling facilities and these appear full with byproduct propylene from ethane feedstock at projected throughputs.
3.1.3 Lack of Flexibility

Except as raw propylene streams may be railed to USGC—primarily from ethylene producers, as now—there will be little/no
flexibility in byproduct supply from individual sources. When changes are made as in Table 3.1.1-3 at individual sources, 90%
or more of all available propylene will be provided. Thus, there will normally be a surplus of byproduct derived propylene for
Midwest or Gulf Coast sale, and/or shipment of more or less ethylene plant raw propylene to the USGC.
The base case 285-kty of propylene in raw feed streams is an annual average and peaks of 330-kty are likely with minima to
processing at or near 200-kty (using feed cavern storage).
3.2 Byproduct Propylene Processing
3.2.1 Preamble
There will be byproduct propylene coming from a variety of sources via pipeline and rail, all with differing qualities. Some
trucked material is possible, but not considered in this study.
Once propylene capture facilities are in place, the byproduct processor will be receiving all available feeds, with the possible
partial exception of some from ethylene plant material. Portions of the ethylene plant material could continue to move south, but
only to the extent, that sufficient numbers of railcars continue available. (Reducing such rail fleets appears likely to be important
financial inducements for ethylene plant sources.)

3.2.2 Feedstock Handling
Due to the variety of source qualities and batch receipt of most material, significant raw propylene storage will be needed,
possibly along with special withdrawal systems to smooth out feed composition to a byproduct processing facility itself. Such
storage must also cater to shutdowns at major sources and in the byproduct processing facility. Figure 3.2.2-1 provides the
byproduct feed system assumed in this study.
Figure 3.2.2-1. Byproduct Receipt System
Suncor or Equal
Pipeline(s)
∼ Interface Processing complete
with Distillation
Tube Surge Storage
Oil Sands C3
Received in
Batches
C4 or C5 Plus Pipeline to Processing Site
(Try for continuous transfer)

SCO etc.
Byproduct
Dow Ethylene Propylene
New Continuous Pipelines Processing
Edmonton Refineries Facility
Bullets
NovaChem Rail
Averaging Withdrawal System

Other Refineries Suggested
Injection Pumps
2 Wells Minimum
Salt Cavern Storage
• Oil sand material is received in daily or bi-daily batches from the Fort McMurray area.
• The batches are stored at the receipt point and then gradually transferred to the processing facility or to
cavern storage.
• Interfaces (and buffers if used) are segregated and the C3 content distilled off and the bottoms returned
to the main pipeline.
• Local ethylene plant feed will be received by pipeline with Joffre feed by rail. Surface storage will be provided to
allow continuous feed of the ethylene plant blend to processing.
• Edmonton refinery feed will be received by pipeline on a continuous basis and routed directly to processing.
• Other refinery feeds will be received by rail and transferred to surface storage and then to the processing facility
with balancing via the caverns.
• All excess feed will be routed to caverns say two at 500,000 barrels each, to be led to the process as capacity and
product demand permit.
This study has not attempted to optimize the feed/raw propylene storage system. (That will be a very complex study in itself—
e.g., sizing cavern injection pumping will be a major challenge.) The diagram notes a possible cavern withdrawal/filling

averaging system (such as that of R. W. Temple who provided advice to this study) in at least one cavern to handle the very likely
quality layering.
3.2.3 Product Propylene Qualities

As will be noted later, specific chemical derivative manufacture is based on a specific refinery, chemical or polymerization grade
feedstocks. When PG propylene is not required, such processes can use such higher quality material, but only at a marginal
additional payment compared to their normal quality feedstock, reflecting less byproduct production.
Refinery propylene is foreseen as being used here directly for only a few propylene derivatives that were not identified as having
major potential. In addition, even the largest individual propylene-rich streams appear below what is seen here as appropriate to
significant propylene chemical production in Alberta. Any combination of source types will require some processing and/or
distillation for even a refinery product grade. Thus, while smaller-scale opportunities for refinery grade propylene are definitely
to be encouraged, this study has considered only chemical and PG propylene.
Table 3.2.3-1 provides typical propylene product specifications from the literature, but each potential customer will have his own
specifications. In practice, certain parameters in the product will regularly be well under formal specifications and customers will
become used to such qualities. They will in effect become defacto standards.
Table 3.2.3-1. Partial Typical Propylene Specifications

Component Min/Max Chemical Grade Polymer Grade
Propylene Min 94.0 wt% 99.5 wt%
Propane Max 5.5 wt%
0.5 wt%
Ethane Max
0.5 wt%
Ethylene Max 50.0 ppm wt
C4 Max 0.1 wt% 50.0 ppm wt
Acetylenes/Propadiene (MAPD) Max 15.0 ppm (wt) 10.0† ppm wt
Sulphur Max 10.0 ppm (wt) 5.0 ppm wt*
Water and Methanol Max ** ppm (wt) 1.0 ppm wt**
CO2 Max – 1.0 ppm wt
CO Max – 0.5 ppm wt
COS Max – 0.1 ppm wt*
Oxygen Max – 1.0 ppm wt
Hydrogen Max – 1.0 ppm wt
Note: The above are not complete specifications with many trace contaminants to be added to both lists, Buyer specs will prevail in all sales
– at his plant gate.
† 5-ppm maximum will likely prevail in practice.
* COS = Total sulphur minus H2S and mercaptans.
** Final drying at customer site.
The primary differences between the two grades are in propane content and trace contaminants (not all shown in the table). The
methylacetylene and propadiene (MAPD) content, is definitely of more concern where PG is standard than when chemical grade
is the normal feed. (Non refinery propylenes and even some refinery propylene may be non-acceptable to ‘refinery’ grade users
due to MAPD content.)
In the byproduct, processing scheme assumed in this study, an option for chemical and PG coproduction is shown. In practice,
there are major differences only in the C3 splitter system between product grades and a PG capability (today using a single tower)
will be a likely decision in any case.
It is important to note that the specifications apply to propylene as delivered to customers—i.e., after caverns, pipelines, railcars,
etc.

3.2.4 Byproduct Processing
Each of the feed streams has its own characteristics and processing needs: the system must be able to handle a wide range of
compositions. The processing proposals here are conceptual for study purposes only.
Figure 3.2.4-1. Byproduct Processing
C2 – to C3 C4 C3
Fuel Gas Splitter Splitter
Ethylene Pre (A)

Plant Feed
Compressor
Hydrogenation Deethanizer (C)
Final
Treater
Purges Final
Chemical To Reflux
Hydro-
Hydrogen Treating Treating
Upgrader
Refinery
Feeds Sulphur
Removal
Hydrogen
(B)
Sulphur
Rich Purge (C)
(D)
Product:
(A) Polymer Grade Propylene to Market
(B) Chemical Grade Propylene to Market (Optional)
(C) Propane to Market
(D) C4+ to Market
Due to its very high MAPD contamination ethylene plant raw feed blend will have a hydrotreater to lower MAPD to 100 or less
ppm (from an inlet design of 50,000-ppm—5%). There will be very appreciable heat generated in this operation and a large cold
recycle will be needed. The MAPD will be converted very largely to propylene, but some hydrogenation to propane may occur,
as well as trace polymerization, perhaps, as far as a thick ‘green’ oil on occasion.
The non-ethylene plant feedstocks require sulphur removal to below 5-ppm. This will be done, probably, via 2 or 3 stages of
processing. Byproduct sources have a habit of bringing unanticipated trace impurities – e.g., phosphorus, antimony, mercury and
nitrogenous compounds. In byproduct processing the chemical treating must consider heavier than propane feedstocks, hence,
the somewhat arbitrary location here ahead of C3 C4 separation. Only allowances for such treating are included here.
The final hydrogenation unit will reduce MAPD to below 10-ppm; distillation in turn will reduce this to near zero in the product
propylene. No significant polymer production is anticipated in this hydrogenation step. Butadiene partial saturation to butylenes
will also occur (improving the quality of the small-scale C4 plus byproduct).
The deethanizer removes all the ethane and lighter components to fuel gas and the C3 C4 splitter produces a C4 plus bottom
product. (There will likely be too much C4 in the original feed to leave in propane. The original feed C4 will have 50 or so
percent olefins, of value to refiners, but requiring hydrogenation if left in for propane, even if it can be.)
The C3 splitter is assumed to be single tower vapour compression reboiled (heat pumped) system (as described further in the later
propane dehydrogenation discussion). Blending a bypass of the final C3 splitter with polygrade product will permit a slightly
lower (utility) cost chemical grade product if desired.
A final guard bed solid adsorbent treater—e.g., for sulphur, CO2, CO, trace metals – has been assumed needed for quality
assurance.
3.2.5 Excess Product Sales

As noted above, buyers are likely to discount byproduct propylene availability and this means regular excesses over local
demands. Variations in byproduct supply will also result in significant short-term excesses, possibly above the ability to smooth
out in storage. Rail shipment of excess polygrade product to the U.S. Midwest, California and/or USGC will be needed, and/or
alternately possibly raw Joffre propylene could be routed south as less expensive than the polygrade propylene sale route.
3.2.6 Byproduct Propylene Valuation

A. Raw Propylene Before Recovery
Each source plant will have its own unique value for propylene at any given time prior to any consideration of its separation for
separate processing for sale.
Oil Sands
• Local marginal natural gas supply cost to displace propylene. Note that lower heating value must be used in
calculating the amount of gas required.
• The large amount of co-recovered propane, 2 to 3 times the volume of propylene, must also be replaced.
• As oil sands processing and related cogeneration systems expands, their incremental gas supplies will be coming
from farther and farther south on the TransCanada system unless a new line is built, increasing the cost of such
gas.
• Like all propylene sources oil sand producers will require a premium over fuel or other replacement costs.
Refineries
• Propylene sale from Alberta refineries will reduce alkylate production [C3= + iC4 Æ C7 isomers] and the resulting
loss of very important gasoline blending stock must be made up by:
• Gasoline purchase from others and/or
• Added crude and intermediate processing
• Taking propylene out of alkylation does improve the octane of the remaining (C4) alkylate in-turn this allows
slightly higher yields in the parallel catalytic reforming unit. However, this only makes up for a small portion of
the deficit.
• Extraneous olefinic C4’s may be available to displace the propylene, but this study has not examined such
potential nor its costs.
• Reduced isobutane demand in alkylation appears economically important, reducing overall refining butane
purchases.
• Raw propylene sales from refineries, also reduces related propane sales, but this is not seen as of a great concern.
(Conversely, less isobutane is needed reducing butane purchases.)
• This study has not attempted a valuation of raw refinery propylene, due to very refinery-specific economic bases
beyond an external reviewer’s knowledge.
Note: At the Regina Co-op refinery propylene is polymerized, hence, a different propylene replacement situation exists.
Ethylene Plants
• Here the situation is clearer as the raw propylene now moves to the USGC. Rail transport south is in the order of
3.5 to 4 cents U.S. per pound of propylene and processing costs appear to be in the 6 to 10 cents U.S. per pound
range. However, in some USGC cases, MAPD may be extracted rather than hydrogenated to propylene
complicating valuation.
• Ethylene plant raw propylene value will closely track USGC chemical and polygrade propylene.
B. Capture Costs
As noted in Figure 3.2.4-1, there will be significant facility needs at each oil sands and refinery source. These
facilities will have high utility costs – electricity for compression, especially for low temperature recovery from fuel gas
streams and steam for distillation, particularly at refineries.
Even in the base case, new processing facilities at oil sand and refinery sources are likely to be in the order of $60 to
100 million with operating costs in the $7 to 12 million year range.
C. Transfer Costs

Any large-scale Alberta byproduct-processing facility will be receiving feed by pipeline (more or less in batches), by rail and
possibly by truck.
There may be a credit for the major reduction in rail cars now used to transport ethylene plant raw propylene to the USGC,
although some will be needed for other non AIH/SIA source material.
Raw propylene storage facilities will be large as noted above to cope with the widely fluctuating feed streams from other than
local ethylene plant and Edmonton refineries.
Handling and raw feed storage facility costs appear likely to have capital costs in the order of $40 to 50 million for the base case.
(This does not consider a new line from the oil sands area.)
D. Processing Charges
The central facility for the assumed base case could cost in the $60 to 80 million range, but no estimate was attempted in this
study, due to wide range of feeds and process alternates to be considered.
E. Overall Byproduct
The capital costs for the base case scheme appear likely to be in the order of $160 to 230 million, without any credit for rail car
reduction. Possible operation costs have not been totalled due to their high uncertainties.
Review of the preliminary costs indicates the likelihood of PG propylene available at 1 to 2 cents U.S. per pound under the
USGC long-term average price, assuming all grassroots facilities.
It is to be noted that underlying cost factors do not relate directly to USGC propylene values on a short-term basis. There will be
many ups, and downs, with Alberta costs and USGC propylene values not being in sync. Reference (a), for example, has graphs
reflecting very wide swings between USGC propane and propylene with only long-term time averaging of use in estimating
economics.
Propylene shipped to the USGC will receive only the contract or spot USGC value, resulting in roughly a four cents per pound
shipping penalty at the Alberta source. While this study’s prefeasibility level estimates did not show such value for Alberta
byproduct propylene from multiple sources, TCMS and/or other operators may well be able to achieve such pricing for all their
propylene product. To be conservative, this study assumed an Alberta byproduct propylene price of two cents per pound under
USGC prices.
TCMS will be able to achieve significant cost savings compared to a grassroots project, due to co-location with the existing
Redwater natural gas liquids fractionation and salt cavern storage facilities. There appear to be opportunities for integration at
other sites, hence, the above cost estimate could well over estimate the required netback on local propylene sales. As such credits
were not fully assessed, this study has assumed a two cents per pound under USGC price for locally delivered PG propylene.

4.0 PROPYLENE FROM PROPANE
4.1 Preamble
The ready availability of at least 200-kty appears essential for each of the short-listed chemicals discussed below in Section 6.
This much appears likely to be available from byproduct sources in 2005 with an 80-kty cushion (assuming only 5-tky lost to
propane in the purification system). However, more than one major derivative plant should be targeted and another route to
Alberta merchant propylene should be considered.
Review of the world propylene scene indicates a number of plants now producing propylene from very low-cost propane. While
Alberta does not fall into that category, construction and operating costs (ex utilities) are generally well below these developing
country sites. Thus, Alberta propane to propylene warrants consideration.
Enough propylene for the minimum sized facilities for two of the three short-listed propylene chemicals could be produced in a
current relatively standard single train 350-kty plant. At much above 450-kty we expect a largely two-train design with only
minor scale advantages.
At 350-kty of propylene from propane, approximately 2,150-m3/d (14,000-BPD) of commercial grade propane will be needed.
This compares to Alberta production of 25 to 30,000-m3/d, with over 80% going to export markets. Hence, a 350-kty propylene
from propane facility should have little problem acquiring feedstock via TCMS, Dow, Amoco and/or Chevron AIH storage at
prevailing prices (probably with some summer over purchases and seasonal storage), even with some diversion to the Alliance
pipeline system.
4.2 Technology
Dehydrogenation of propane to propylene via catalytic processes is being practiced in Europe, Saudi Malaysia and Korea. In one
case, a combined propane and isobutane feed is being processed to supply both PP and MTBE feedstocks.1 However, separate
processing at larger-scale is more economic and strongly recommended.
In the combined feed case and most other current propane dehydrogenation facilities, the UOP Oleflex dehydrogenation
technology used is very similar to that used for isobutane to isobutylene at AEF. The catalyst regeneration system at AEF is also
common to that at the propane units and close to that of Shell’s continuous catalytic reformer in the Scotford Refinery.
Other process routes to propane dehydrogenation are practiced in one Antwerp unit and licensed for two new smaller Mid East
units. Due to its predominance and local partial usage, here, we have assumed use of UOP’s Oleflex technology, based on
Reference (a) and discussions with UOP staff (References (b) and (c)). There would be four reactors versus three at AEF and
metallurgy would be higher due to more severe conditions when dehydrogenating propane.
1
Alberta EnviroFuels now dehydrogenate a portion of the propane contaminant in its feed butane, but both unreacted propane and
propylene are routed to fuel gas.

Figure 4.2-1. Propylene from Propane
Fuel H2
Gas C3
Fuel Gas Splitter
H2
Purification (C) Compressor
Depropanizer H2
Dehydrogenation Deethanizer
Polymer
Grade
Pipeline Propylene
Hydrogenation Storage
from Pretreatment of MAPD Cavern
NGL Reboiler
Reflux
Frac / Storage
C4 +
Recycle
(C) Propane to Market Propane with traces of C4+
The pretreatment system would reduce sulphur and other contaminants to a very low level to protect the precious metal catalyst
used in dehydrogenation. Essentially, all C4 and any heavier portions of the propane feed and recycle streams would be removed
in the depropanizer. (Note that ethane in the feed carries on through reaction to fuel gas.)
Propane and hydrogen pass through four fired heaters and four moving bed reactors in series as dehydrogenation proceeds to near
the 40% equilibrium level. The reaction products are then processed to remove small quantities of light decomposition
components and hydrogen. A small amount of propadiene/methylacetylene is formed in the reaction and is converted to
propylene in a well-proven low temperature hydrogenation step. The deethanizer insures final control of the ethane content of
the propylene product and the C3 splitter the propane content.
UOP has standardized on a single tower C3 splitter arrangement compressing overhead vapour before condensing to provide the
heat input needed at the tower bottom. (Product is withdrawn part way down the column to insure purity, a small overhead
recycle removes ethane and other trace contaminants.) This arrangement results in lower temperatures and enhanced distillation
properties than normal distillation, and avoids a two very large tower arrangement. The C3 splitter will still be in order of 60
meters tall and have up to 250 or so specially designed trays.2 The reboilers will also be special to minimize vapour compression
requirement. The C3 splitter will be more complex than for chemical grade, but in a new propane dehydrogenation system, the
added costs are more than repaid in the premium for PG product. Chemical grade product could be produced in such a system
with lower compressor energy inputs, if desired.
4.3 Integration Potential

It is possible to introduce properly conditioned byproduct propylene at the hydrogenation or deethanizer step. However, two C3
splitters are recommended for reliability and flexibility over, say 450-kty of total propylene. Hence, parallel byproduct and
propane-based trains appear likely, if more than two major propylene derivative plants emerge. Propylene product storage, utility
and other support systems would be common to both trains.
It is also very realistic to integrate the deethanizer/C3 splitter system with homopolypropylene production to handle the purges of
that process. Similar fits with other propylene derivative facilities may also be available.
The furnaces in the dehydrogenation system produce large qualities of steam—usually used to drive the compressor(s) in the
dehydrogenation system. The heat pump compressor of the C3 splitter is usually electric. There are major opportunities for
utility integration with other process plants and/or cogeneration facilities.
2
UOP has supplied the special trays to over 150 C3 splitters, most produce polygrade product.

4.4 Hydrogen Use
Decision economics are usually based on using hydrogen byproduct internally as fuel gas, but in the AIH or SIA, it appears very
likely that hydrogen would be recovered for sale.
4.5 Propylene Handling

Product propylene from byproduct processing and/or propane dehydrogenation has been assumed handled as follows:
Figure 4.5-1. Propylene from Byproduct Processing
Chemical Grade Separate

Line
Propylene
Network
Polymer Grade Pipelines Users
Polymer
Guard
Grade
Treating
Propylene
Product
Product Rail Loading
Storage
Truck Loading
Off-specification propylene is assumed routed back to in process or to raw feed caverns in the byproduct case or sold as chemical
grade via direct railcar loading in the propane route. Note that any/all chemical grade shipments will have their own pipeline
system.
Two caverns will be needed with their own brine system (separate from other cavern systems to preclude trace impurities). As
with ethylene the cavern capacities must allow for at least a one-month supply shutdown and a one-month demand shutdown,
with flexibility for day-to-day and week-to-week supply/demand in balances. Brine displacement will introduce contaminants
such as oxygen and a special drying/chemical treating system will be needed to insure delivered product quality. A final
drier/treater will be recommended at any consuming facility to reinsure polygrade product quality, but is probably not needed for
chemical grade product.
Both railcars and trucks will be dedicated to the specific product grade. Rail car unloading facilities will be provided at one or
two spots for off-spec returns and to allow railcars to be used for peak storage.
4.6 Production Cost

UOP indicate 7% extra capacity inherent in their designs, hence, another 25-kty of added propylene can be expected over time.
(Experience indicates UOP claims are generally conservative.) Due to worldwide dehydrogenation technology, competition and
ongoing catalyst improvements the study expects either an added 10% at least available or 7% less capital cost if facility size is
reduced. However, these potential credits have not been considered in the following operating cost estimates.
Reference (a) contained an early 1999 estimate of USGC costs for propane based propylene units producing 150 to 350-kty,
starting up in 2002. Here, only the latter size has been considered – for two minimum sized derivative units and to take
advantage of Alberta’s high propane availability. Nominal capacity of such a facility is unlikely to be discounted, given
sufficient product storage capacity – say two months of production – to handle propylene and conversion units operating cycles.
Propane feedstock cost is discussed in the next section, here the production costs are considered.

Table 4.6-1. Propane Dehydrogenation Capital Costs
($ million U.S.)
UOP Paper This Study
Project Sector USGC AIH
Pretreating – 10
Battery Limit Propylene Unit 145 145
Outside Battery Limit (@ 20%) 29 29
Other Project Costs (a) 37 40
Added Storage – 6
Total 211 230
(a) Catalysts, adsorbents, precious metal inventory, project developments and management, technology license and similar costs.
An SIA or AIH location has been assumed with essentially identical capital costs as on the USGC – given optimum use of
prefabrication and excellent project management.3
Added feed processing needs and salt cavern product storage have been added along with a nominal adjustment to ‘other costs’
for corporate costs and land. Note that no synergies with other plants were considered, conversely, no hydrogen purification
facilities are included.
Table 4.6-2. Propane Dehydrogenation Operation Costs

(ex Feedstock)
($ million U.S.)
UOP Paper This Study
Estimate Location USGC AIH
Catalysts and Chemicals 5 5
Utilities - Electricity (a)
12 9
- Fuel (a)
Fixed Costs (b) 19 20
Total 36 34
(a) Both estimates assume hydrogen and ethane from propane and light process gases provide the bulk of the fuel needs. This study assumed a
lower electricity cost, as well as lower makeup fuel costs.
(b) Maintenance, operators, technical, administration and related costs. This study added an allowance for interest on inventories and for added
corporate costs.
Hydrogen recovery and sale would add capital but add very roughly $1 million a year to the plant’s margin not considered here.
Converting the capital costs to annual ‘cost’ at a simple 20% per annum to cover provides the next table.
Table 4.6.3. Cost Summary

(ex Feedstock)
($ million U.S.)
Portion Base Factor Alberta USGC
Capital 227 0.2 45.4 42.2
Operating (ex feed) 34 1.0 34.0 36.0
Total – – 79.4 78.2
@ 350,000-kty Unit Cost 10.3 cents U.S. per pound ($227 per tonne)
The original paper numbers would indicate a USGC facility production at 10.1 cents U.S. per pound, marginally lower at a 20%
simple before tax. (The early nature of these calculations is to be noted.)
3
A current study for AED indicates AIH petrochemical facility capital costs 5% below those of the USGC. Such a credit has not been
shown in these estimates.

4.7 Propane from Propylene Cost
Review of weekly propane and propylene prices as quoted by OPIS for 1998 and 1999, indicated the following annual averages.
Table 4.7-1. Propane and Propylene

(Annual Averages in U.S. dollars)
Product/Location/Cost 1997 1998 1999
Propane
Mt. Belvieu, Texas
¢ U.S. per U.S. gallon 37.6 26.2 33.3
¢ U.S. per pound 8.9 6.2 7.9
$ U.S. per tonne 196 137 174
Edmonton
¢ U.S. per U.S. gallon 32.1 17.9 24.7
Differential Mt. Belvieu – Edmonton
¢ U.S. per U.S. gallon 5.5 8.3 8.6
¢ U.S. per pound 1.3 2.0 2.0
$ U.S. per tonne 22 44 45
Propylene
Mt. Belvieu, Texas
¢ U.S. per U.S. gallon not calculated 51.0 59.7
¢ U.S. per pound not calculated 11.8 13.8
$ U.S. per tonne not calculated 260 304
Propylene/Propane Differentials
USGC ¢ U.S. per pound not calculated 5.6 5.9
USGC $ U.S. per tonne not calculated 123 130
USGC Propylene/Edmonton Propane
¢ U.S. per pound not calculated 7.6 7.9
$ U.S. per tonne not calculated 167 175
Source: OPIS Weekly Publications
The Mt. Belvieu (USGC)/Edmonton propane posting differences are related to the traditional ‘eternal triangle’
between Edmonton (the net producer region), Sarnia (eastern consumer hub, including Marysville, Michigan) and
USGC (the ‘mother-of-all-consumers’). The economics can best be conceptualized as propane prices being set by
the ability of USGC to ‘clear’ propane (at a profit over cracker feedstock values) into the Eastern U.S. market base,
via TEPPCO pipeline and local distribution) where they meet Sarnia and Marysville-based rail transported LPGs. The
combined transportation costs to that Eastern market base being about the same from both hubs, means that the
Sarnia area and USGC prices are about the same level, with seasonal variations. Conway, Kansas is the fourth hub,
sitting on the mid-western side of the triangle, and having a major ‘intermediate’ influence on the pricing dynamics.
Edmonton pricing discount (relative to these markets) is a function of rail or pipeline transportation costs to the
alternative market. Using Sarnia as an example, the discount is approximately the cost of shipping the marginal
barrel in the Cochin pipeline at non-incentive rates, or about 7 to 8 cents U.S. per U.S. gallon. A similar rationale
applies to the Edmonton long-term differential of about 7 to 8 cents U.S. per US gallon.
This study analyses have not considered the future in-depth, but foresee no major changes in propane availability, currently about
25,000-m3/d from Alberta gas and straddle plants, and refineries.
Reference (a) presents a week-by-week analysis for the period 1981 through part of 1998, showed a $217 per tonne (9.8 cents
U.S. per pound) differential between USGC propane and propylene over that period. That number is significantly higher than
noted in the above table – noting a major need for much more rigorous analysis by any propane dehydrogenation project
proponent.
Over 80% of Alberta’s average (25,000-m3/d) of propane production is sold out of the province, largely by pipeline. As noted
above, 350-kty propylene propane to propylene facility will only use approximately 2,150-m3/d (14,000-BPD). Thus, no impact
on Edmonton postings is foreseen with such a new local propane derivative plant.
Commercial propane has 2+% ethane and 3 to 5% butane contents. In the selected technologies the ethane would be routed to
fuel gas, there not being sufficient for economic recovery for sale. The C4’s would be isobutane rich and, with a small byproduct
stream from dehydrogenation valued above conventional butane (of special value to refinery alkylation units). Thus, no
adjustments for commercial propane impurity values have been made.

Propane is the swing feed in USGC ethane (‘gas’) based ethylene plants, although not used here (beyond the present low impurity
level in ethane feedstock) due to poor yields. Propane is also a swing feed in U.S. Gulf Canada naphtha based ethylene plants.
Thus, USGC propane values follow naphtha and condensates over time. The naphtha and condensate values in-turn are crude oil
based. Thus, USGC propane can be considered to follow crude oil averaged over, say 12 months.
Commercial propane contains sulphur compounds above the <1-ppm level required by the dehydrogenation facility. But aside
from feed desulphurization drying and C4 plus rejection (in the feed depropanizer), feed propane treating needs are minimal.
The propane portion of the dehydrogenation feed is converted to propylene at approximately 94.5 weight percentage yield –
hydrogen at 3+% being the principal byproduct. In other words, 1.06 pounds of propane are required per pound of propylene.
Using the 1999 average data:

• Alberta propane feed to product one tonne of propylene
• 106-tonnes @ $129 U.S. per tonne = 137
• USGC selling price – $304 per tonne
• Differential available to cover propane dehydrogenation
• Capital and operating costs $167 per tonne of propylene
• But calculated cost is $227 at 20%
or $185 at 15%
• Return at $167 per tonne would be only 13.5%, based on USGC sales value.
Thus, deliberate propane conversion to propylene does not appear attractive with 1999 conditions. However, the difference
between the reference’s, USGC propylene, minus propane differentials and this study’s costing may warrant a second look. The
high sensitivity to capital is to be noted and hopefully, decreasing capital costs could make this route a future winner in Alberta,
even with our high propane costs, relative to developing country supply.
While this study did not find propane dehydrogenation greatly economic in a current Alberta setting – only a fair return even at
1999 USGC propylene value – the current surge in dehydrogenation technology development is to be noted. The two Mideast
projects committed to new technology may confirm lower capital costs, particularly in smaller facilities. The competition is
heating up with another technology entry about ready to go. Thus, while apparently poor economically at this time, the study
team strongly recommends very close attention to dehydrogenation developments and Alberta propane cost. We believe a
prudent propylene supplier or bulk user would go much deeper into dehydrogenation than possible in this study.

5.0 PROPYLENE CHEMICAL OPPORTUNITIES IN ALBERTA
5.1 Propylene Derivatives in an Alberta Context

Overt the past decade there has been a shift in propylene as a raw material from the ‘unwanted child’ of ethylene and refining
production to a feedstock for a variety of chemicals and resins with strong growth.
Table 5.1-1. Propylene Derivatives Assessed in Study

Polypropylene Cumene/phenol
Propylene oxide Propylene glycol
Isopropanol/acetone Acrylonitrile
Propyl ethers Propyl esters
n-Butanol Acrylic acid
2-Ethyl hexanol Acrylates
In the analysis of the chemicals derived from propylene or secondary products from propylene derivatives, the products are
handled in roughly the order below.
Table 5.1-2. Demand for First-step Derivatives of Propylene in North America

(1998 - (ktonnes)
Chemical Product Demand Propylene Use
Polypropylene 5,818 5,926
Acrylonitrile 1,564 1,858
Cumene 3,136 1,170
Propylene oxide 1,455 1,148
n-Butanol 818 920
Acrylic acid 954 651
Isopropanol 636 622
2-Ethyl hexanol 377 397
5.2 Polypropylene (PP)

PP is a thermoplastic resins that has gained wide use in injection molding of a wide range of products, blow molding of bottles,
sheet production particularly for food products, and even some application in wire and cable uses.
The resin is made from PG propylene in a gas-phase process. Some plants can use lower grade propylene – chemical grade – but
give up some capacity utilization with that decision.
5.2.1 North American Market for Polypropylene (PP)

The market for PP resins in North American ran to 5,750-ktonnes in 1998 with injection molding and fiber applications as the
dominant demand areas. The injection molding area is highly varied as PP provides an easily worked and tough resin.
Automotive parts have been a major outlet for resin in recent years as have appliances, and equipment parts for uses ranging from
trucks to garden tractors.
Table 5.2.1-1. Markets for Polypropylene in North America

(ktonnes)
Market Sector Demand 1998
Injection molding 1,635.7
Fiber and filament 1,582.9
Distributors and compounders 1,213.6
Film and sheet 580.4
Blow molding 105.5
Other, including wire and cable 158.3
Exports 541.8
Total Demand 5,818.2
.

5.2.2 Major Producers of Polypropylene (PP)
The PP business has been consolidating, as have many other product areas, and today in North America there are two firms –
Shell through Montell4 and BP Amoco that dominate the field with 30% of capacity. There are two plants in Canada, the
Montell/Shell facility in Montreal (Varennes) with a capacity of 185-kty and the Shell/Montell facility in Corunna, Ontario with a
similar capacity.
Table 5.2.2-1. North American Polypropylene Producers

(kty)
Producers Capacity
Canada
Montell, Varennes, QU 185
Montell/Shell, Corunna, ON 185
U.S. Plants
Aristech, La Porte, TX 175
Aristech, Neal, W. VA 205
BP Amoco, Cedar Bayou, TX 250
BP Amoco, Chocolate Bayou, TX 545
Epsilon, Marcus Hook, PA 335
Exxon, Baytown, TX 480
Fina, La Porte, TX 680
Formosa Plastics, Point Comfort, TX 230
Huntsman, Longview, TX 300
Huntsman, Marysville, MI 80
Lyondell, Bayport, TX 180
Millennium, Morris, IL 130
Montell, Bayport, TX 525
Montell, Lake Charles, LA 425
Phillips Sumika, Pasadena, TX 340
Rexene, Odessa, TX 95
Solvay Polymers, Deer Park, TX 350
Union Carbide Norco, LA 225
Union Carbide, Seadrift, TX 140
Total 6060
5.2.3 Production Technology for Polypropylene (PP)

The basic or most common PP process involves a gas-phase polymerization using proprietary catalysts. A number of competing
processes using alternative routes include a tubular reactor using liquid propylene. Single site catalysts are replacing the
traditional Zeigler Natta catalysts. Recently metallocene catalysts have been developed for PP resins, and this development is
expanding the range of resin grades and characteristics.
In the gas phase process (Unipol PP from Union Carbide Corp., now Dow Chemicals) a fluidized bed reactor using a proprietary
catalyst is used. Melt index, isotactic level and molecular weight distribution, are controlled by catalyst type and quantity, as well
as the addition of molecular weight control agents.
The reaction takes place at 35 bar and 70ºC. The reaction gas is circulated by a centrifugal compressor, which also fluidizes the
bed and provides the feed stream. The reaction is exothermic, and the outlet gas removes the heat of reaction. Approximately
20% of the feed is reacted per pass. The granulated product is removed after cooling. Unread reactants are recycled.
Hydrocarbons remaining in the product are removed by purging with nitrogen. The granulated product is sent to a pelletizer,
which provides a uniform low dust product.
Both homopolymers and copolymers with ethylene or butene can be produced in PP plants. However, impact grade copolymers
require a second reactor.
4
BASF – the world’s largest chemical company, is now becoming a partner in Montell.

Inputs
Propylene is the major raw material for the production of PP resins with 1.01-kg required for each kg produced. Outside of
utilities and labor the cost of catalysts and license fees are the major input expense in the process.
Table 5.2.3-1. Raw Materials and Utilities Consumption per 1,000-kg of PP

Input Quantity
Propylene 1,010-kg
Electricity 120-kWh
Cooling water 100-m3
Catalyst 0.1-kg (cost $10 to 20 per kg)
Steam 300-kg
Plant Size
Although, the existing plants are in the 30 to 300-kty capacity a World Scale Plant should be considered to be in the 200 to 300-
kty range depending on process and propylene cost. The very minimum plant size for new facilities is at the 120-kty level.
Process Suppliers
The popularity of PP resins has help to foster a number of suppliers of process technology. However, three processes tend to
dominate the field – Unipol PP, Spheripol, and Novelen.
Polypropylene Process Suppliers

• Union Carbide/Dow
• Montell/Shell
• Targor/ Krupp Uhde
• Borealis A/S of Denmark.
• Chisso Corp. of Japan
• Mitsui Chemicals of Japan
• Nova of Canada
Unipol PP Process
From Union Carbide Corp. (now Dow Chemicals) this gas phase process is the most successful process and is readily available
commercially. Today 34 lines are operating or under construction worldwide ranging from 80 to 260-kty. This covers a wide
range of homopolymers and copolymers with up to 12% ethylene or 14% butene.
Spheripol Process
Montell PP (from Shell) is the main commercially competing process originally developed by Montedison of Italy. Shell recently
acquired all of the company and its polymer technologies. This process uses a liquid phase reaction and Montedison developed
the Loop Reactor. Some 65 Spheripol plants are in operation with a capacity of 10 million tonnes per year with individual plant
capacities in the 40 to 300-kty range.
Novelen PP Process
This process was developed by Targor (the PP Company with the BASF and Hoechst plants) and is offered exclusively by Krupp
Uhde of Germany. Some 39 lines with capacities of 60 to 225-kty are in operation or under construction. This process uses a
vertical helical stirrer for homogenization and is particularly suited for making rubber copolymers
5.2.4 Technical Business Trends in Polypropylene (PP)

PP resins have been growing a 6% annually for most of the past decade and the near-term expectations in this century are that
growth in demand will run in the 6 to 8% range. Metallocene catalyzed resins and a growing range of copolymer resins have been
major drivers in this demand trend as PP takes over market areas once dominated by other resins. Compared with polyethylene’s
(PE’s) 3 to 4% annual demand growth, PP growth has been stronger by 2 to 3%.

Table 5.2.4-1. North American Polypropylene Capacity Expansions*
(kty)
Producers Capacity Date Planned
Amoco, Chocolate Bayou, TX 250.0 1999
Arco Products, Carson, CA 200.0 1999
Aristech, La Porte, TX 250.0 1999 to 2000
Aristech, Neal, W. VA 55.0 1998
Dow Chemical, un-named n/a 1999 to 2001
Epsilon/Marathon, Garyville, LA 360.0 2000
Exxon, Baytown, TX 250.0 1999
Fina, La Porte, TX 250.0 planned
Huntsman, Longview, TX; Marysville, MI; Woodbury, NJ 420.0 debottlenecking
Total 2,035.0+
* proposed/planned from 1998 forward
Should growth rates in resin demand hold up, all the planned capacity is likely to be completed. The major change in the PP
business is the entry of Dow Chemical and Arco Products. Both firms have strong molding resin businesses, and PP is a natural
addition to their product slate. Also, Dow has a strong position in metallocene catalyst technology, and will likely put it to good
use in making PP resins.
Dow Chemical's first PP unit was a 200-kty at Schkopau, Germany. A second plant is slated for Tarragona, Spain, and a further
PP plant is planned for the U.S. The three plants together would give Dow a total of about 680-kty of capacity.
5.2.5 Potential for Alberta

The strong growth in PP offers good potential for an investment in Alberta. The province has potentially a large supply of
untapped raw materials, as well as PP producers with established plant sites in the province.
Strengths for an Alberta Plant

• Strong regional position to access Western N. American markets and Asia-Pacific.
• Good supply of raw materials at below USGC prices.
• Rail distribution access to North America markets.
• Potential investor companies with existing plant sites.
Dow Chemical’s move into PP and its plans for a resin plant in North America would offer solid potential to persuade the
company to investment in the province. A second possibility is Montell, controlled by Shell Chemical, which has a plant site in
the province (with BASF as a new partner). Montell has not been making capacity additions recently, and the firm may be
considering new capacity should PP market growth continue.
5.3 Acrylonitrile (ACN)

ACN is best described as a fiber chemical, since it is a raw material for two major products of the fiber industry – nylon and
acrylic fibers.
5.3.1 North American Market for Acrylonitrile (ACN)

The markets for ACN are concentrated in the fiber business in North America; so the U.S. southeast provides the geographic
focus for the demand. The plastics business provides the second major demand area for this chemical.
Nylon demand is the larger market segment as ACN is turned into adiponitrile for producing this plastic. Acrylic resins are also
made from ACN for fibers along with sheet production and molding grades. Nitrile elastomers also have a fiber market use as
well as molding applications. At the performance fiber end of the scale, ACN is used for making carbon fibers.
The plastics sector forms the second major use area for ACN derivatives. The chemical forms the ‘A’ in ABS and styrene
acrylonitrile (SAN), two copolymer resins. ABS is used in everything from auto parts and other molded products to pipe, while
SAN goes into the packaging sector as well as consumer food wraps.

Table 5.3.1-1. Acrylonitrile Demand in North American
(kty)
Market Volume
Adiponitrile 356.6
ABS/SAN resins 332.8
Acrylic fibers 297.2
Acrylamide 71.3
Nitrile elastomers 47.5
Misc. incl. polymers, carbon fibers 83.2
Exports 375.0
Total 1,563.6
5.3.2 Major Producers of Acrylonitrile (ACN)

Over 90% of North American ACN production is carried out in Texas. Only the Lima, OH plant of BP Amoco is outside of that
state. The level of integration of the fiber producers with the production of ACN has been lessening in recent years. Cytec and
Monsanto produce or produced acrylic fibers, and much of their production goes into that market. After selling its fibers business
to Sterling, Cytec is still in the acrylamide applications in a major way, as well as supplying ACN to Sterling.
Table 5.3.2-1. Major North American Producers of Acrylonitrile

(kty)
Producers Capacity
BP Chemicals, Green Lake, TX 450
BP Chemicals, Lima, OH 225
Cytec Industries, Avondale, LA 220
DuPont, Beaumont, TX 175
Monsanto, Alvin, TX 225
Sterling Chemicals, Texas City, TX 320
Total 1,615
DuPont’s nylon business is supported by the Beaumont plant, but it also buys on a merchant basis. Sterling and BP Amoco have
about 60% of ACN capacity for merchant sale.
5.3.3 Production Technology for Acrylonitrile (ACN)

Over 90% of the world ACN capacity is based on BP Amoco’s Sohio process. With this process, the propylene can be low purity
refinery stream propylene or a 94% chemical grade stream. This is reacted with fertilizer grade ammonia and oxygen (as air) in
proportions of 1:1:1.5 (by volume) in a catalyzed fluidized bed reactor at 400oC and 15-psig. The propylene is converted to ACN
with an efficiency of over 70%. The main byproduct is HCN at 0.15-kg per kg of ACN with 0.04-kg of acetonitrile.
The reactor effluent after cooling is sent to separator where unconverted propylene, nitrogen and combustion products which are
sent overhead. The bottoms product containing an aqueous solution of ACN is sent distillation for separation of acetonitrile and
purification.
Sohio are also developing a competing process based on propane feedstock, which claims to reduce the cost of production by
20%. This is based on the much lower price of propane compared to propylene. This process, when proven, will reduce the
propylene feedstock requirements for ACN.
Table 5.3.2-2. Material Consumptions per 1,000-kg of Acrylonitrile

Propylene (100% basis) 1175-kg
Ammonia 475-kg
Air 0.2-MMscf
Catalyst $2
Plant Size
• The size of World Scale ACN Plant is 200-kty capacity.
Process Availability

• New ACN processes are not readily available on a commercial basis in North America, although the conventional
BP Amoco process is likely available for selected markets.
Major Suppliers of Acrylonitrile (ACN) Technology

• BP Amoco Chemicals
• Monsanto
The Sohio Process from BP Amoco Chemicals is the sole commercially proven and viable process at present. (A competing
process based on propane may also be licensed by the same party, as well.) Since BP is a major producer of this product, it
should be expected that the licensing for this process can be considered restricted.
Monsanto has an ACN process, which recently was licensed to Tae Kwang in Korea. This move breaks the near monopoly on the
BP Amoco process.
Solutia (formerly Monsanto) has an in-house ACN process, which they are using for the 300-kty capacity plant at Alvin, TX, but
it is not available commercially.
5.3.4 Technical Business Trends in Acrylonitrile (ACN)

The ACN business in North America has involved a strong domestic market as well as exports, mainly to Asia of between 500
and 636-ktonnes a year. These exports come out of the Texas plants. The Asian markets have been growing driven by acrylic
fiber demand and the ABS resin business.
Domestically construction and durable goods – such as automobiles and major appliances – have kept ACN growing at 2 to 3%
annually. The fastest growing market for the chemical has been the polyacrylamide polymers that go into the paper and water
treatment business as flocculants and retention aids. PAM products have been growing at 4 to 5% annually.
On the supply side, there has been rationalization of ownership in recent years as Cytec sold off its fiber plants to Sterling in
1997. BP added a new production train to its Green Lake plant in 1996, which added 120-kty to the site capacity. Since then, no
new capacity has been added in North America.
5.3.5 Potential for Alberta for Acrylonitrile (ACN)

The major opportunity from an Alberta market position to ACN lies in competitively reaching the Asian markets. With over 500-
ktonnes a year moving into those markets from the USGC, an Alberta plant could cut the shipping distance. Domestically Canada
imports some 7.3-ktonnes of ACN (each for 1997 and 1998) worth some $8 million or so a year, the investment market support
lies in the export markets.
On the raw material side, Alberta has both propylene and ammonia at fully competitive levels. Given the seasonable nature of the
ammonia business local fertilizer plants should be in a strong position to supply a world-scale ACN plant. With Agrium and
Sherritt in the AIH (and Agrium and Canadian Fertilizer at other sites) as ammonia suppliers an ACN plant will be well supplied
with ammonia.
The byproduct cyanide offers good market potential as well. Traditionally this side-stream has been converted into sodium
cyanide for the mining sector. In Canada, all the gold and copper refineries operate on imported sodium cyanide – mainly from
ICI, Degussa and DuPont. The western mining market in Canada as well as into the U.S. would be open to an ACN plant. The
nearest competitor is a liquid plant of FMC in Wyoming that supplies the local gold mines.
One of the more interesting potentials lies in production technology. A couple of years ago BP Amoco started of a demonstration
unit for its new process for producing ACN directly from propane. The process is said to cut the cost of acrylo manufacture by at
least 20%. Again, Alberta has a sufficient supply of propane to support a competitively sized facility, if the process shows
promise.

5.4 Cumene and Phenol
Cumene and phenol together form a combination of intermediate and finished products with cumene as the direct propylene
derivative. All cumene production virtually goes into the production of phenol. Phenol must be considered as the commodity
petrochemical since little cumene trades on a merchant basis.
5.4.1 North American Market for Phenol and Cumene

The cumene demand in North America ran to 3,136-ktonnes in 1998 and growth is running 4% annually based on phenol
demand.
Table 5.4.1-1. Demand for Cumene

(ktonnes)
Phenol 3,039
Imports (114)
Exports 211
Total 3,136
Virtually all cumene produced is oxidized to cumene hydroperoxide, which is then cleaved catalytically to phenol and acetone.
Therefore, the market for cumene is phenol.
Table 5.4.1-2. North American Demand for Phenol, 1998

(ktonnes)
Use Volume
Bis-phenol A 701.2
Phenolic resins 677.3
Caprolactum 294.4
Aniline 101.2
Alkylphenols 99.2
Xyenols 97.8
Miscellaneous 19.1
Exports, net imports 20.5
Total 2,010.7
Source: Sigurdson & Associates/SRII Consultants
The market growth in the U.S. has been driven by the growth in three major plastic resins – epoxy, nylon and polycarbonate
resins. Bis-phenol A is used for making epoxy resins and polycarbonates, as well as other chemicals. These two resins are
undergoing strong growth at present. Polycarbonate is being driven by its use in glazing as well as in compact discs, while epoxy
resins are finding greater use in industrial and consumer applications as adhesives, coatings and casting compounds.
Other demand areas for phenol lie in the wood binder business where phenolic resins dominate for outdoor grades of plywood
oriented strand board and increasingly manufactured studs and beams.
5.4.2 Major Producers of Cumene and Phenol

In the past, Canada had phenol production with a plant in Montreal operated by Gulf Canada, and Chatterton Chemicals
(originally Dow) in Burnaby, BC. However, both of those facilities closed several years ago.

Table 5.4.2-1. Cumene Producers in North America
(kty)
Producer Capacity
Chevron Chemical, Port Arthur, TX 454
Citgo Petroleum, Corpus Christi, TX 507
Coastal Eagle, Westville, NJ 150
Georgia Gulf, Pasadena, TX 682
JLM Industries, Blue Island, IL 70
Koch Industries, Corpus Christi, TX 682
Marathon/Ashland, Cattlesburg, KY 363
Shell Chemical, Deer Park, TX 500
Sun Chemicals, Philadelphia, PA 475
Texaco Refining, El Dorado, KS 77
Total 3,960
Source: Chemical Marketing Reporter
The integration of cumene and phenol production runs just over 20% of phenol capacity, which is very low for a commodity
chemical of this volume. Georgia Gulf is integrated from cumene into phenol in order to supply its phenolic wood binder plants
scattered across the continent. JLM Industries, Shell, Sun and Texaco are the other firms integrated back to cumene, but most of
their sales are into the merchant markets. GE Plastics has captive uses for phenol in its plastics and specialties business.
Kalama Chemicals in Washington State produces phenol from toluene, using an old process developed originally by Dow
Chemical, the plant also produces a series of benzoic acid derivatives.
Table 5.4.2-2. Phenol Capacity in North America

(kty)
Producer Capacity
Aristech, Ironton, OH 291
Dakota Gasification, Beulah, ND 17
Dow Chemical, Freeport, TX 295
Fenoquimia, Cosoleacaque, Veracruz 22
GE Plastics, Mt. Vernon, IN 318
Georgia Gulf, Pasadena, TX 73
Georgia Gulf, Plaquemine, LA 230
JLM Industries, Blue Island, IL 43
Kalama Chemical, Kalama, WA 32
Merichem, Houston, TX 16
Shell Chemical, Deer Park, TX 318
Sun, Frankford, PA 454
Texaco, El Dorado, KS 57
Total 2,166
Source: Sigurdson & Associates
Consolidation has been occurring in the phenol business. The most recent shift saw Sun Chemical buy Allied-Signal’s phenol
business, which tied phenol production to Sun’s cumene capacity in the Philadelphia area.
5.4.3 Production Technology for Cumene and Phenol

Cumene
Cumene is produced by alkylating benzene with a refinery or chemical grade propylene (94% purity).
Liquid propylene is mixed with fresh and recycled benzene and fed to a fixed bed alkylation reactor. A proprietary regenerable
zeolite catalyst is used for the alkylation. The propylene reacts completely and the effluent flows to the depropanizer column
where the propane leaves as the overhead product. The bottoms are sent to the benzene column where the unreacted benzene
leaves as the overhead product and is recycled. The benzene column bottoms are sent to the cumene column where the overheads
are the cumene product with 99.7% purity. The bottoms are sent to the heavies column, where the overhead product is
diisopropyl benzene, which is recycled and the heavies are a byproduct.

Table 5.4.3-1. Input Consumption per 1,000-kg of Cumene
Benzene 651-kg
Propylene( 94%) 370-kg
Catalyst $2
Electricity 11-kWh
Heat input 0.35 million kcal
Cooling Water 5-m3
Plant Size
• The existing plant capacities cover the 100 to 600-kty range. A world scale plant today should have a minimum
plant capacity of 300-kty. This would require the availability of 195-kty of benzene and 210-kty of propylene.
Plants are usually located near an existing refinery complex where the bulk feedstocks and utilities are readily
available over-the-fence.
Process Technology
• Cumene process technology is readily available on a commercial basis with three major suppliers actively
marketing their engineering and process expertise.
Major Suppliers of Cumene Technology

• UOP LLC, Des Plains, IL
• Badger/Raytheon, Pittsburgh, PA
• CDTECH, Houston, TX
• Mitsui, Japan
Q-Max Cumene Process

• UOP’s process is relatively new with plant capacities up to 600-kty. There are three plants in operation and one
under construction. The process integrates well with UOP’s BTX (aromatics) units and is readily commercially
available. The catalyst is regenerable and has an expected life of three years. Low-pressure steam can be recovered
for use in an adjacent phenol plant.
Mobil/Badger Process
• Provided by Raytheon, Pittsburgh, PA this is the traditional favorite and is well suited to low purity propylene. It
is commercially well developed and seven plants have been installed since 1996.
CDTECH Process
• This process has been developed by ABB Lummus and CR&L. This process uses catalytic distillation and is
suited to lower capacity plants. The first commercial unit of 270-kty for Formosa will go on stream this year.
Phenol
• Cumene peroxidation process is the major process used and involves the liquid-phase oxidation of Cumene into
Cumene hydroperoxide, which decomposes into phenol and acetone. For every tonne of phenol produced 0.6-
tonnes of acetone is generated in the process.
Table 5.4.3-2. Input Consumption per 1,000-kg of Phenol

Cumene 1380-kg
Air 1415-m3
Sulfuric acid small
Sodium hydroxide small
Plant Size
• A World Scale phenol plant would be minimum 150-kty and more likely 200-kty for most market areas.
• There are two major suppliers of phenol processes, Kellogg and ABB Lummus.
Kellogg/Hercules/BP Process

• Kellogg boasts to having supplied this process to 50% of the world’s phenol plant capacity. Three plants are
presently under construction including two major facilities in North America.
CDHYDRO Process
• ABB/Lummus’ process is a companion to its cumene technology and offered by CDTECH. Presently two plants
are being built – one in North American and the other in Taiwan and the firm boasts 50 years of building these
plants.
5.4.4 Technical Business Trends in Cumene and Phenol

The phenol business has been growing at 3% annually over the past few years driven by the construction board adhesives and the
bis-phenol-A businesses. However, expansion has been the order for all the major producers; in addition, two new companies
have announced plans to enter the business.
Phenolchemie, a Degussa-Hüls subsidiary, is a leading European phenolic resin producer, has announced plans for a facility in
Alabama. Also, Solutia’s new plant in Florida will have JLM Industries as a partner to take a portion of the output. That facility
will use Russian technology to produce phenol without going through the Cumene step.
Table 5.4.4-1. Phenol Plant Expansions Planned in North America

Producer Expansion
ktonnes Date
Aristech, Haverhill, OH 318 1999
Phenolchemie, Mobile, AL (1999) 400 2000
Shell Chemical, Deer Park, TX 225 2000
Solutia/JLM, Pensacola, FL (2000) 136 2001
Total 1,308
Over the past year, the phenol industry has announced expansions that will more than double North American output, if all the
plants are constructed. To this point, the ‘brown-field’ expansions have been going ahead strongly. Suncor brought on stream the
Allied Signal expansion after its acquisition of the Allied facilities. Several of the other plants have debottlenecked to add some
capacity.
Cumene production capacity is out of sync with phenol at this point. Minor plant expansions and one new production train have
been completed in the past three years. Should the Cumene process continue strongly, and the proposed phenol plant capacity be
constructed there will be a shortage of Cumene in the coming years.
5.4.5 Potential for Alberta in Cumene and Phenol

The potential for cumene/phenol in Alberta lies in the growing board resin market in the Northwest of North America and only
one small phenol plant supplying this region. Canadian imports of phenol run to 100+ kty with 60% of that going into the
Western regional market.
The development of technology that produces phenol without generating acetone is a big plus for potential investment in Alberta.
There are few acetone uses in Western Canada, and the newer technology would mean that byproduct acetone would not have to
be shipped out of the region by a plant mainly involved with supplying the phenolic resins sector.5
In Canada demand for phenol is supplied by imports, and the bulk of supply comes from the U.S. The share of the market held by
U.S. producers has remained constant over the years, in part, because of the spread-out nature of the domestic market. Major
demand lies in Ontario, Quebec and the Maritimes, but it is also scattered into Alberta and BC.
Table 5.4.5-1. Canadian Imports of Phenol

Year Value Total Imports
$ million Cdn ktonnes
1998 123.5 116.4
1997 107.1 99.9
1996 97.6 97.0
5
Acetone can be converted to isopropanol and most of that back to propylene via hydrogenation to alleviate byproduct challenges, if
required.

1995 76.2 73.3
1994 59.4 71.9
1993 45.0 61.3
Source: Statistics Canada, Imports by Commodity
5.5 Propylene Oxide (PO) and Glycol

PO is the starting point for the production of a variety of chemicals particularly urethane polyols and plasticizers. Most of the PO
plants also have integrated polyol production.
Dipropylene glycol
Propylene oxide Urethane polyols
Propylene glycol
P-series Glycol ethers
5.5.1 North American Market for Propylene Oxide (PO) and Glycol
The major use of PO lies in the production of urethane polyols. When reacted with isocyanate the polyols make urethane foams –
flexible and rigid. On a PO basis flexible foam polyols account for 53% of use, while the rigid foams take 6% of PO and non-
foam use of polyols accounts for 1% of material going into this market area.
Table 5.5.1-1. Propylene Oxide Markets in North America

(ktonnes)
Market Demand
Urethane polyether polyols 749.3
Propylene glycols 312.3
P-series glycol ethers 49.9
Miscellaneous 137.4
Total 1,455.0
The next largest demand area for PO is the production of propylene glycol, followed by the p-series glycol ethers, miscellaneous
applications for PO, including making polyalkylene glycols, alkyl alcohol and isopropanolamines. Trade in PO per se is modest
with some 200 to 210-ktonnes being exported from the U.S. and imports into the U.S. being negligible.
Table 5.5.1-2. Propylene Glycol Markets in North America

(ktonnes)
Market Demand
Unsaturated polyester resins 105.6
Antifreeze and deicing fluids 89.2
Food, drug and cosmetics 73.0
Liquid detergents 44.6
Paints and coatings 20.3
Functional fluids 16.2
Pet food 12.2
Tobacco 12.1
Miscellaneous, incl. plasticizers 32.4
Total 465.1
The largest polygrade (PG) market is the polyester resin systems for making fiberglass parts; followed closely by antifreeze and
deicing fluids, where PG competes with ethylene glycols. Aircraft deicing and long-life radiator antifreeze applications top this
market area. In the food, drug and cosmetic areas, PG acts as a texturizing agent, binder, and humecent. Unlike ethylene glycol

PG is not toxic and so can be used in food and drugs. The balance of PG demand lies in a variety of specialty applications from
pet food to tobacco where the glycol helps to keep things moist, or hold texture or flow properties.
Table 5.5.1-3. Dipropylene Glycol Markets in North America

(ktonnes)
Market Demand
Plasticizers 18.7
Unsaturated polyester resins 12.3
Cosmetics and fragrances 4.9
Urethane polyols 3.9
Alkyd resins 3.4
Miscellaneous, incl. functional fluids 5.8
Total 49.0
The dipropylene glycol applications are a refined sub-set of the PG market. Plasticizers are the largest application area; followed
closely by unsaturated polyester resins. The other uses areas are cosmetics, urethane polyols, alkyd resins and a variety of areas
including functional fluids.
Plasticizers, 38%; unsaturated polyester resins, 23%; cosmetics and fragrances, 10%; polyurethane polyols, 8%; alkyd resins, 7%;
miscellaneous, including solvents and functional fluids, 14%.
5.5.2 Major Producers of Propylene Oxide (PO) and Glycols

The producers of PO are all located in the USGC are involved in the urethanes business. Arco dominates the field in terms of
capacity with Dow running second. Huntsman purchased its facility from Texaco a few years ago and is the third player in the
field.
Table 5.5.2-1. Propylene Oxide Producers in North America

(kty)
Producer Capacity*
Arco, Bayport, TX 550
Arco, Channelview, TX 500
Dow, Freeport, TX 590
Dow, Plaquemine, LA 290
Huntsman, Port Neches, TX 180
Total 2,110
* 1998
Propylene glycol tends to be an integrated product to PO production. However, two of the propylene glycol producers are not
integrated with the production of PO, Eastman and Olin purchasing their raw material on a merchant basis.
Table 5.5.2-2. Propylene Glycol Producers in North America

(kty)
Producer Capacity*
Arco, Bayport, TX 256
Dow, Freeport, TX 115
Dow, Plaquemine, LA 105
Eastman, South Charleston, W. VA 33
Huntsman, Port Neches, TX 55
Olin, Brandenburg, KY 35
Total 599
* 1998 figures,
Source: Chemical Market Reporter.
Specialty products generated as byproducts from propylene glycol production are the di and tri glycols at about 10% of PG
production.
5.5.3 Production Technology for Propylene Oxide (PO) and Glycol

Propylene oxide
Today there are several routes for the production of PO, each with different raw material requirements and product outputs. The
choice of route is dependent on the price of raw materials and required products.
The traditional route is from propylene and chlorine using the chlorohydrin route. The dilute chlorohydrin is reacted with 10%
slaked lime (or caustic soda) slurry to produce PO; however, further reaction to the glycol is to be prevented.
This process gave way to the generally lower cost peroxidation route: peroxidation of isobutane and propylene to give PO and
tertiary butyl alcohol (TBA). This was traditionally done using air, but the newer plants use oxygen.
In a third process, propylene and ethyl benzene are reacted to produce PO and Styrene Monomer (SM) in another emerging
technology – the most common in new facilities of the past five years.
Chlorohydrin
The traditional route is the production of PO from propylene via the chlorohydrin route. This route has been used by Dow but has
a higher per capita propylene consumption.
The process uses the hydrolysis of propylene and chlorine with water in the presence of a lime slurry or caustic soda to produce
PO. The oxide must be removed rapidly to prevent the formation of propylene glycol. Propylene, chlorine and water are sent to
the reactor. Initially hypochlorus and hypochloric acids are formed. The liquid effluent contains 3 to 4% chlorohydrin. The
chlorohydrin should not separate as an oil phase as this increase the side reactions. Unreacted chlorine and acid are scrubbed
using a lime or caustic wash. The chlorohydrin is reacted with a 10% lime slurry or caustic solution to give PO and CaCl2 or
NaCl. The PO has to be removed rapidly from the reaction zone to prevent the formation of propylene glycol. The resulting PO is
purified by distillation.
Table 5.5.3-1. Consumptions per 1,000-kg of Propylene Oxide
Product Consumption
Propylene (100%) 940-kg
Chlorine 1,590-kg
Lime 1,090-kg
Byproducts are 90-kg of propylene chloride, 20-kg of ethers and 2,150-kg (as 1,005 CaCl2) of calcium chloride brine (or sodium
chloride brine).
Peroxidation
In this process isobutane is peroxidized at 90ºC and 450-psig in the presence of a catalyst to form tertiary butyl hydroperoxide
and tertiary butyl alcohol (TBA) yield is approximately 94% of the theoretical and 2.2-kg of TBA is produced per kg of PO.
Other byproducts depend on isobutane purity.
Table 5.5.3-2. Raw Materials Inputs per 1,000-kg of PO with Peroxidation
Input Quantity
Propylene 728-kg
Isobutane 2,160-kg
Oxygen 895-kg
Propylene Oxide/Styrene Monomer (POSM)

This process has styrene monomer (SM) as its major product with a byproduct (on a weight basis) of PO. The starting point is
ethyl benzene (or benzene and ethylene which can be reacted and dehydrogenated to give ethyl benzene). The ethyl benzene and
propylene are reacted to produce POSM. It is not a viable alternative without the availability of ethyl benzene at competitive
prices and in large quantities.
Plant Size
For the peroxidation process, a world-scale plant has 300-kty of capacity. The World Scale plant based on the POSM process is
approximately 250-kty of PO plus 600-kty of styrene.

Availability of PO technology is mixed with the POSM process tightly controlled. The new technology for this route is provided
by Nizhnekamskeftekhim of Russia through Dow Chemicals. Arco has never offered its POSM technology for sale, and Shell is
building a plant in Singapore using a similar technology.
Major Suppliers of Propylene Oxide Technology

None
Union Carbide and Dow Chemical have PO technology but do not offer it on a merchant basis. Carbide developed a peroxidation
process using oxygen, which has equipment cost reduction, as well as higher conversion compared to air peroxidation. Overall,
the technology is not freely available and will require negotiation.
Propylene Glycol
Propylene glycol is produced from PO and water. PG can be produced in a stand alone unit starting with purified PO or in an
integrated unit using aqueous solution of PO, hence, saving on purification. However, it is the PO, which is a consumer of
propylene and not PG directly.
The process is similar to that used for ethylene glycol. It is in principle possible to use the ethylene glycol hydration facilities to
produce PG. In addition to mono propylene glycol, there is some requirement for dipropylene glycol for the polyester resin
industry.
PO with an excess of recycled water is heated to approx. 190oC at 185-psig. In the tubular reactor, total conversion to propylene
glycols takes place. Excess water provides for a higher mono glycol product.
Excess water is evaporated in multi stage evaporators, with the last evaporator producing low-pressure steam. The process is non-
catalytic. Crude PG is purified using a vacuum column. Dipropylene glycol can be produced by the addition of PO or by reducing
the recirculating water.
Table 5.5.3-3. Major Inputs per 1,000-kg of Mono Propylene Glycol

Input Quantity
Propylene oxide 770-kg
MP steam 600-kg
Electric power 40-kWh
Cooling water 15-m3
Plant Size
Since the propylene consumption is dependent on the PO plant size the minimal size is more a function of whether the plant is
stand alone or integrated. Scale can be further reduced in principle if some ethylene glycol equipment is used. However, it can be
said that the minimum capacity should be 40-ktonnes with an optimum for a standalone unit at 100-ktonnes.
With the similarity of ethylene and propylene glycol plants, there are several suppliers of PG processes and access is good.
Major Suppliers of PG Technology

• Shell International
• Scientific Design
• Union Carbide/Dow
Shell International have 60 EG and PG plants in operation and commercially offer the process. Sharing the field is Scientific
Design with again, 60 EG and PG plants in operation. The two other major glycol producers with well-developed technology are
Union Carbide and Dow Chemical (now all Dow). At this point, they do not appear to offer this technology for third party usage.

Dipropylene Glycol
Dipropylene glycol, along with tripropylene glycol (TPG) and small quantities of higher glycols are produced during the
manufacture of propylene glycol from PO. TPG production represents 1% of output normally in such a plant. Dipropylene glycol
can be made on purpose should demand warrant by reacting propylene glycol with PO. No proprietary commercial process is
involved with this simple reaction.
5.5.4 Technical Business Trends in Propylene Oxide (PO) and Glycol

Both PO and PG are growing in the 2 to 4% per year range and are expected to hold those growth rates in the coming years. PO
has an export component that runs to 15% of U.S. domestic demand at 210-ktonnes a year or so. Much of this product has been
going into the Asian markets.
Durable goods such as cars, major appliances, carpeting, etc. that use urethane polyols are expected to be the major driver in
North America for PO in the coming years. At this point points strong automotive sales are driving flexible mold urethane foams,
while good demand for furniture, carpet underlay and bedding raises urethane slab stock requirements.
PG’s outlook is for growth in the 3 to 4% per year range, about 1% above PO’s growth rate. Unsaturated polyester, resins,
personal care products and functional fluids are considered the strong market areas for the chemical. In recent years the strong
polyester resins business has helped growth, but in recent years, dicyclopentadiene-based resins have been moving into the
fiberglass business. This trend may cut the use of PG in this market segment. Deicing fluids for aircraft using PG have been
growing nicely due to the concern about toxicity for using ethylene glycol. Growth of USP glycol in the cosmetics and the
personal care segment is being driven by strong markets for a variety of skin care and sunscreen products; however, tobacco use
is expected to continue to decline.
U.S. Exports of propylene glycol have been in the 80-kty level recently with imports minimal.
5.5.5 Potential for Alberta with Propylene Oxide (PO) and Glycol
A PO/PG complex likely would have to be considered, to justify building a Greenfield plant in Alberta. Favorable raw material
supply helps, but developing market access to the Asian markets and strong ties to U.S. mid-western consumers of both PO and
PG would be critical in justifying an investment in these chemicals in the province. The Canadian market does offer some
demand support, although most of the use lies in the eastern half of the country. Between the two chemicals domestic use run in
the $100 million level annually.
Table 5.5.1-1. Canadian Imports of PO and PG

Product 1998 1997
Propylene Oxide
Volume, ktonnes 58.5 57.1
Value, $ million Cdn 88.6 83.4
Propylene Glycol
Volume, ktonnes 20.6 22.2
Value, $ million Cdn 29.0 31.7
Asian PO demand, which had been growing at double-digit rates, is still expected to increase by 4 to 5% this year and offers
interesting potential. It is likely that an investor will have a specific geographic supply need to seriously consider a PO/PG
facility. Also, many of the producers are moving into value-added products such as polyalkylene glycols – e.g., Dow recently
expanded its capacity for those products at its Plaquemine, LA site.
5.6 Propylene Ethers

Propylene ethers are a growing product for the coatings, adhesives, inks and some industrial chemical applications.
Some of the Propylene Ethers

• Propyl propionate
• iso-Propyl ether
• Propylene glycol butyl ether
• PBT (propylene glycol t-butyl ether)
• Propylene glycol monoethyl ether

• Propylene glycol monomethyl ether
• Propylene glycol phenyl ether
5.6.1 North American Market for Propylene Ethers

Propylene glycol ethers are growing rapidly, far outstripping the ethylene glycol ethers or E-series products. In Europe P-series
ethers are accounting for 44% of all ether solvent consumption, while in North America it runs to just over 20%. In coatings and
adhesives, the two products can be easily switched without great reformulation. PO based (P series) glycol ethers are produced by
Dow Chemical Co., Arco Chemical Co., Eastman Chemical Corp., Shell Chemical Co. and Oxychem.
Demand for P- and E- series glycol ethers is about 880 million pounds per year and growing at 2 to 3% per year. The coatings
industry consumes about half of the glycol solvents. Because P-series are not classified as hazardous air pollutants, they will
continue to outpace demand for E-series and hydrocarbon solvents.
5.6.2 Major Producers of Propylene Ethers

Propylene ethers are made by the same producers as ethylene ethers and as a result, capacity cannot be easily split between the
various products to isolate the propyl portion of the sector. PO based (P series) glycol ethers are produced by Dow Chemical Co.,
Arco Chemical Co., Eastman Chemical Corp., Shell Chemical Co. and Oxychem.
Table 5.6.2-1. P&E-type Ether Solvent Capacity

(kty)
Company Site Capacity
Union Carbide Seadrift, TX 136 1
Seadrift, TX 64 2
Taft, LA 41 3
Dow Chemical Plaquemine, LA 91 2,4
Midland, MI 34 2,4
Eastman Chemical Longview, TX 91 2
Oxychem Bayport, TX 82 2
Arco Chemical Bayport, TX 52 4
Shell Chemical Geismar, LA 34 2
Olin Brandenburg, KY 92
1 butylene-based
2 ethylene based
3 methylene based
2, 4 ethylene and propylene based
4 propylene based
Source: Company reports
All the major producers provide a range of products to the coatings, adhesives, inks and general solvents business areas. Also, in
their production complexes they also produce various alcohols and PO to support the production of the propylene and other
ethers.
5.6.3 Production Technology for Propylene Glycol Ethers

Alcohols or phenols and PO are reacted to produce propylene glycol monoethers, which may be further reacted to produce di-,
tir- and poly (propylene glycol) ethers.
Propyl ethers are produced by the dehydration of propyl alcohols. For this, IPA is a suitable feedstock.
The traditional propyl ether process is carried out in the liquid phase using sulfuric acid as the dehydrating agent. A 96% sulfuric
acid is reacted with an aqueous 95% IPA solution in a corrosion resistant kettle. The reaction takes place 125oC. The vapor
effluent is scrubbed with dilute caustic soda to remove the residual acid. The ether is recovered by distillation. The process
requires special technology due to the explosive nature of the ether. The scale of production is normally about 10 to 15% of the
IPA capacity.
The production technology is similar and the same plants can be used for making a variety of ethers. Ethylene, butylenes and
methylene ethers are made by the same producers.

5.6.4 Technical Business Trends in Propylene Glycol Ethers
A high growth rate in the coatings, inks and adhesives area is giving rise to a bright outlook for p and e-type ethers in North
America. Growth rates are expected to run over 5% annually as the major demand areas try to control VOC emissions from their
products by switching to low volatile solvents such as propylene glycol ethers.
5.6.5 Potential for Alberta with Propylene Glycol Ethers

With no major regional supplier of these growing solvents, should a PO facility be built in Alberta, the production of propyl
ethers could be viable. There is not a large local regional market, but shipping to Eastern Canada and the Midwestern U.S. would
be competitive with the USGC.
5.7 n-Butanol
Normal butyl alcohol or n-butanol is a medium-volume propylene derivative that goes into solvent products on a direct basis or
as a raw material.
5.7.1 North American Market for n-Butanol

Acrylates, both butyl and methyl form the largest use for n-butanol, and also is one of the areas that is highly integrated with the
production of AA as well. The chemical’s use as a solvent or for making flow modifiers such as ethers, acetates and plasticizers.
Table 5.7.1-1. n-Butanol Demand in North American

(kty)
Market Volume
Butyl acrylate and methacrylate 296.9
Glycol ethers 176.8
Butyl acetate 106.1
Solvent use 63.6
Plasticizers 21.2
Amino resins 14.1
Misc. incl. butylamines 28.3
Total 818.4
5.7.2 Major Producers of n-Butanol

Solvent and specialty chemical producers dominate the n-butanol business in North America. Carbide is the largest producer and
is well-integrated into specialty esters. BASF and Celanese both have fiber and specialty chemical operations as well as specialty
chemical distribution.
Table 5.7.2-1. Major Producers of n-Butanol in North America

(kty)
Producer Capacity
BASF, Freeport, TX 240
Celanese, Bay City, TX 136
Eastman, Longview, TX 180

Shell, Deer Park, TX 66
Union Carbide, Taft, LA 275
Union Carbide, Texas City, TX 255
Total 1,152
Most commercial production involves the hydrogenation of n-butyraldehyde made through oxo reaction with propylene.
However, there are byproduct sources as well. Condea Vista Company produces about 5-kty of n-butanol annually at Lake
Charles, LA as part of its detergent alcohols operations. BP Amoco obtains an ethanol/n-butanol stream as a byproduct at its
Pasadena, TX linear alcohols plant.

5.7.3 Production Technology for B-butanol
The production of n-butanol is mainly from propylene and syngas (H2 and CO). The traditional route, which was based on the
fermentation of carbohydrates, can be assumed uneconomic for new capacity. Many existing plants are being converted to this
route.
The option is to use the oxo synthesis to produce butyraldehyde, which can be hydrogenated to butanol. The alternative product is
2-EH, which is produced by the aldol condensation reaction followed by catalytic hydrogenation. In the newer processes,
propylene and syngas can be converted directly to a mixture of n and iso butanol and 2-EH without isolating the butyraldehyde.
A mixture of n and iso-butyraldehyde can be produced by the LP Oxo Process, available from Kaverner/Dow UCC using a
rhodium catalyst, which operates at less than 300-psig as against the 1,500-psig for the convention oxo process. The oxonation
process produces n to iso product at a ratio of 10 to 1, but can be tailored to ratios varying from 30:1:1. The mild reaction
conditions result in fewer byproducts. The catalyst has a long life and is regenerable at site. The water-soluble Rh catalyst is
easily recovered and reused. The reactor effluent is cooled and crude product separated with recycle of unreacted gases to the
reactor. N and iso butyraldehyde is separated by distillation. A separate syngas generation facility based on natural gas feed
would typically be required, but H2O and CO can be made available from hydrogen and methanol units now in the AIH and SIH.
N-butyraldehyde can be hydrogenated to produce n-butanol using a variation of oxo alcohols synthesis. This uses a propylene:
CO: H2 mole ratio of 1:1:2. The reaction takes place at 1,000-psig and 150oC. The catalyst is a Ni catalyst in the Celanese/Rhone
Poulenc process. This process requires a significant supply of hydrogen.
Table 5.7.3-1. Raw Materials Inputs per 1,000-kg of Butyraldehyde

Input Quantity
Propylene 600-kg
Syngas ( CO + H2) 28,000-scf
Table 5.7.3-2. Raw Materials Inputs per 1,000-kg of n-Butanol by Hydrogenation

Input Quantity
Butyraldehyde 1,020-kg
Hydrogen 15,000-scf
For the direct process from syngas that generates both n-butanol and 2-EH the inputs are as follows for Butanol.
Table 5.7.3-3. Raw Materials Inputs per 1,000-kg of Butanol from Syngas
Input Quantity
Propylene 1,050-kg
Syngas ( CO + H2) 17,000-scf
Hydrogen 5,000-scf
Plant Size
Plants of capacity 30 to 350-kty have been installed. The minimum capacity for a world scale plant starting from propylene is
150-kty capacity. For 2-EH production, this could be reduced to 50-kty.
The process options for making n-butanol are several and the process can be combined with the production of 2-EH and other
oxo alcohols.
Suppliers of n-Butanol Processes

• Union Carbide Corp – low pressure oxo process
• Kruppe Udhe – n-butyraldehyde & hydrogen
• Hoechst AG/Rhone-Poulenc – propylene and syngas
• Hüls AG – butyraldehyde and hydrogen
Kvaerner/Dow/UCC have a well-developed LP oxo synthesis for the production of butyraldehyde. This is the rhodium catalyst
system described above. There are 18 plants with capacities up to 350-kty installed.

Celanese/Rhone Poulenc offer a water soluble catalyst system engineered by Krupp Uhde for butyraldehyde production starting
from propylene and hydrogen
Krupp Uhde offer a Ni catalyst based hydrogenation process, which is commercially available and well proven. They are also
leaders in syngas production and offer the adol route where butyraldehyde is treated with dilute caustic soda to give 2-EH.
Hüls AG offer the catalytic hydrogenation of butyraldehyde to butanols and 2-EH. The company has two plants in operation
since 1988.
Kvaerner/Dow – UCC also offer the Rh catalyzed low-pressure oxo process, which has been installed at Taft for Dow-UCC.
Celanese/Rhone – Poulenc also offer the Rh catalyzed process for direct oxo synthesis of n-butanol from propylene and syngas.
Shell Chemical has a one-step process, which converts propylene to butanols or 2-EH by hydrogenation. This is a flexible
process and permits flexibility in operations depending on market demand. This process has restricted licensing possibilities.
5.7.4 Technical Business Trends in n-Butanol

Growth in n-butanol demand has been running 3% annually, and that is expected to be maintained. Recently there has been some
125-kty of capacity added to the North American supply as Carbide expanded its Taft site in 1999, however no new plants are
announced at this time. Only modest volumes of n-butanol are exported, but the chemicals derivatives do go into the
international markets in better volumes.
The use of butanol in acrylate and methacrylate esters is growing at above 4% annually. These applications are expected to drive
the market in the coming years. They now account for over 40% of n-butanol consumption. Both of these products go into the
construction renovation market as an additive for latex paint. The additional growth potential lies in the shift to water-based
coatings in the paint industry on an overall basis. Exports of n-butanol derivatives – butanol, butyl acrylate and butyl acetate –
have become increasingly important. However, new global capacity may reduce the volume in the coming years from the U.S.
5.7.5 Potential for Alberta for n-Butanol

The most favorable investment strategy for butanol in Alberta would be the establishment of a complex making n-butanol and 2-
EH. Product would mainly be aimed at the export Asian markets, but a favorable raw material situation and a growing market in
the Pacific Rim countries could be attractive.
The domestic demand for n-butanol runs in the 5 to 6-ktonnes range annually and the value of imports has been in the $4 to 5
million level, not major support for a plant investment.
Overall, the potential for production of n-butanol in Alberta is modest. Coupled with an AA and acrylate facility the potential
rises dramatically, but as a single product, the investment potential must be considered fairly low.
5.8 Acrylic Acid (AA)

AA is a versatile and key raw material for water/moisture control products and coating additive products. It also is reacted up to
form various acrylates.
5.8.1 North American Market for Acrylic Acid (AA)

Super absorbants have been the largest and perhaps the most dynamic market areas for AA demand in recent years. The AA
water treatment derivatives provide flocculation or formation process control in the water treatment and paper making sectors.
The various acrylates – butyl, methyl, ethyl, ethyl hexyl and the specialties – form the balance of AA demand and these products
go into the coatings sector mainly.

Table 5.8-1. Acrylic Acid Demand in North American
(kty)
Market Volume*
Polyacrylic acid and salts 334.0
n-Butyl acrylate 286.3
Ethyl acrylate 190.9
Methyl and 2-ethylhexyl acrylates 66.8
Specialty acrylates 47.7
Miscellaneous 28.5
Exports, net imports* (77.2)
Total 954.4
* Imports exceed exports by 77-ktonnes
5.8.2 Major Producers of Acrylic Acid (AA)

The dominant producer of AA is Rohm & Haas, which has a major position in acrylic sheet through to acrylic emulsions and
other polymers. However, both BASF and Celanese have super absorbent businesses and major specialty chemicals operations,
serving the coatings sector, as a result, they are strong in butyl acrylates and ethyl acrylates including raw material integration.
Table 5.8.2-1. Major Producers of Acrylic Acid

(kty)
Producer Capacity
Celanese, Clear Lake, TX 275
Rohm and Haas, Deer Park, TX 520
Union Carbide, Taft, LA 110
Total 1,205
About three-quarters of AA production is converted directly into acrylate esters on site and the balance is purified and sold as
glacial AA. Despite, nominal U.S. over-capacity AA imports exceed exports.
5.8.3 Production Technology for Acrylic Acid (AA)

The main process route for AA is by the gas phase catalytic oxidation of propylene. The alternative route is via the hydrolysis of
ACN (which is produced from propylene and ammonia). The oxidation route is highly favored economically.
The reaction between propylene and oxygen is carried out in a catalytic reactor at 400oC containing a solid, cobalt
molybadate/tellirum oxide catalyst. The reaction requires careful control to prevent by product formation. Aqueous AA is
separated and concentrated to crude AA. For ester production, this can be reacted with the appropriate alcohol in a n esterification
tower using an acid catalyst. A vapor phase esterification process using silica gel has been developed for ethyl acrylate. This has
a conversion rate of 56% at 260oC. This has the advantage that for an integrated plant the heat efficiency is greatly improved.
However, for product quality considerations most new plants use glacial AA as the starting point for the esters.
Table 5.8.3-1. Input Consumptions per 1,000-kg of Acrylic Acid

Input Consumption
Propylene ( as 100%) 620-kg
Oxygen 710-kg
Plant Size
A World Scale Plant for this process has a capacity of 200 to 300-kty.
Technology Availability
Most of the producers of AA are reported to license their technology for selected markets. There are three or four firms offering
that technology on a commercial basis. BASF, Nippon Shokubasi and Mitsui tend to be the leaders in this production technology
area.

Major Suppliers of Acrylic Acid Technology
• BASF, Germany
• Nippon Shokubai, Japan
• Mitsui, Japan
Currently the firms expanding in AA tend to be using their own technology. BASF is setting up a plant in Malaysia (a joint
venture with Petronas) using in house technology. Sumitomo is providing the technology for a 25-kty glacial AA plant in
Singapore, while Nippon Shokubai/MHI are providing technology for a 40-kty acid and ester plant in China.
Mitsubishi Petrochemicals have provided technology for seven plants producing AA. The process boasts a high yield catalyst
system and low capital cost, but Mitsubishi does not seem to be involved in the latest round of global expansion.
5.8.4 Technical Business Trends in Acrylic Acid (AA)

AA has been growing at 5% annually and expectations are that it will continue to increase at that level in the coming years.
Products such as super absorbants are projected to grow at 6 to 7% annually, while the coating products face more measured
growth in the 3 to 4% range.
To meet this demand outlook there has been some expansion of the supply. Slated for start-up in 2001 is a new 125-kty plant of
American Acryl at Pasadena, TX. The company is a joint venture between Elf Atochem North America and Nippon Shokubai.
Elf is also constructing an acrylate facility to take its share of the new plant’s output. Both BASF and Celanese has recently
added to the capacity of their AA plants, and Celanese is adding a further 80-kty at Clear Lake, TX later this year.
5.8.5 Potential in Alberta for Acrylic Acid (AA)

Alberta offers interesting potential for AA. The strong growth rate of the chemical will mean that in the coming 3 to 4 years
additional capacity will be required for North American demand. Asian demand also is growing strongly both for acid as well as
the esters. Until the expansions come on stream in the USGC imports of AA are exceeding exports. If market growth continues,
there still could be an opportunity to add another AA plant in a few years without disrupting the market here.
Table 5.8.5-1. Acrylic Acid and Ester Imports to Canada

Import 1998 1997
ktonnes $ million Cdn ktonnes $ million Cdn
Acrylic acid 1.9 2.8 1.8 2.6
Acrylic esters 27.7 53.3 29.0 52.9
The players in AA and its derivatives also are changing. As a consumer of AA and acrylates in the U.S., Dow Chemical broke
ground in 1998 for a 125-kty AA unit at its BSL complex (Bohlen) in Germany. Startup of the project, which includes esters, is
scheduled for 2000. With the Dow/Carbide merger, domestic interest in the product could be increasing, since the Carbide plant
is the smallest complex in the North American industry.
5.9 Isopropanol/Acetone
Isopropyl alcohol or isopropanol (IPA) is a popular solvent.
5.9.1 North American Market for Isopropanol/Acetone

The North American market for isopropanol or isopropyl alcohol (IPA) was 636-ktonnes in 1998 with solvent use dominating the
business. As part of the solvent application is the use of IPA as an oxygenate in certain gasolines.
Table 5.9.1-1. Isopropyl Demand in North American

(ktonnes)
Market Volume
Solvent 172.8
Chemical derivatives 116.6
Acetone 64.8
Household & personal care. 43.2
Pharmaceuticals. 21.6
Misc. solvent 12.9

Total 636.4
The ability to make a high quality acetone from isopropanol has created a outlet for about 15% of IPA demand. However, in the
context of the acetone business IPA-based product accounts for only 5% or less of supply.
Household and personal care use of IPA represents sales to the consumer as a cleaning solvent and a medicinal alcohol. The
pharmaceutical use of IPA is as a process chemical or additive.
Table 5.9.1-2. Acetone Demand in North American

(ktonnes)
Market Volume
Acetone cyanohydrin (methyl methacrylate) 568.6
Bis-phenol-A, 252.7
Solvent 214.8
MIBK and MIBC. 101.1
Miscellaneous 126.4
Total 1,263.6
5.9.2 Major Producers of Isopropanol/Acetone

There is one IPA plant in Canada, that of Shell Chemical facility in the Alberta area, a major regional supplier for many years.
All the other facilities in North America are on the USGC.
Table 5.9.2-1. Isopropanol Producers in North America

(kty)
Producer Capacity
Shell Chemical, Corunna, ON 85
Exxon, Baton Rouge, La. 295
Shell, Deer Park, Tex. 275
Union Carbide, Texas City, Tex. 260
Total 915
The production of acetone is dominated by the phenol plants where it is a byproduct or coproduct of the cumene to phenol
process. Deliberate IPA to acetone production is aimed at high quality markets where minor trace chemicals cannot be tolerated.
Table 5.9.2-2. Acetone Producers in North America

(kty)
Producers Capacity
Shell Chemical, Corunna, ON 15
Aristech, Haverhill, Ohio 200
Dow, Freeport, Tex. 180
GE Plastics, Mount Vernon, Ind. 195
Georgia Gulf, Pasadena, Tex. 45
JLM Chemicals, Blue Island, Ill. 26
Shell, Deer Park, Tex. 190
Sun, Frankford, Pa. 280
Texaco, El Dorado, Kans. 38
Union Carbide, Institute, W.Va. 77
Total 1,246
5.9.3 Isopropanol Production

• C3 H6 + H2O Æ CH3 CHOH CH3
propylene water isopropanol
Isopropanol (IPA) production from propylene is produced via a gas phase 170 to 190oC temperature medium
pressure reaction over a fixed bed catalyst. Unreacted propylene and most byproducts are recycled. Propane and

minor unreactable byproducts – mostly acetone – are purged from the raw product before final dehydration to
cosmetic grade IPA.
Table 5.9.3-1. Balance for 1,000-kg of IPA

Propylene (@100%) 715-kg
Water 600-kg
Steam 2,200-kg
Electricity 35-kWh
Fuel Gas small
Capital costs are in the order of $60 million for a 100,000-kty facility using Degussa technology. If desired ethanol
can be produced in the same facility with ethylene replacing propylene as feed.
Acetone
Approximately 27% of the IPA are used to produce acetone by the water removal step. However, 90% of the North American
acetone is as a byproduct in phenol production. A small amount is also produced as by product from PO production.
Plant size
Plant sizes vary widely depending on the local market for high quality acetone. A minimum plant size would be at the 25-kty
level.
Process Technology
IPA to acetone process technology is available from Edelneau of Germany, as well as IFP, of France. The bulk of acetone is
produced in the conversion of cumene to phenol, as discussed above.
Propyl Ethers
Propyl ethers are produced by the dehydration of propyl alcohols. For these derivatives, IPA is a suitable feedstock.
In the traditional process, this was carried out in the liquid phase using sulfuric acid as the dehydrating agent. 96% sulfuric acid is
reacted with an aqueous 95% IPA solution in a corrosion resistant kettle. The reaction takes place 125oC. The vapor effluent is
scrubbed with dilute caustic soda to remove the residual acid. The ether is recovered by distillation. The process requires special
technology due to the explosive nature of the ether. The scale of production is about 10 to 15% of the IPA capacity.
Plant Size
The capacity for propyl ether is in the order of 10-kty given its specialty chemicals nature.
Process Technology
Propyl ether technology is available from various engineering companies and major IPA producers have it for internal use.
5.9.4 Technical Business Trends in Isopropanol/Acetone

Isopropyl alcohol is a mature product with a growth rate in the 1 to 3% annual level. To ease the lack of local demand, U.S.
producers export about 35% or 300-ktonnes offshore to Europe, Central and South America. Imports into the U.S. come mainly
from the Shell plant in Alberta with about half of its output going into U.S. regional markets.
Solvent demand is an area of little growth. The pharmaceutical industry, a major consumer, has been moving to solvent
recycling, which has cut into IPA sales. Regulations aimed at cutting down on volatile organic compound (VOC) emissions also
have been hurting IPA solvent use as industrial consumers move to less volatile products. Derivative products – amines, esters
and ketones – are growing at higher rates in the 3 to 4% annual level, but demand in those products is not offsetting a stagnant
solvent market.
5.9.5 Potential for Alberta with Isopropanol/Acetone

While there is a good supply of propylene in Alberta from local refineries, the lack of a regional market for IPA and the shipping
distance to most North American markets mitigate against the product. As an ancillary product for production of another

chemical in the province, a small IPA plant might be considered. Capital costs are modest and production operations are not
particularly complex for making isopropanol, so a local demand could be handled by a less than world-scale plant.
5.10 2-Ethyl Hexanol

Significant 2-EH nitrate is used by Alberta oil refiners to increase the cetane of oil sands derived diesels, however, 2-EH nitrate is
apparently available at low cost in the Far East and suitable quality nitric acid is not available in Alberta.
Plasticizers and acrylates are normally major outlets for 2-EH. The balance of uses represents fewer than 10% of demand.
5.10.1 North American Market for 2-Ethyl Hexanol
The plasticizer business has been dominated by phthalates. Today about 60% of the plasticizer EH goes into making dioctyl
phthalate, followed by dioctyl terephthalate (about 30%). The Plasticizers go mainly into the polyvinlyl chloride (PVC) business
for making flexible products. Acrylates are mainly used in emulsion polymers for adhesives, coatings and in textiles. The rest of
demand lies in making specialty chemicals used in the lubricant additives and surfactants or directly as solvents. On a net basis,
export account for about 15% of demand from the domestic producers of 2-EH.
Table 5.10.1-1. 2-Ethyl Hexanol Demand in North American

(kty)
Market Volume*
Plasticizers 154.7
Acrylates 90.2
2-Ethylhexyl nitrate (cetane improver) 25.8
Lube additives 12.9
Surfactants 9.7
Solvents 6.4
Miscellaneous 22.6
Exports, net of imports 55.0
Total 377.3
5.10.2 Major Producers of 2-Ethyl Hexanol
All the North American capacity for 2-EH lies in Texas with Eastman accounting for half of the continent’s capacity. Aristech
and Union Carbide (Dow) rank second and third in the sector. Aristech’s Pasadena site also has an ophthalmic anhydride facility
or plasticizer production. BASF has been a major producer and developer of plasticizers, while Shell has strength in lube
additives and certain improvers as well as other specialty products.
Table 5.10.2-1. 2-Ethyl Hexanol Producers in North America

(kty)
Producer Capacity
Aristech, Pasadena, TX 138
Eastman, Longview, TS 240
Shell, Deer Park, TX 30
Union Carbide, Texas City, TX 55
Total 503
5.10.3 Production Technology for 2-Ethyl Hexanol
There are three processes for making 2-EH: the oxo process, syngas and propylene, and the hydrogenation of butyraldehyde.
Table 5.10.3-1. Raw Materials Inputs per 1,000-kg of 2-Ethyl Hexanol by Hydrogenation
Input Quantity
Butyraldehyde 1,200-kg
Hydrogen 10,000-scf
It should be noted that approx. 200-kg of byproducts are obtained in the process.

Plant Size
A minimum sized World Scale plant for 2-EH would be 100-ktonnes per year.
5.10.4 Technical Business Trends in 2-Ethyl Hexanol
There have been minor additions to 2-EH capacity in recent years, although much of the oxo plant capacity installed has been
oriented to n-butanol use. Eastman added about 40-ktonnes of capacity to its facility in 1997, but the other producers have
expanded their aldehyde capabilities without adding any hexanol capacity.
In Shell's one-step process, propylene is converted directly to butanols and 2-EH, without isolating butyraldehydes. The
company's 2-EH capacity is very flexible depending on the production of n-butanol, some of which is used solely for glycol
ethers.
Growth for 2-EH has been running in the 2 to 3% level and is expected to remain there. The plasticizer business has been under
pressure for the toxic concerns regarding phthalates. As a result, for many PVC applications processors have been moving to
other products away from the phthalates. Growth is acrylates and methyl acrylates is expected to be in the 5 to 7% range in the
coming years as demand for emulsions increases.
5.10.5 Potential for Alberta for 2-Ethyl Hexanol
As part of a butanol/2-EH complex, production of this chemical could occur in the province. On its own 2-EH will not be a driver
for investment, despite the favorable supply of propylene in the province and the cetane improver market.
On an overall continental basis low demand growth and an in-place capacity of 500-ktonnes facing a demand of less than 400-
ktonnes and Asian imports means it is unlikely that a new plant will be built in the medium future. Pressures on 2-EH in the
plasticizer business may further reduce demand.
5.11 Atactic Polypropylene (APP)

APP is used as a polyolefin constituent in products such as hot melt adhesives and specialty laminations. Traditionally the
material was a byproduct from the production of homopolymer PP. However, in recent years, catalyst technology and tighter
production control has reduced the production of APP, while the market for hot metal adhesives and some of the other
applications has continued to grow.
5.11.1 Production of Atactic Olefins
The soft and waxy resins are produced by PP and PE producers as specialty items in their product lines. Eastman Chemicals and
Exxon Chemicals both have substantial product lines going into the adhesives industry (hydrocarbon resins, solvents, additives,
etc.). The dominant position is held by Eastman, which supplies both APP and atactic PE as part of its adhesives chemicals
business.
About 15 to 20% of material comes as a byproduct from PE and PP plants. International Waxes of Ajax, ON was one of the
forerunners in developing the APP applications in adhesives, as an adjunct to its wax business (business sold to IGI
International). Firms such as Crowley Chemicals of New York also market byproducts from various PP plants.
Table 5.11.1-1. Producers of Atactic Olefin Resins

Polypropylenes
Eastman Chemicals Long View, TX
IGI/Himont Sweetwater, TX
Rexene Odessa, TX
Polyethylenes
Eastman Chemicals Long View, TX
Exxon Chemicals Baton Rouge, LA
Millennium/Quantum Houston, TX
Union Carbide Sea Drift, TX
Source: SRI Consultants

5.11.2 Process Technology
APP, unlike resin grade PP, involves polymerizing propylene into a non-regular or random polymer chain. During the step-
growth polymerization process, an isotactic structure normally found in PP resins is not produced, and the result is a soft, waxy
product highly suited for blending into adhesive formulations. Raw material requirements are the same as for homopolymer PP
and identical production hardware is required.
Potential Sources of Atactic Polypropylene Technology

• Hercules Inc., Wilmington, DE
• Shell Chemical, Houston, TX
• Mitsui, Japan
From a capital cost point of view, an option is to obtain an old, small PP reactor that will be the right size for the market to be
served. The APP market could not take the output from a new large plant.
One additional factor in terms of technology acquisition in the context of a Alberta location could be the possible availability of
plant hardware. At the Shell/Montell PP plant site in Montreal is a mothballed PP plant with some 80-kty capacity. This facility
was considered at one point by its past owners to be reactivated for making APP.
5.11.3 Markets and Outlook
The markets for APP and PE run in the 120 to 150-ktonnes (265 to 330 million pounds) area annually in North America.
Table 5.11.3-1. Estimated Market Segmentation for Atactic Polypropylene

Application Use
Bituminous roofing 60%
Adhesives 25%
Lamination 10%
Misc. 5%
Total 100%
The major application lies in the bituminous roofing materials, where APP competes with SBR rubber. The PP allows the sheet
roofing material to be easily adhered and bonded. The next major market lies in the formulation of hot melt adhesives. Along
with EVA resins and hydrocarbon resins, APP provides melt flow and body to the hot melt formulations.
Close to one-third of the APP market is in the manufacture of hot melt adhesives. This has been a steadily growing application
area for APP.
Table 5.11.3-2. Hot Melt Adhesive Use of Atactic Polypropylene

Industry 1992 1997
ktonnes million lbs. ktonnes million lbs.
Packaging 17.3 38 15.1 33
Textiles 6.4 14 6.8 15
Appliances 1.9 4 2.1 5
Disposables 1.1 2 1.3 3
Electrical/Electronics 1 2 1.2 3
Automotive OEM 1 2 1.5 3
Construction 0.2 <1 0.2 <1
Total 28.9 62 28.2 57
Source: SRI Consulting
Paper lamination and some plastics/paper lamination is another solid use of APP. In the wire & cable area the resin is used for
cable flooding where the polymer is used to fill in around the insulation filler in large power cables to keep moisture out.
APP is also used in the lamination of plastic films and plastic to other materials. The miscellaneous uses, are in the wire and
cable industry where APP is used for filling and sealing the insulation in high-tension cables and other similar products.

The list price for APP is $1.82 Canadian per kilogram (55 cents U.S. per pound). APP sells at price levels as a specialty chemical.
While the market size is modest with any volume of sales a producer can generate an attractive margin based on propylene raw
materials running currently at 60 cents Canadian per kilogram (20 cents U.S. per pound).
Table 5.11.3-3. Some Major and Potential Users of Atactic Polypropylene

Company Major Location Product
Croda Apex Adhesives Itasca, IL hot melts
Dexter Corp. Seabrook, NH hot melts
Findlay Adhesives Watosa, WI hot melts
Hall Tech Toronto, ON hot melts
Harcos Chemicals Belleville, NJ hot melts
H.B. Fuller, Canada Toronto, ON hot melts
H.B. Fuller St. Paul, MN hot melts
Imperial Adhesives Cincinnati, OH hot melts
Loctite, div. of Henkel South Elgin, IL hot melts
National Starch & Chemical Bridgewater, NJ hot melts
Taac International Rockland, MA hot melts
Firestone Carmel, IN roofing sheet
GAF Roofing Cedar Knolls, NJ roofing sheet
Polyglass Fernley, NV roofing sheet
Suprema Cleveland, OH roofing sheet
U.S. Intec Somerville, NJ roofing sheet
5.11.4 Investment Potential
As older PP plants are retired and the new PP technology generates no atactic byproducts, new capacity for atactic products will
be required.
Alberta Investment Factors

The combination of raw materials and a location in the heart of the key markets for APP help provide the investment impetus for
the product. The factors include:
• APP supply from PP production is dwindling as older PP plants are closed.

• Availability of low cost propylene raw materials in Alberta.
• Technology and possibly plant equipment could be available through Shell.
• Markets such as modified roofing products and adhesives are close by in the region.
• Demand growth has been in the 3 to 4% annually with construction products seeing 5%+ growth in recent years.
5.12 Ranking of Propylene Product Potential

Propylene Quality
A major issue in the development of propylene raw material sources is matching volume and quality with the demands of a
particular chemical process. In ranking the investment options in the context of Alberta, this becomes a critical step in the
evaluation.
As has been indicated in Section 4, refinery propylene can be upgraded from a ‘refinery grade’ to a ‘chemical grade’ or a ‘PG’.
However, some of the propylene sources, such as ethylene plants, generate diolefins and other difficult to handle products that
can hinder efficient use of C3 streams as propylene sources without further processing.

Table 5.12-1. Typical Propylene Grade Requirements
Chemical Typical Quality Alternate Quality
Polypropylene * polymer high chemical
Acrylonitrile refinery chemical
Cumene refinery chemical
Propylene oxide chemical polymer
n-Butanol refinery chemical
Acrylic acid chemical polymer
Isopropanol chemical refinery
2-Ethyl hexanol chemical refinery/syngas
* Includes copolymers and atactic grades.
Selection Criteria
In rating the chemicals for investment potential in Alberta, four criteria were used to evaluate the prime propylene derivatives. As
has been indicated in the previous sections, many of the propylene chemicals are produced in a complex, so that several products
justify and carry the overhead of production. For an investment to be made in a propylene production facility in Alberta a two or
three-step production decision may be required to justify the expenditure, and such complexity mitigates against a Greenfield
investment.
Selection Criteria for Rating Potential

• Sufficient raw materials available for a plant of competitive scale.
• Market growth to foster expansion.
• Possible competitive price advantage.
• Some regional market support.
Based on examining the eight primary derivatives analyzed in this study and considering the need for downstream investments to
justify an initial production facility, the rating is as follows:
Table 5.12-2. Ranking of Propylene Opportunities in Alberta

Chemical Overall Market Growth Regional Market Raw Materials
Polypropylene* 11 4 2 5
Acrylonitrile 11 3 4 4
Acrylic acid 10 4 2 4
Cumene 10 4 5 1
Propylene oxide 9 3 3 3
Isopropanol 8 2 1 5
n-Butanol 7 2 2 3
2-Ethyl hexanol 5 1 1 3
Ranking: 1 to 5 = strong
* Includes atactic and copolymer variations.
The rationale for the specific chemical’s rating is as follows:
Polypropylene offers solid potential in the medium term. Growth is high at 5 to 6%, and despite recent expansions in capacity in
North America, a need for further capacity is likely in the next 4 to 5 years. The capital investment in, say, 225-kty plant is not
large, running in the $175 to 200 million range. Sufficient raw materials are readily available to support a 225-kty facility. The
major negative is the regional market support. Product would be shipped to Asian markets or to the U.S. Midwest, so raw
material costs need to be low enough to cover transportation costs.
Alberta has sufficient raw materials for a world-scale plant. In addition some of the raw materials for making copolymer PP are
available in raw form, at last, in the province. PG material is required for an efficient plant operation.
While not considered in-depth a smaller APP project could well be developed for its niche markets.
Acrylonitrile has good potential through a supply of raw materials and a growing Asian market, which can be accessed in
competition with the U.S. exports from the Gulf Coast. There are sufficient raw materials to support an ACN plant, and chemical
grade material is all that is required, making the process competitive in the context of Alberta.

Acrylic Acid and acrylates offers good regional potential, when the Asian markets are considered.
Cumene/Phenol is one of the strongest product potentials for Alberta on a market basis. There is strong regional demand and
little competition. Benzene raw material is a problem, which is why it does not rank in the top three selections for Alberta
potential investments. A growing regional market for phenol with only one small competitor is a major plus. Also, changes in
production technology mean that the product can be made without generating acetone as a byproduct. The lack of regional
acetone customers has always been a major deterrent to a cumene/phenol plant complex, but added processing can decrease that
risk. The only major negative lies in the tightness in benzene supply in the province. With sufficient propylene available for a 150
to 200-kty plant, some 100-ktonnes of benzene would be required.
Propylene Oxide
PO has perhaps the strongest potential in an Alberta context outside of the top four chemicals selected. Raw materials are
sufficient in the province to support a plant. However, PO on its own has little market potential, and a PO derivatives complex
has to be considered in order to create demand. Many of the key derivatives – urethane polyols, propyl esters and the like have
most of their demand far to the Southeast in North America, and in the early stages of growth in many parts of Asia. Propylene
glycol might be the derivative exception.
Isopropanol
From a production point of view, isopropanol offers good potential in Alberta. However, there is little regional market and the
low value-added of the product makes it difficult to ship long distances and be competitive. Should IPA find use in a volume
application in the region, the potential would increase substantially. There are sufficient raw materials around and the process can
be run with refinery grade material as feedstock.
n-Butanol
Butyl alcohol offers only modest potential for an Alberta investment. Any investment would likely have to be coupled with an
AA plant. There is little regional market and the export potential into the Pacific Rim countries is modest at this time.
2-Ethyl Hexanol
Ethyl hexanol is last on the list due to low growth rates on plasticizers almost globally, and little regional market to be accessed.
Canada did have a small 2-EH plant in Montreal some years ago, but it was closed with little disruption to domestic plasticizers
producers. From a market perspective, the plasticizer market is under pressure with the European Community threatening to ban
the use of phthalate plasticizers, particularly for use in consumer products such as kids’ toys. Also, local cetane improver 2-EH
nitrate markets.

6.0 THREE PRODUCTS WITH POTENTIAL FOR ALBERTA
6.1 Chemicals Selected for Further Analysis

The chemicals selected for further analysis all have the characteristic of a strong growth rate in the global market, a strong
continental market and access to attractive Pacific Rim markets. In addition, the products often have the competitive option of
competing with the USGC on trade with the Orient.
The products selected are:

• Polypropylene
• Acrylonitrile
• Acrylic acid and acrylates
An analysis of phenol is at the end of this section. This product has strong regional demand, but there is a shortage of raw
materials. The potential for a regional phenol plant is strong.
6.2 Polypropylene (PP)

PP’s strong growth in new production technology and copolymers, with a well developed continental market and export
opportunities placed it first in products with strong potential for Alberta manufacture.
PP is made by polymerizing propylene into polymer chains of various lengths; copolymers are also produced by adding rubbers,
and various monomers to change the performance properties of the PP resin.
Capital costs and operating cost factors vary widely with the specific location and the service infrastructure available. Many PP
plant projects include propylene recovery on production as well, and there is considerable benefit to having a resin plant and a
fractionator located on the same site.
Table 6.2-1. Polypropylene Plant Overview

Size of world-scale plant 225-kty
Capital cost of plant, green field $25 to 175 million U.S.
Propylene requirements 230 to 240-kty
Resin selling price, homopolymer 22 to 65 cents U.S. per pound
Electricity 8-MW
Steam 103-kg/hr
Nitrogen 103m3/hr
6.2.1 Market Potential

Growth rate of PP has been outstanding among the commodity plastic resins at 6%, and expectations are that it will run in the 6
to 7% annually in the coming years. Should this happen, it will mean that the continental market will require 350 to 400-kty of
new capacity each year in order to supply the growing demand.
The major demand drive in the market for a Western Canadian plant would be a mix of continental business and some Pacific
Rim exports. Globally PP demand is running in the 23,500-kty (1997). Should growth continue in the 5 to 7% annual level about
five 250-kty PP plants are required each year to keep the global market in balance.
Table 6.2.1-1. Growth Outlook for PP Resins in North America

(ktonnes)
Market Sector Demand 1998 Growth
Injection molding 1,635.7 10.2%
Fiber and filament 1,582.9 6.1%
Distributors and compounders 1,213.6 8.5%
Film and sheet 580.4 6.8%
Blow molding 105.5 6.3%
Other, including wire and cable 158.3 5.4%
Exports 541.8 2.0%
Total Demand 5,818.2 7.1%

.
In 1999 among the industrial countries and the emerging Asian economies PP resin use is expected to grow by 10% over the
previous year, thanks to favorable resin prices and the recovery in the Asian countries. Another major factor has been the
development of high impact PP resins and thermoplastic elastomers using a propylene backbone.
The high growth in the injection molding and distributor/compound market sectors in North American can be traced to these
developments. PP resin producers now are making copolymers with ethylene, butylenes and various rubbers with the
‘comonomer’ content running as high as 50% for some of the new rubber copolymers coming onto the market.
The PP resin producers are using different catalysts and comonomers to change stiffness, impact resistance, toughness, cold
weather cracking resistance and flow rate in their products. Most of these developments are finding they way to the injection-
molding field. Some of the new copolymer resins offer the benefit that parts can be painted directly out of the mold, eliminating
surface treatment.
As a result of the developments PP resin growth of 10% or even higher is predicted for the molded pails, jars, baskets, auto
fascias, furniture, appliance parts and some industrial products.
In comparison application, segments such as fibers and blow moldings are mature, even though their overall growth is high
compared to other plastic resins.
Table 6.2.1-2. Global PP Market Segmentation

North America 24%
Asia 38%
Western Europe 25%
Eastern Europe 2%
Africa & Middle East 5%
South America 4%
Total 100%
The Asian market is the largest PP market in the world with some 11,500-ktonnes of resin being consumed annually. With
relatively fast-growing markets in the region, the Pacific Rim has been an importer of PP resins in the 200+ ktonnes level
recently.
Table 6.2.1-3. Asia-Pacific PP Capacity by Country

(kty)
Country PP Capacity
Japan 2,946
Korea 2,520
China 1,810
Thailand 920
Indonesia 625
India 560
Taiwan 510
Singapore 350
Philippines 340
Australia 320
Malaysia 210
Total 11,111
Now Exxon is planning 250-ktonnes of new capacity in Singapore, and there are several projects in the works in the Middle East.
That will supply some of the Asia-Pacific shortfall in resin, but still leave room for supply from North America.
6.2.2 Trade in Polypropylene (PP)

On a continental basis, North America exports over 500-ktonnes of PP resins a year. The export of PP resins from North America
has been steady with over 600-ktonnes moving in recent years. Some of the new plants being built in Asia may cut into that trade,
but the producers on this continent have a strong position in the global PP business.
Table 6.2.2-1. U.S. Exports of Polypropylene

(ktonnes)
Year Homopolymer Copolymer Total
1996 673.2 132.8 806.0
1995 519.2 130.1 649.3
1994 406.9 103.0 509.9
1993 480.9 102.3 583.2
1992 611.6 93.9 705.5
The Canadian situation on PP resins exports has move from an export position to integration into the continental market. Shell’s
takeover of Montell brought both the Alberta and Montreal plants under one management and the move to more copolymer
production from the two facilities helped to shift the supply focus to the regional markets.
Table 6.2.2-2. Canadian Polypropylene Resin Export Trade

($ million Cdn)
Year Polypropylene Copolymer PP Total
U.S. Exports Others U.S. Exports Others
1998 163.7 11.6 78.9 9.4 263.6
1997 169.8 39.1 54.8 8.9 272.6
1996 127.2 50.1 82.3 1.7 261.3
1995 159.5 67.4 23.8 1.3 252.0
1994 95.8 52.9 41.8 0.6 191.1
Source: Statistics Canada Trade Data
Table 6.2.2-3. Major U.S. Polypropylene Export Markets, 1998

($ million Cdn)
Country Homopolymer PP Copolymer PP Total
Canada 262 189 451
Mexico 267 53 320
Hong Kong 46 2 48
Taiwan 17 – 17
China 20 – 20
Japan – 5 5
Australia – 6 6
Brazil 23 3 26
Columbia 13 6 19
Guatemala 15 – 15
Argentina – 4 4
Belgium – 14 14
France – 3 3
Israel 24 – 24
Egypt 16 – 16
Others 116 23 139
Total 819 309 1,127
The cross-border trade on PP resins is a major factor today with Canada running a trade deficit on PP resins with the U.S. While
exports to the U.S. run to $243 million Canadian, imports from the U.S. run at $451 million Canadian on PP resins.
The export of PP resins from the U.S. to Pacific Rim countries amounted to $96 million Canadian in 1998. Canada and Mexico
accounted for almost 70% of the exports in that year. However, U.S. trade with the Pacific Rim countries over the past few years
has been declining. In 1995, shipments to Hong Kong, China and Taiwan accounted for 15% of exports, totalling $906 million
Canadian of business.
6.2.3 Technology Shifts in Polypropylene (PP) Resins

Metallocene technology polypropylene (mPP resins) holds the promise of revolutionizing the PP grade slate for most processors.
While mPP resin use is only running to about 85-ktonnes in 1999, demand is projected to grow by 6%+ in North America and by
7%+ in Europe in the coming years. These higher performance resins are more expensive because of higher production costs, but
the suppliers are confident that many application areas will be able to justify their cost/performance situation.

Dow Chemical has developed a mPP catalyst system and is about to commence production in North America. In Europe Targor
(a Montell subsidiary) has a 60-ktonnes per year plant in Germany and will provide catalysts to the PP resin producers as well.
Montell is working on their metallocene catalyst technology and the industry is expecting this major producer to move into full
commercial production in a year or so.
Metallocene polypropylene offers a narrow molecular weight distribution, which improves the properties of PP resins
considerably. While much of the PP markets are commodity oriented and some analysts do not foresee processors paying more
for mPP over conventional PP resins, the expectations are that mPP will have a dramatic effect on resin use for many products in
the coming years.
Table 6.2.3-1. Demand Patterns for mPP Resins

Segment Use
Fiber 50%
Injection molding 30%
Blow molding 5%
Film 5%
Other 10%
Another factor in PP plant technology is the reduction of capital costs on plants in recent years. The Unipol PP plant technology
was the start of this trend and recent facilities being built are coming in 10 to 15% lower than plants built five or more years ago
for the same capacity.
6.2.4 Cost Competitiveness of Alberta in PP Resins

On an operating and investment, basis and Alberta plant holds a major advantage in the raw material costs and in shipping
containers to the Asian markets.
While a PP plant does not consume large amounts of electricity or natural gas there is some solid savings offers by most Alberta
locations. Labor costs in Alberta are slightly below the USGC for plant operating, while construction costs are generally
equivalent to 5% higher.
Table 6.2.4-1. Competitive Cost Factors for PP Resins in Alberta

Factor Difference to USGC
Raw Materials 0 to 2 cents/kg
Capital Cost + 0 to 5%
Plant labor & operating costs - 2 to 4%
Electrical costs - 1 cent/kWh
Natural gas costs - 20%
Transport to Midwest1 + 0.2 cents/kg
Transport to Asian markets2 - 0.2 cents/kg
1 – Fort Saskatchewan to Chicago, 10 car lots vs. Houston to Chicago, same basis.
2 – Fort Saskatchewan to Hong Kong in 40ft container vs. Houston to Hong Kong, same basis.
Reference: Alberta’s Petrochemicals – Transportation Assessment – Alberta Department of Economic Development updated to January 1999.
The transportation factors are such that shipping to Chicago is slightly uncompetitive compared to shipping out of Houston,
however movement to Asia is competitive on prices as well as shipping time. Shipping time from the Gulf Coast to Asian
through the Panama Canal takes 30 to 39 days, while out of the BC ports 15 days is shaved off the delivery typically.
Therefore, overall a PP facility located in Alberta will have a significant operating cost advantage over a Gulf Coast facility
competing in the Pacific Rim markets.

6.2.5 Alberta Potential for Polypropylene (PP) Resins
Alberta offers an investment location for a PP producer that has favorable raw material costs and a geography suited to supplying
product to both the North American market as well as the large Pacific Rim market.
Major Benefits and Business Trends

• Operating and (to Pacific Rim) freight advantages.
• New plant technology is 10 to 20% cheaper in capital cost and more efficient than older technologies.
• Metallocene catalyst technology may push needs for more plants.
• Supply of underutilized propylene in Alberta at below USGC prices.
The large Asian market with its continued importation of PP resin is an essential business factor to consider. The ability to
competitively ship from Alberta to Pacific Rim markets makes a plant investment highly attractive to any firms wishing to
expand its business in Western North America and move more products to Asia.
6.3 Acrylonitrile (ACN)

ACN offers interesting potential because the product can easily be made in Alberta. For the Asian market and its byproduct,
cyanide can go to the regions’ gold mining and metal extraction business. While the ACN technology route is being bypassed, to
a great extent ACN can also be used for making AA (see the following section).
ACN is made through the reaction of propylene, ammonia and air in the following reaction:
C3H6 + NH3 + 3/2O2 Æ C3H3N + 3 H2O
The yield on the process is 70 to 75% and refinery grade propylene and fertilizer grade ammonia can be used. Oxygen from air
is assumed here, but purchased oxygen for enriched air route is to be considered.
Table 6.3-1. Acrylonitrile Plant Overview

Capital cost of plant, green field ~$200 million U.S.
Ammonia requirements 120-kty
Hydrogen cyanide, by product 38-kty
ACN selling price 40 to 52 cents U.S. per pound
Sodium cyanide selling price 75 to 90 cents U.S. per pound
Electricity 6-MW
Plant capital and operating costs vary widely with location for ACN. When a plant is situated near an ammonia facility as in the
AIH ammonia will be pipelined and uncompressed for reaction in the ACN units with considerable cost savings all around. Also,
the handling of and reaction into sodium cyanide or disposal of the hydrogen cyanide can vary capital costs on a facility to a
marked extent.
6.3.1 Market Potential for ACN

The market potential for ACN lies in the fibers business and the Asian market will be the key to any investment in Western
Canada. The fibers market in North America lies in the southeastern states, which makes competition difficult, compared to the
Gulf Coast producers. However, the growing Asian market offers good potential for the fibers business as well as the acrylic
specialties.
Table 6.3.1-1. Global ACN Markets

1998 ktonnes
Acrylic fiber 2,305
ABS/SAN resins 1,305
Other chemicals & resins 740
Total 4,350

The major demand drive in the market for all North American producers has been the supply deficient in Asian with upwards of
600-ktonnes a year being imported from around the world by the fiber and resin producers in the Pacific Rim area. A secondary,
but fast growing market has been acrylamides, for water flocculation. This use area has been growing at 6 to 7% annually. Again,
water treatment chemicals are a fast growing demand area in the Asian countries.
Table 6.3.1-2. Regional ACN Plant Capacities

Country kty
U.S. Gulf Coast 1,615
China 170
Japan 619
Korea 90
Taiwan 132
Total 2,626
The expansion of ACN capacity has been modest, although the plans are in place to meet some of the growing demand in Asia.
The new plant of Formosa Plastics in Taiwan was slated to start operation last year, but has been put off until the middle of this
year. In Korea the 250-ktonnes Ulsan plant planned by Tae Kwang has been put on hold or abandoned because of the financial
crisis in that country.
Table 6.3.1-3. ACN Planned Plant Expansions

Plant Capacity Date
Solutia, Alvin, TX 250 3rd Q, 2000
Formosa, Mailoi, Taiwan 200 2000
Jinling Petrochemicals, China 70 2001
BP Amoco, Shanghai, China 260 2001+
Total 780
6.3.2 Trade in Acrylonitrile (ACN)

A major strength of a Western Canadian ACN plant could lie in the potential to supply the growing Asian markets. At this point,
some 450-ktonnes of product is exported from the USGC each year. Moreover, this trade has been steady since the early 1990’s.
Table 6.3.2-1. ACN Exports from U.S.

Year Quantity Value
ktonnes $ million
1992 620.1 381.6
1993 463.8 265.8
1994 639.5 403.0
1995 661.3 792.9
1996 623.5 448.2
The major countries importing U.S. ACN are Japan, Taiwan, China and Hong Kong with smaller amounts going into India and
Thailand. Asian countries account for over 80% of the export trade from North American in ACN, and even with the expansion
of regional facilities, the movement from the USGC remains strong.

Table 6.3.2-2. Major U.S. Acrylonitrile Export Markets
($ million Cdn)
Country 1998 1997 1996
Canada 8 9 8
Mexico 20 43 14
Japan 96 94 111
Taiwan 90 134 125
Korea 84 171 170
India 12 13 7
Peru 11 31 26
Thailand 5 0 7
Italy 10 37 47
Turkey 8 88 49
Others 14 75 47
Total 358 695 611
Figure 6.3.2-1. U.S. Acrylonitrile Exports, 1996
Taiwan
Other 21%
29%
Singapore
4% China
0% Korea
29%
Japan
17%
6.3.3 By Product Potential in Canada

An ACN plant of 250-kty capacity running at full capacity generates 150-kg of cyanide for each tonne of product or about 38-
ktonnes of cyanide. (A plant this size would consume 190-ktonnes of propylene and 120-ktonnes of ammonia annually.) By
neutralizing the material with sodium hydroxide, sodium cyanide is produced. The major application for sodium cyanide lies in
the mining industry as the extractive chemical for gold and for helping separate metal values from copper/lead floatation circuits.
Table 6.3.3-1. Outputs of an ACN Plant per kg of Propylene Input

Product Proportion
Acrylonitrile 0.84-kg
Acetonitrile 0.03-kg
Cyanide 0.13-kg
Canada imports all its sodium cyanide and an ACN plant would be able to serve the Canadian market as well as a portion of the
Western U.S. gold and copper mining areas. A world-scale plant would also have additional cyanide available to serve the export
markets for sodium cyanide in Austral-Asia and South America. The closest competitor in the U.S. is the Wyoming plant of
FMC, a liquid sodium cyanide facility serving that region’s gold mines.

Table 6.3.3-2. Canadian Imports of Sodium Cyanide and Cyanide Salts
($ million Cdn)
Year BC, NWT and Yukon Prairies Ontario and Quebec Total Canada
1998 2.1 2.0 19.4 23.6
1997 1.0 7.5 19.3 28.2
1996 4.5 5.8 17.9 29.3
1995 4.5 4.0 18.9 28.3
1994 3.8 3.3 13.1 21.7
Alberta has a good supply of sodium hydroxide from the Dow Fort Saskatchewan chloralkali plant, so all the elements to support
a cyanide business an ACN plant exist in the province.
6.3.4 Technology Shifts in ACN Production

While many ACN plants are being built around the world the major, almost the only technology supplier is BP Amoco. The
exception was Monsanto, which had a deal to supply technology for a new plant in Korea. Despite the fact that the Tae Kwang
plant was not built, the presence of alternate technology widens the potential for new entrants in the ACN business.
On the negative side for propylene use, but a potential factor in the ACN business could be a new BP Amoco process, using
propane as a feedstock, instead of propylene and claims major savings in production.
6.3.5 Cost Competitiveness of Alberta for ACN Production

The major cost advantage for making ACN in Alberta lies in raw materials. Both propylene and ammonia are available at
competitive levels. Alberta’s world scale fertilizer business is highly seasonal as well as cyclical. And with two or more major
ammonia suppliers in the region raw materials for a world scale ANC plant could be easily available and at off-season prices for
much of the year.
Table 6.3.5-1 Competitive Cost Factors for Acrylonitrile Production in Alberta

Raw Materials:
- propylene - 2 cents/kg
- ammonia - 2 cents/kg
Capital Cost - 5 to 0%
Transport to Asian markets2 + 0.2 cents/kg
2 – Fort Saskatchewan to Hong Kong in 5000 ton lot vs. Houston to Hong Kong, same basis.
Reference: Alberta’s Petrochemicals Transportation Assessment – Alberta Department of Economic Development update to January 1999.
For an Alberta ACN plant operational costs are competitive and infrastructure can help in the supply of services. Oxygen
pipelines are available should a plant want to use an enriched air stream in production. In addition, steam may be available ‘over-
the-fence’ in some locations. Electrical and natural gas costs offer solid savings compared to the USGC.
Labor costs in Alberta are slightly below the USGC for plant operating. Construction costs are generally, equivalent to 5% high.
The transportation factors are slightly negative for ACN, but in terms of serving the Pacific Rim markets, an Alberta plant would
have a good response time. Shipping time from the Gulf Coast to Asian through the Panama Canal takes 30 to 39 days, while out
of the BC ports 15 days is shaved off the delivery typically.
The possible need for storage on the West Coast requires further consideration.
6.3.6 Alberta Potential for Acrylonitrile (ACN)

Alberta offers a production center for ACN that provides access to the strong and growing Asian markets, as well as regional
market support for byproduct cyanide from a plant.
Major Benefits and Business Trends for Acrylonitrile

• Raw material advantages of two to four Canadian cents per pound.
• Competitive shipping to Pacific Rim versus USGC.
• Growing Asian market to serve.
• Supply of underutilized propylene in Alberta.
• Nice sized sodium cyanide business in Canada for byproduct sales and utilization.
A medium-scale, 250-kty ACN plant in Alberta would have solid market coverage in the Asian markets, and the ability to back
out some or all of the $150 million in exports to that region.
Perhaps the most favorable development scenario for an Alberta ACN investment might be a slowdown in Chinese investments.
The BP Amoco plant has been in the planning stages since 1996; such a facility could be ideal here to serve the Chinese market.
6.4 Acrylic Acid (AA) and Acrylates
6.4.1 Acrylic Acid (AA)

An investment possibility for Alberta could be AA. Dow Chemical and Celanese are considering a plant in North America, and
Dow already has a suitable site in Alberta.
Recently Dow and Celanese joined forces to build an AA plant in Bohlen, Germany. Dow will use the bulk of the new plant’s
output and Celanese will sell the balance on the merchant market in Europe.
Table 6.4.1-1. Acrylic Acid Capacity in North America

Producer Location Capacity
kty million lbs./yr.
BASF Freeport, TX 136 300
Hoechst Celanese Clear Lake, TX 193 425
Rohm and Haas Deer Park, TX 373 820
Union Carbide Taft, LA 109 240
Total 811 1785
Source: Chemical Marketing Report
A similar joint venture might be possible in North America, and the companies have made initial moves in that direction. Dow
produces super absorbents and acrylic lattices both in Europe and North America, buying AA. In addition, an acrylic latex plant
is already located in Alberta and Dow has been considering its long-term future.
While there are several routes to AA the most favorable one for the Alberta area would likely be the oxidation of propylene to
acrolein, which is then oxidized with a molybdenum-vanadium catalyst to AA. Other routes such as reacting acetylene and
carbon monoxide run into the problem of local raw materials.
However, the Dow-Celanese venture in Germany is using the propylene route using Celanese process technology. Using
propylene feed from the ethylene crackers, the new plant will produce 80-kty (175 million pounds per year) of crude AA, which
will be processed into 60-kty (132 million pounds) one of either AA or butyl esters. The plant will be using Nippon Shokubai
catalysts.
AA is produced by the oxidation of propylene in the following two-step reaction that takes placed in the reactor:
C3H6 + O2 Æ C3H5O + H2O
2C3H5O + O2 Æ 2C5H8O2 + H2O

Table 6.4-1-2. Acrylic Acid Plant Overview
Capital cost of plant, Greenfield $150 to 200 million U.S.
Acrylic acid selling price 50 to 65 cents U.S. per pound
Electricity 3-MW
Note that oxygen is provided from air.
Capital cost on AA plants may vary with process. BASF has a new process, which they are planning to use in Brazil. This
catalyst technology developed by the German firm reportedly reduces capital and operating costs significantly.
6.4.2 Market Potential for Acrylic Acid (AA)

AA’s prospects in the context of Alberta lie in the super absorbent growth in the Pacific Rim countries and in the growth in
acrylates in that region as well. In North America, growth in super absorbents and the acrylates is adding about 65 to 70-ktonnes
of demand a year domestically.
The hottest market area for AA lies in the super absorbent polymer (SAP) business. These products have been growing at 5 to
10% annually as the chemical has found application in feminine products, diapers, wipes as well s medical products and a host of
specialty uses. Growth in super absorbents has been running close to 8% annually with no let up in sight. The European market is
showing sings of maturity, but growth continues at a good pace in North America. Highest growth for super absorbents occurs in
South America and in the Pacific Rim countries.
Table 6.4.2-1. Market Growth Outlook

KTPA
Market North American Use Growth/yr.
Polyacrylic acid salts 334.0 7.9%
n-Butyl acrylate 286.3 3.6%
Ethyl acrylate 190.9 4.1%
Methyl and 2-EH acrylate 66.8 3.7%
Specialty acrylates 47.7 5.2%
Miscellaneous products 28.5 3.1%
The global SAP business now is almost 750-kty of product with 38% of demand in North America and 32% in Europe. Japan is
the other well-developed market area. Latin America and Asia are the hot growth markets for SAP product with demand
increasing at 7 to 10% annually in these areas. Butyl acrylate is a major raw material for making super absorbent polymers.
The acrylates are experiencing slower relative growth, but still a solid 3 to 4% annually depending on the product. The major
driver for them has been the push to remove solvents from coatings, adhesives, inks and various industrial products. Concern
about VOC emissions has been pushing the formulators in these sectors to reduce or eliminate high volatile solvents. Acrylates,
along with ester solvents, can be a major part of the reformulation as well as performance improvers for making the thin films
required.
Ethyl acrylate goes into the acrylic resins sector, and this clear plastic has solid growth prospects in both casting and sheet
applications. However, demand is not likely to be beyond GDP growth in the coming years from the acrylic resin area.
Degussa-Hüls’ subsidiary, Stockhausen, has merged with Rohm & Haas’ AA business to form StoHaas. Rohm & Haas also
bought Stockhausen's butyl acrylate business, and the two firms are aggressively perusing a supply position with super absorbent
(SAP) producers around the world. The planned Brazilian plant is aimed at supplying a new Degussa-Hüls SAP plant.

Table 6.4.2-2. Expansion of Acrylic Acid Capacity
(kty)
Producer Capacity Timing
American Acryl, Pasadena, TX 130 2001
BASF/Petronas, Malaysia 160 2000
Rohm & Haas, Antwerp, Belgium n/a on hold
StoHaas,* Marl, Germany 75 expansion
StoHaas,* Marl, Germany 100 2001
StoHaas,* Brazil n/a planned
Sasol, South Africa n/a 2003
* Degussa affiliate.
Investment Example: Acrylic Acid Complex
Sasol's board has approved an R835-million ($140 million) n-butanol project and a plan to builds a world-scale acrylates complex. It
follows completion of a feasibility study launched at the end of last year (CW Dec. 9, 1998, p. 22).
Sasol will locate the 150,000-m.t./year n-butanol unit at either its Sasolburg or Secunda complexes. The company will make a decision
by March 2000 when it completes basic engineering work on the plant. Completion is scheduled for 2002. Sasol will supply the plant
with propylene and synthesis gas feedstock, which it produces at its coal-to-synthetic fuels plants. Sasol will locate the acrylates
complex at the same site as the n-butanol plant.
The complex will comprise an acrylic acid plant and units producing n-butyl acrylate, ethyl acrylate, and glacial acrylic acid. The
acrylates plants are likely to be commissioned in 2003.
All of the new plants will be operated by Sasol's solvents division. Once on stream, the n-butanol and acrylates units “will probably add
40%-50% to Sasol solvents' [$200 million/year ] sales," says general manager Anton Putrer. The n-butanol unit will use technology
licensed from Mitsubishi Chemical. Most of the n-butanol and derivatives will be exported, says Sasol. The company has also agreed to
supply a small portion of the output to Mitsubishi. – Chemical Week.
Dow Chemical also is planning to build a SAP plant in North American and apparently is considering an AA plant. No site or
timing has been announced.
In summary expansion of AA and acrylates is continuing on a global basis. However, the capacity gain in North America could
still leave room for a new plant in the coming years.
6.4.3 Trade in Acrylic Acid (AA) and Acrylates

A major strength of a Western Canadian AA plant could lie in the potential to supply the growing continental markets and back
out some of the imports from Japan and Korea. While AA is a modest export product, the methyl, ethyl and butyl acrylates are a
major export business from North America, despite solid imports from Europe and Asia.
North America tends to be a net importer of AA, despite the strong exports in acrylates. Imports have been at the 70 to 80-
ktonnes for several years. Canadian imports of AA run to $3 million annually, but 90% of that is material imported from the U.S.
Japan is a major supplier of AA to North America with imports from Japan to the U.S. running as high as $60 million Canadian
in recent years.

Table 6.4.3-1. Major U.S. Acrylic Acid and Derivative Export Markets, 1998
($ million Cdn)
Country Acrylic Acid Acrylates Total
Canada 2.8 54 56.8
Mexico 18.6 40 58.6
Korea 3.4 – 3.4
Taiwan 1.2 13 14.2
China – 13 13.0
Australia – 17 17.0
Brazil 11.3 58 69.3
Venezuela 3.6 – 3.6
Columbia 1.2 – 1.2
Argentina 1.5 13 14.5
Belgium – 54 54.0
Netherlands 1.4 33 34.4
Malaysia 0.7 – 0.7
South Africa – 14 14.0
Others 4.1 89 93.1
Total 50.0 399 447.8
Table 6.4.3-2. Imports of Acrylic Acid by the U.S.

($ million Cdn)
Country 1998 1997 1996 1995 1994
Japan 22.7 39.3 60.7 66.8 33.2
Mexico 2.8 3.5 1.4 0.1 1.5
Germany 0 23.6 33.6 7.4 4.1
Others 5.7 6.7 2.0 1.3 1.2
Total 31.2 73.1 97.7 75.6 40.0
The acrylates offer strong potential for import substitution into North America. Canada brings in $1 to 2 million worth of
acrylates not including material coming up from the U.S., which runs to $45 to 50 million annually in recent years.
Table 6.4.3-3. Imports of Acrylic Acid Esters

($ million Cdn)
Country 1998 1997 1996 1995
Canada
U.S. 52.5 52.3 48.9 41.4
Others 0.6 1.7 1.4 1.0
Total 53.1 53.0 50.3 42.4
USA
Japan 33.1 30.7 43.8 43.7
Mexico 35.5 48.4 51.0 39.8
Germany 14.8 16.5 12.4 13.2
Belgium 17.5 10.7 2.6 1.3
Others 21.7 24.2 26.3 33.7
Total 122.6 130.5 136.1 131.7
Japan and Mexico account for over half of the imports of acrylates into the U.S. and form the major potential for import
displacement. The European suppliers, including some material form France, England and the Netherlands, also could be
displaced by new North American capacity in the coming years.
6.4.4 Cost Competitiveness of Alberta for Acrylic Acid (AA) Production

Favorable operating costs and a competitive propylene supply are the factors making AA’s and derivatives attractive for an
Alberta investment.
Investment in an AA plant and most likely an associated acrylates facility would be raw material competitive with the other
plants on the continent, and should be competitive in much of the continental market.

On an operational basis, oxygen pipelines are available in the Edmonton area. In addition, steam may be available ‘over-the-
fence’ in some locations. Electrical and natural gas costs offer solid savings compared to the USGC.
Table 6.4.4-1. Competitive Cost Factors for Acrylic Acid Production in Alberta
Raw Materials
- propylene - 2 cents/kg
Capital Cost - 5 to 0%
Transport to Asian markets2 + 0.2 cents/kg
2 – Fort Saskatchewan to Hong Kong in 5000 ton lot vs. Houston to Hong Kong, same basis.
Reference: Alberta’s Petrochemicals – Transportation Assessment – Alberta Department of Economic Development Updated to January 1999.
Labor costs in Alberta are slightly below the USGC for plant operating, and construction costs are generally utility costs are
lower.
The transportation factors are slightly negative for the continental markets against the USGC, but in the Pacific Rim markets, an
Alberta plant would have favorable shipping costs and a good response time. Shipping time from the Gulf Coast to Asian through
the Panama Canal takes 30 to 39 days, while out of the BC ports 15 days is shaved off the delivery typically.
6.4.5 Alberta Potential for Acrylic Acid (AA) and Acrylates

Production of the volume acrylates along with AA offers good potential in Alberta. A facility would have operating costs equal to
or competitive with the USGC, and a slight edge on raw material prices.
Major Benefits and Business Trends

• Raw material advantage of 2 or more cents/kg.
• Growing Asian market to support a plant.
• Ability to back-out imports from Japan and other countries in Asia.
• Supply of underutilized propylene in Alberta.
From a market point of view, a new facility in Alberta should be in a position to back-out some of the $70 million or so imports
of AA and esters from Japan moving into the U.S. market. In addition, a portion of the $40 million of U.S. imports into Canada
should be open to a new plant.
6.5 Phenol
A product with strong regional potential in Alberta is phenol. However, the major drawback at this point, in time, is a lack of
benzene for making the chemical either through the cumene route or through a new more direct benzene reaction. It is being
included as an adjunct possibility for Alberta’s use of propylene.
While there has been a reasonably strong expansion of the North American capacity carried out or planned in the past year or
two, technology is also having an impact on the business. A new process that does not generate acetone as a coproduct or
byproduct is being refined in a full production plant.

Table 6.5-1. U.S. Phenol Supply/Demand, 1996
Use Volume
ktonnes million lbs.
Capacity 2,372 5,218
Production 1,892 4,162
Imports 106 234
Supply 1,998 4,396
Uses 1,864 4,101
Exports 134 295
Demand 1,998 4,396
Phenol must be considered as a commodity petrochemical. While small amounts of the product go into the specialty chemicals
and formulated chemicals sectors, which are the focus of this study, the bulk of use lies outside of these areas.
6.5.1 Markets and Outlook for Phenol

Uses for phenol are concentrated in three applications areas – bis-phenol A, phenolic resins and caprolactum. Together these
three uses account for over 75% of demand for the chemical and are heavily dependent on the demand for plastic resins. Other
uses: aniline demand is driven by the demand for rubber accelerators, dye-stuff production and isocyanate production, plus a host
of minor chemical applications. Alkylphenols as a group tend to go into specialty chemicals applications ranging from rubber
accelerators through to pharmaceutical intermediates.
Table 6.5.1-1. North American Demand for Phenol, 1996

Use Volume
ktonnes million lbs.
Bis-phenol A 653 1,437
Phenolic resins 634 1,395
Caprolactum 280 616
Aniline 93 205
Alkylphenols 92 202
Xyenols 90 198
Miscellaneous 22 48
Total 1,864 4,101
Source: SRI Consultants
The market growth in the U.S. has been driven by the growth in three major plastic resins – epoxy, nylon and polycarbonate
resins. Bis-phenol A is used for making epoxy resins and polycarbonates, as well as other chemicals. These two resins are
undergoing strong growth at present. Polycarbonate is being driven by its use in glazing as well as in compact discs, while epoxy
resins are finding greater use in industrial and consumer applications as adhesives, coatings and casting compounds.
Other demand areas for phenol lie in the wood binder business where phenolic resins dominate for outdoor grades of plywood,
oriented strand board, and increasingly manufactured studs and beams.
In Canada, demand for phenol is supplied by imports, and the bulk of supply comes from the U.S. The share of the market held
by U.S. producers has remained fairly constant over the years in part because of the spread-out nature of the domestic market.
Major demand lies in Ontario, Quebec and the Maritimes, but it is also scattered into Alberta and BC.

Table 6.5.1-2. Canadian Imports of Phenol
Year Value Total Imports U.S. Exports
$ million Cdn $ million U.S. ktonnes million lbs. ktonnes million lbs.
1997 107.1 71.3 99.9 220 77.1 170
1996 97.6 65.1 97.0 213 77.7 171
1995 76.2 54.4 73.3 161 63.9 140
1994 59.4 42.1 71.9 158 65.5 144
1993 45.0 34.1 61.3 135 53.9 119
Source: Statistics Canada – Imports by Commodity.
With no bis-phenol A production or caprolactum demand in Canada the bulk of the imports goes into the phenol resins business,
which has been growing at 4 to 5% annually.
Regional Market
The major regional market for a phenol plant located in Alberta lies in the phenolic resins area. Major multi-plant producers in
the region are Borden Chemical, Neste Resins and Unibord Inc. with Georgia Pacific having several plants along the U.S. East
Coast, as well.
In addition to the regional market for phenol in the wood adhesives business, Arisitech has a bis-phenol A plant associated with
its phenol operation at Haverhill, OH. Allied-Signal has a caprolactum facility at Hopewell, VA for its nylon business.
Table 6.5.1-3. Regional Phenolic Resin Plants

Canada
ARC Resins, Longueil, QC Neste Resins, St. Therese, QC
Borden, Edmonton, AB Neste Resins, Thunder Bay, ON
Borden, Vancouver, BC Temfibre, Temiscaming, QC
Borden Packaging, Laval QC Unibord Inc., Mont Joli, QC
Borden Packaging, North Bay, ON Unibord Inc., Mont Laurier, QC
Neste Resins, North Bay, ON Unibord Inc., Val d’Or, QC
USA
Borden Chemical, Fayetteville, NC Georgia-Pacific, Vienna, GA
Borden Chemical, Hope, AR Hoechst Celanese, Rock Hill, SC
Borden Chemical, Sheboygen, WI IMC, Seiple, PA
Capital Resins, Columbus, OH Malenckrodt, Allentown, PA
Celanese, Rock Hill, SC Neste Resins, Moncur, NC
Chembond Corp., Moncure, NC Perstorp, Toledo, OH
DuPont, Parkersburg, W.Va. Riechold, Hampton, SC
Georgia-Pacific, Columbus, OH Spurlock Adhesives, Bethlehem, NY
Georgia-Pacific, Conway, NC Spurlock Adhesives, Waverly, VA
Georgia-Pacific, Louisville, MS Spurlock Adhesives, Malvern, AR
Georgia-Pacific, Russellville, SC Wright Chemical, Reigelwood, NC
These plants have been serving the plywood and oriented strand board (OSB) plants in Eastern Canada and along the Atlantic
coast. With the changes in board technology coupled with a strong construction sector demand for phenolic resins has been
booming. Several new and large wood board plants have come on stream in the past three years within the region increasing
demand for wood binders.
Demand growth is likely to continue for phenolic resins and phenol in Canada. The wood board industry has developed synthetic
lumber products – stud and beams – using wood chips bound together with phenolic resin. By allowing the wood industry to use
smaller trees and what used to be waste wood to make dimensional lumber and semi-finished products demand is increasing.

Table 6.5.1-4. Estimated Regional* Demand Growth for Phenol
Country 1996 2001
ktonnes million lbs. ktonnes million lbs.
Canada 68 150 105 231
U.S. 835 1,837 995 3,189
Total 905 1,987 1,100 3,420
* Region includes Ontario, Quebec & Maritimes; Illinois to Maine and down the East Coast to South Carolina.
6.5.2 Producers of Phenol

The firms involved in the production of phenol have tended to be either merchant producers or companies with an internal
demand for phenol. Shell and Dow, as major producers of epoxy resins, along with Solutia in caprolactum and nylon, are
examples. Georgia Gulf as part of the Georgia Pacific group (G-P) has been a major supplier into the phenolic resin business,
despite the splitting of G-P’s businesses into chemicals and forest products.
Regional supply of phenol consists of four world-scale plants with a total capacity of 1,332-kty (2,930 million pounds per year).
The Blue Island facility of JLM Industries could also be considered part of the regional supply. Sun’s Philadelphia plant and
Aristech’s Haverhill, OH facility are both being expanded, and each will come up to over 630-kty (1,385 million pounds per
year) of capacity. These two expansions will add a total of 545-kty (1,188 million pounds per year) of capacity to the regional
market.
Table 6.5.2-1. Phenol Capacity in North America

Producer Capacity Expansion
ktonnes million lbs./yr. ktonnes million lbs./yr.
Allied Signal, Philadelphia, PA (now Sun) 425 1,054 227 500
Aristech, Ironton, OH 291 640 – –
Aristech, Haverhill, OH 318 700 318 700
Dakota Gasification, Beulah, ND 17 37 – –
Dow Chemical, Freeport, TX 264 580 – –
Fenoquimia, Cosoleacaque, Veracruz 22 48 – –
Georgia Gulf, Plaquemine, LA 200 440 – –
Georgia Gulf, Pasadena, TX 73 160 – –
JLM Industries, Blue Island, IL 43 95 – –
Kalama Chemical, Kalama, WA 32 70 – –
Merichem, Houston, TX 16 35 – –
Mount Vernon Phenol, Mt. Vernon, IN 318 700 – –
Phenolchemie, Mobile, AL (1999) – – 400 880
Shell Chemical, Deer Park, TX 300 660 227 500
Solutia/JLM, Pensacola, FL (2000) – – 136 300
Texaco, El Dorado, KS 53 117
Total 2,372 5,336 1,308 2,880
Consolidation has been occurring in the phenol business. The most recent shift saw Sun Chemical buy Allied-Signal’s phenol
business, which tied phenol production to Sun’s cumene capacity in the Philadelphia area. Also, relationships are firming up.
Solutia’s new plant in Florida will have JLM Industries as a partner to take a portion of the output.
Over the past year, the phenol industry has announced expansions that will more than double North American output, if all the
plants are constructed. To this point, the ‘brown-field’ expansions have been going ahead strongly with Sun bringing on stream
the Allied Signal expansion after its acquisition of the Allied facilities.
The phenol business requires access to cumene on a favorable geographic and business basis. Several of the phenol producers are
integrated backwards. Shell, JLM Industries, Texaco, and Georgia Gulf are all cumene producers. The Dow Chemicals plant in
Freeport, TX buys cumene on a merchant basis, but the company can draw upon its European cumene supply should local pricing
dictate an advantage to importing product.

Table 6.5.2-2. Cumene Producers in North America
Producer Capacity
kty million lbs./yr.
Amoco, Texas City, TX 14 30
Ashland Petroleum, Cattlesburg, KY 363 800
Chevron Chemical, Port Arthur, TX 454 1000
Citgo Petroleum, Corpus Christi, TX 507 1115
Coastal, Westville, NJ 68 150
Georgia Gulf, Pasadena, TX 682 1500
JLM Industries, Blue Island, IL 70 154
Koch Industries, Corpus Christi, TX 682 1500
Shell Chemical, Deer Park, TX 409 900
Sun Chemicals, Philadelphia, PA 193 425
Texaco Refining, El Dorado, KS 77 170
Total 3,519 7,744
Source: Chemical Marketing Reporter
6.5.3 Process Technology for Phenol

Most phenol is made by the oxidation of cumene, which produces acetone as a coproduct. Overall, the process is as follows:
benzene + propylene Æ cumene

cumene + oxygen Æ phenol + acetone
In the production of phenol for each tonne of product made 0.6-tonnes of acetone is generated.
From a production technology, point of view, the phenol process fits extremely well for the production of bis-phenol A, which
requires 0.9-tonnes of phenol and 0.3-tonnes of acetone to produce a tonne of product. Generally, however, the acetone markets
have been smaller than the phenol markets, so finding homes for acetone has occasionally been a problem.
Over the years, several developments have resulted in processes that do not generate acetone in the production of phenol.
Kalama Chemicals in Kalama, WA generates phenol by the oxidation of toluene with benzoic acid as an intermediate. That
process was at one time also used by Chatterton Chemicals in Vancouver, BC (now closed).
There is a growing move to processes that do not produce acetone. Kalama’s route, which was developed by Dow Chemical, is
the pioneer in the area. Today Merichem in Houston, TX and Dakota Gasification in Beulah, ND, also use processes that only
produce phenol (total non-phenol capacity is 65-ktonnes per year or 143 million pounds per year).
The major move in the direction of acetone, less production of phenol is the recently announced 136-kty (300 million pounds per
year) plant that Solutia is building in Pensacola, FL. Solutia holds the rights outside of Russia for technology developed by the
Boreskov Institute of Catalysis. This process starts with benzene and does not require cumene to move through to a phenol
output.
Solutia’s Russian process uses nitrous oxide, either from its adipic acid production or from ammonia at the Florida plant site as
well as the two raw materials. Costs are reported to be 20% lower than the traditional route.
Capital costs on phenol plants vary, but in petrochemical terms, they are not expensive. A recent 136-ktonnes per year (300
million pounds per year) plant in Singapore is budgeted at $128 million Canadian ($85 million U.S.). Even the new Solutia plant
in Florida is likely under $150 million Canadian ($100 million U.S.), since JLM Industries is only paying $54 million Canadian
($35 million U.S.) towards capital costs for just under half the output.
6.5.4 Investment Potential for Product

An investment in phenol in Ontario would probably be done in AIH when benzene is available.
Today margins on the products are good with pricing in the $1.35 Canadian per kilogram (41 cents U.S. per pound) level and
cumene selling at 63 cents Canadian per kilogram (19 cents U.S. per pound). The present, round of plant expansions have been
predicated on this type of price spread. However, the new plant investments are expected to drive down pricing in the next few
years. The over supply is expected to bring margins down to a level of 10 to 15% or less.

Phenol Investment Considerations and Alberta
• Much of the recent expansion is by firms integrating backwards to support nylon, epoxy or phenolic resin
production.
• A major portion of the phenol market is captive.
• Direct benzene to phenol production could revolutionize the business.
In the short and medium-term, the potential for attracting a ‘player’ to Alberta may be modest. The phenol business is undergoing
a 55% increase in capacity at this point, in time and running through to the year 2000.
Secondly, much of the phenol industry in North America will wait on new investment to see how the Solutia plant in Florida
operates. The process claims to have low costs by removing the cumene production step in the route to phenol. While many of
the phenol producers also have strong market position in acetone, the new technology may make any new investor cautious about
a new plant in the short term, given the potential for competitive economics to shift downward.

7.0 CONCLUSIONS
7.1 Byproduct Propylene Availability

• Nearly 500-kty of propylene is estimated to be produced in Alberta in 2005 following completion of publicly
known projects. However, only approximately 280-kty of that propylene is seen here as being commercially
available from a purification facility, (including some out of province supply); 90-kty of that from a single source.
• A prudent propylene user will probably discount that supply by the latter quantity to assure enough available with
that source unavailable from an extended period, say, 200-kty fully secured supply.
Preliminary
• The 280-kty availability figure is possibly conservative, but it is very subject to the success of current/future
contract negotiations. (Another 100 or so kty may become available, conversely, 90-kty may not.)
All or Nothing
• Byproduct supply will be an all or nothing affair from all sources, except possibly for ethylene production
byproduct propylene and there, only if sufficient rail cars remain available to move excess raw propylene to the
USGC. (With several hundred cars involved without its local processing this is a big ‘if’.)
Purification Capacity
• The purification facility will be receiving at a rate of up to 330-kty of propylene on occasion – e.g., no shutdowns,
slightly above design production rates at most suppliers, and down to less than 180-kty during shutdowns. The
processing facility must have a 300-kty capacity with up to turndown capability, unless railcars kept are available
to move long-term excesses south. (Major raw propylene storage is essential in any byproduct propylene-
processing scheme.)
7.2 Byproduct Propylene Processing

There will be at least three quite different types of raw propylene:
• Ethylene plant
• 90% propylene (after partial saturation of methyl acetylene propadiene)
• Refineries
• 65% propylene with rest mostly propane
• Oil Sand Upgraders
• 30 to 40% propylene with rest mostly propane, but some butanes plus likely
Only the oil sands propylene is expected to be received by pipeline, with significant railcar movement for ethylene plant and
refinery material.
The various feeds will carry a variety of impurities – e.g., methyl acetylene propadiene (MAPD) at 3 to 5% in ethylene plant
feeds, but at 100-ppm or less in other feeds, sulphur compounds, and possibly arsenic, phosphorus, mercury and other metallic
compounds.

Figure 7.2-1. Overall Byproduct Propylene Processing
Ethylene P
MAPD
Plant Feeds Treatment Distillation
Hydrogenation
P
R* To New AIH or SIA Area
C2’s to Fuel Propylene Users
R
P To Other Propylene Users
Other Feeds
R Feed C4 + C3 Product
Caverns Byproducts Propylene
Caverns P - Pipeline
R - Rail (plus truck?)
Extensive raw feed storage is essential, up to one million barrels (1150,000-m3). Ethylene plant high MAPD content
must be reduced and depending upon byproduct propane and butanes plus specifications likely a final hydrogenation
will be needed. Other treating can be perhaps before or after the final propylene purification distillation.
This study assumed byproduct purification to a polymer (99.5%) grade product as the only significant difference
between chemical (94 to 95%) and PG is the size and type of distillation equipment. We believe a prudent processor
would design for PG to suit PP plant needs, although the other short-listed propylene derivatives require only a
chemical grade. (There will be some economic advantages if they use PG, but possibly not enough to warrant a PG
price.)
7.3 Propylene from Propane

Figure 7.3-1. Propylene from Propane
Hydrogen (Optional)
Existing
Propane Propylene Consumer
Systems
P
C3 Dehydrogenation
Propylene Cavern
Cavern
Storage Feed C4’s
P - Pipeline
7.3.1 World Situation

• Worldwide propane to propylene conversion of propylene6 has at least one well proven technology. Other
technologies are in the wings and the competition appears to be decreasing capital costs. However, locations of all
of the current and planned propane to propylene units are in areas of very low propane costs.7
7.3.2 Process for Comparison
6
Propane is also being used as a feed to acrylonitrile in a new Asian plant in lieu of propylene.
7
Areas of high capital costs and high propylene derivative transport charges.

• The assumption of UOP’s Oleflex route to propylene in this study is consistent with all but one, propane to
propylene project worldwide in the past 10 years. Portions of that technology are now used at AEF and at Shell’s
Scotford Refinery.
7.3.3 Yields and Balances

• The Oleflex technology results in a 94.5+% yield (on feed propane) of propylene and a major hydrogen byproduct
that can be used.
• Deliberate production of propylene can be tailored to match specific end user needs with storage only to match
shutdowns at producer and consumer ends.8 (But excess production might be railed to the U.S. Midwest or Gulf
Coast.)
7.3.4 Sizing
• This study assumed a 350-kty (of propylene) facility due to that size being a relatively standard single train facility
(and good cost data being available).
• At that size roughly 14,000-BPD (2,150-m3) of commercial propane would be needed (similar to AEF field butane
supply rate).
• This size could carry two of the short-listed chemicals, assuming each at minimum size.
7.3.5 Propylene Supply Cost
7.3.5.1 Deliberate Propane to Propylene Base

• The literature indicates that a propane to propylene route would have been competitive with other propylene
sources on the USGC over the 1982 through 1998 period.
• However, this study’s review of 1998 and 1999 propane prices (Texas and Edmonton) and USGC PG propylene
price indicated the likelihood of a relatively low 13.5% simple rate of return from such a venture, even assuming a
USGC propylene price acceptable here. Further, more in-depth review appears warranted due to the inconclusive
result and the downward trends in capital and operating costs. More analysis of future USGC propane and
propylene prices is also needed to better define the dehydrogenation option 3 to 5 years hence.
7.3.5.2 Byproduct Propylene

• Each byproduct source has its own replacement feedstock or alternate market price.
Ethylene Plant
• Raw propylene now goes to USGC with very roughly 3.5 to 4.0 cents U.S. per pound freight cost.
• Current Gulf Coast processing to PG product cost is estimated very roughly in the order of 7 to 10 cents U.S. per
pound.
Oil Refineries
• Refineries must make up for reduced gasoline production via blending stock or finished gasoline purchase or
added crude processing.
• Raw propylene value will vary greatly refinery to refinery greatly being influenced by expansion and/or other
changes needed for different crudes and/or product quality change environmental regulations driver.
Oil Sands
• Propylene will be replaced by natural gas in fuel gas systems – on balance by gas moving north on the
TransCanada system.
• The byproduct aggregator will have quite different negotiations with each source.
• To these replacement/replacement values must be added transport to the byproduct propylene processing center, as
well as processing costs.
8
Roughly half that appropriate for a byproduct propylene route.

This study’s very preliminary estimates placed Alberta byproduct propylene at 1 to 2 cents below USGC pricing, assuming
grassroots facilities. TCMS will use appreciable common facilities at its Redwater natural gas liquids fractionation and there are
other settings with similar synergistic cost lowering opportunities.
7.3.6 Key Selected Derivatives

Key Products (Short-List)
• PP variations (with ethylene and possible/probably other monomers).

• Major polymer group next to PE’s in world importance, with a 5 to 6% per year.
• As with PP product types to be produced, a prospective PP producer will have his own select market
areas for specific grades, well beyond definition in this study. Mid continent and California markets, for
example, could well be emphasized rather than Asian ones.
• ACN (with ammonia)
• AA (and probably some derivatives) for super adsorbents.
• Pacific Rim (via, say, Kitamat for liquids, Vancouver for PP) plus internal North American demands in
each case.
• Minimum plant size is about 200-kty of propylene in each case matching minimum byproduct supply scenario.
Product costs should all be 1 to 4 cents per pound under USGC prices, with marginally lower transport costs to the Pacific Rim
and perhaps marginally higher costs to mid continent markets.
Watching Briefs
• PO and derivatives are complicated by cofeeds, e.g., benzene, and major coproducts such as styrene monomer, but
PO is not to be forgotten.
• Phenol, but benzene supply much more critical than propylene, has significant lower demands, the only example
noted in this study.
Other Chemicals
• This study did not show much encouragement for n-butanol, 2-EH and isopropanol as markets are not expanding
at any significant rate. (While 2-EH has some local market as the nitrate salt as a cetane improver in oil sand
derived diesels; this market may not last and is now well supplied with low cost Asian supply.) However, one
very knowledgeable contact indicated he felt oxo chemicals would eventually be produced here with CO and
hydrogen available from hydrogen and methanol production units.
7.3.7 Companies
• Throughout the analysis, certain chemical company names arose several times, often relative to their own core
product/market interests. Dow, Shell Chemical, BP Amoco, Degussa for example, are already very active in
Alberta. BASF, Huntsman, Solutia were also noted several times and may be enticed here. This is but a starter
list of companies with core propylene derivative interests. Such companies will decide which propylene (and
related feed) derivatives, if any, are important to them in an Alberta content.
• Availability of cofeeds such as benzene for a styrene/PO facility and/or phenol will be important to many
companies.
• Utility et al Availability – many ‘newcomers’ will be assuming over-the-fence availability of oxygen, nitrogen,
hydrogen, CO, steam, electricity and even plant air as is now almost standard in Europe and on the USGC.
• Low construction costs should prove attractive.
Note: Note that Alberta sites will be compared with Asian, U.S. and possibly European sites where more or less government
financial support is available – e.g., a current largely government funded Netherlands to Ruhr Valley propylene
pipeline. (Such assistance at competitive sites has not been considered in this study, but we believe it is an important
decision factor, especially to companies not already located in Alberta.

7.4 Summary
Supply – Byproduct
• Minimum 280-kty on average anticipated likely in 2005 (but with significant uncertainty with possible swings of
+100-kty overall and +50 to 100-kty on daily basis). Note that a propylene user is likely to discount, to say, 200-
kty.
Supply – Propane Dehydrogenation

• Propane dehydrogenation is proven not competitive here today, but with better technology is coming closer.
Propylene Pricing
• Pricing in the order of two cents U.S. per pound of PG propylene, below USGC on average for byproduct
propylene, assuming grassroots facility – with integration at existing facilities cost could well be less.
7.5 Recommendations
7.5.1 Byproduct Propylene Aggregation

AED should promote and assist in aggregation and all related permitting. Getting the propylene availability story out to
prospective users also will need major AED assistance. The limits of byproduct supply must be considered in such ‘story’.
7.5.2 Other Feedstocks

Propane feedstocks for propylene and, perhaps, ACN, and ammonia (for the latter) should need little AED help, if economically
attractive. However, potential availability of other cofeeds warrants further study and supplier identification – e.g., benzene in
particular, but also dienes for (EPD type polymers) and CO for oxo alcohols. Propane to propylene facility will need quite
similar assistance to that of the byproduct processing train.
7.5.3 Utilities For New Plants

Details need to be developed on over-the-fence availability of pipelined oxygen, nitrogen, hydrogen and other gases, steam, plant
air, cooling water/water supply generally. Contact points should be well defined and assistance provided.
7.5.4 Company Attraction

While this study short-listed several chemicals, chemical companies will decide on what, if any, propylene related projects they
will pursue. Each company has its own criteria for product and site selection, hence, each will need unique packages of Alberta,
AIH and SIA attributes and utility, feedstock, land, transport, regulation specifics. Comparison of Alberta to European and other
competitive site ‘offerings’ must be very well defined and differences made known to all involved in Alberta petrochemical
industry attraction (and retention).

REFERENCES
(a) Gregor, J. H. et al “Increased Opportunities for Propane Dehydrogenation” Dewitt World Petrochemical Review,
March 23 to 25, 1990.
(b) Gregor, J. H. (UOP), Private Communication re Impurity Handling in Propane Dehydrogenation, February 2000.
(c) Ecker, H. (UOP), Private Communication re Distillation System Design, February 2000.
(d) GTS Group International, Alberta’s Petrochemicals – Transportation Assessment for AED updated through January
1999.


Alberta Propylene Upgrade Prospects

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ALBERTA

PROPYLENE UPGRADING PROSPECTS

ALBERTA DEPARTMENT OF ECONOMIC DEVELOPMENT

T. J. MCCANN AND ASSOCIATES LTD.

GLOSSARY ................................................................................................................................................................................... vii

1.0 EXECUTIVE SUMMARY............................................................................................................................................... 9

2.0 INTRODUCTION .......................................................................................................................................................... 11

6.4.3 Trade in Acrylic Acid (AA) and Acrylates...................................................................................... 65

Table 3.1.1-1. Estimated 2005 Propylene Availability .................................................................................................................. 13

Table 6.2.2-2. Canadian Polypropylene Resin Export Trade ......................................................................................................... 57

Figure 3.2.2-1. Byproduct Receipt System .................................................................................................................................... 15

2-EH 2-ethyl hexanol

PROPYLENE IS THE MAJOR MISSING PETROCHEMICAL INTERMEDIATE IN ALBERTA.

KEY POTENTIAL DERIVATIVES

ALBERTA DEPARTMENT OF ECONOMIC DEVELOPMENT March 31, 2000

Acrylic Acid (AA)

ALBERTA DEPARTMENT OF ECONOMIC DEVELOPMENT March 31, 2000

2.1 Terms of Reference

2.2 General Bases

The early screening nature of this study is to be noted.

2.3 Propylene Only

ALBERTA DEPARTMENT OF ECONOMIC DEVELOPMENT March 31, 2000

ALBERTA DEPARTMENT OF ECONOMIC DEVELOPMENT March 31, 2000

Table 3.1.1-2. Current Propylene Uses

ALBERTA DEPARTMENT OF ECONOMIC DEVELOPMENT March 31, 2000

3.1.2 Incremental Propylene from Ethylene Production

3.1.3 Lack of Flexibility

3.2 Byproduct Propylene Processing

ALBERTA DEPARTMENT OF ECONOMIC DEVELOPMENT March 31, 2000

Figure 3.2.2-1. Byproduct Receipt System

Tube Surge Storage

(Try for continuous transfer)

Averaging Withdrawal System

ALBERTA DEPARTMENT OF ECONOMIC DEVELOPMENT March 31, 2000

3.2.3 Product Propylene Qualities

Table 3.2.3-1. Partial Typical Propylene Specifications

ALBERTA DEPARTMENT OF ECONOMIC DEVELOPMENT March 31, 2000

Figure 3.2.4-1. Byproduct Processing

Ethylene Pre (A)

3.2.5 Excess Product Sales

ALBERTA DEPARTMENT OF ECONOMIC DEVELOPMENT March 31, 2000

3.2.6 Byproduct Propylene Valuation

ALBERTA DEPARTMENT OF ECONOMIC DEVELOPMENT March 31, 2000

ALBERTA DEPARTMENT OF ECONOMIC DEVELOPMENT March 31, 2000

ALBERTA DEPARTMENT OF ECONOMIC DEVELOPMENT March 31, 2000

4.3 Integration Potential

ALBERTA DEPARTMENT OF ECONOMIC DEVELOPMENT March 31, 2000

4.5 Propylene Handling

Figure 4.5-1. Propylene from Byproduct Processing

Chemical Grade Separate

4.6 Production Cost

ALBERTA DEPARTMENT OF ECONOMIC DEVELOPMENT March 31, 2000

Table 4.6-2. Propane Dehydrogenation Operation Costs

Table 4.6.3. Cost Summary

ALBERTA DEPARTMENT OF ECONOMIC DEVELOPMENT March 31, 2000

Table 4.7-1. Propane and Propylene

Source: OPIS Weekly Publications

ALBERTA DEPARTMENT OF ECONOMIC DEVELOPMENT March 31, 2000

Using the 1999 average data:

ALBERTA DEPARTMENT OF ECONOMIC DEVELOPMENT March 31, 2000

5.1 Propylene Derivatives in an Alberta Context

Table 5.1-1. Propylene Derivatives Assessed in Study

Table 5.1-2. Demand for First-step Derivatives of Propylene in North America

5.2 Polypropylene (PP)