Industry observers say a new linear alpha olefins unit that ExxonMobil expects to open in 2022 in Baytown, Texas, should reduce its reliance on competitors for LAO as a feedstock for making polyalphaolefins, though the company will likely remain an active buyer of LAO from merchant sellers.
ExxonMobil announced on May 2 a $2 billion expansion project at its Baytown petrochemical refinery, including a new linear alpha olefins unit expected to produce about 350,000 metric tons per year. LAO is the building block chemical for polyalphaolefin.
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PAO molecules are made by assembling chains of octane, decene and dodecene – olefin hydrocarbons with chains of eight, 10 and 12 carbon atoms respectively – to reach the molecular weights and performance targets desired by customers. High-viscosity PAOs are typically used as lubricant additives, while low-viscosity PAOs are used as base stocks.
The LAO plant will have global distribution capability, according to ExxonMobil Chemicals website. ExxonMobil has PAO plants in Baytown and Beaumont, Texas, and in Gravenchon, France. The company would not say if it plans to use Baytown LAOs in its PAO business.
ExxonMobil is the only one of the top three PAO producers – the others being Chevron Phillips Chemical and Ineos – without backward integration into decene and dodecene LAO feedstock, according to Stephen B. Ames, of SBA Consulting in Pepper Pike, Ohio. Merchant sellers of LAO include Shell Chemical, Ineos and Chevron Phillips Chemical.
“They have relied on a long-lasting, strong relationship with Shell Chemical for their supplies to the Baytown, Beaumont and Gravenchon PAO operations,” Ames told Lube Report. “Shell is the worlds largest producer of LAO, but [does] not forward integrate into PAO, so the fit between the two companies has been quite good and strategic.”
He noted that Shell Chemical recently streamed a fourth 425,000 tons per year LAO train at its Geismar, Louisiana chemical plant, bringing its capacity to a world-leading 1.3 million t/y. Shell also has a smaller LAO facility within a Stanlow, United Kingdom, refinery owned by Essar. The Stanlow operation suffered a fire in August 2018 and has not operated since, Ames said.
He noted that Shell last month announced it would close the Stanlow facility and an associated alcohols unit rather than rebuild them. “That obviously impacted ExxonMobil’s Gravenchon PAO plant,” he added.
“Nevertheless, the planned 350,000 tons per year ExxonMobil LAO plant is unlikely to produce sufficient quantities of decene and dodecene monomers to support all of their global PAO capacity,” Ames said. “Perhaps justification for the LAO operation also hinged on internal uses for the other LAO monomers, such as the co-announced polymer unit. ExxonMobil’s expansion plan includes a new performance polymer unit with capacity of about 40,000 t/y. I would thus surmise that Shell Chemical will continue to be a strategic partner and maintain a strong supply relationship with ExxonMobil.”
Joel Houston, president of chemical market research firm Colin A. Houston & Associates Inc. of Aiken, South Carolina, told Lube Report that, “From our understanding, ExxonMobil aims to strengthen its feedstock position for several key LAO cuts, some for which ExxonMobil is the largest buyer. Although the market is not currently underserved, building this unit reduces ExxonMobil’s reliance on its competitors.”
Houston said that the plant will make a full-range LAO slate, so its more than just polyolefin co-monomer driven since it will also serve a portion of their PAO needs.
He pointed out that the LAO space has been busy. “Shells recent startup of the unit at Geismar gives it a net increase in LAO capacity,” he said. “And recent announcements for a revival project in Qatar could mean even more LAO capacity coming up in the next few years,” he added. This would be in addition to the Ineos Oligomers new LAO and PAO units coming onstream later this year.
Houston cautioned the new LAO capacity could result in some end markets going long. “However, demand for use as surfactant intermediates has been strong, especially with favorable ethylene economics in the face of rising crude oil prices,” he said.
Almost 90 percent of all PAO supply is produced by three market players: ExxonMobil, Ineos and Chevron Phillips Chemical.
According to Lubes’n’Greases 2018 Nonconventional Base Stocks Guide, ExxonMobil Chemical has about 284,000 t/y of PAO production globally, including 50,000 t/y at the Baytown plant and 146,000 t/y at the Beaumont site. The company’s Gravenchon PAO plant in France has 88,000 t/y capacity.
Ineos has a total of 230,000 t/y PAO production capacity at plants in Feluy, Belgium; and La Porte, Texas, where the company has additional volumes via a toll manufacturer. According to its website, the company has LAO units in Joffre, Canada, and in Feluy to produce the feed for its current PAO capacity. Ineos announced in Dec. 2017 plans to build a 120,000 t/y low-viscosity PAO unit on its site in Chocolate Bayou, Texas, with start-up scheduled for the third quarter of 2019. The new PAO unit would obtain its feedstock from an adjacent LAO plant under construction at the same site.
Chevron Phillips Chemical has about 130,000 t/y PAO production capacity among plants at three locations: Beringen, Belgium, using normal alpha olefin as feedstock; and two in Texas in Cedar Bayou (Baytown) and Pasadena.
Some other smaller PAO producers include Lanxess (30,000 t/y from plants in Canada and the Netherlands), Naco Lubrication Co. Ltd. (35,000 t/y from two plants in China) and Tatneft (9,600 t/y at a plant in Russia).
According to ExxonMobil Chemicals website, LAOs may also be used in lube additives, functional fluids, drilling fluids, synthetic waxes and surfactants.