Ineos Oligomers plans to build a new linear alpha olefin unit in the United States by late 2016 and expand its Canadian LAO unit in 2014, partly driven by demand for high performance automotive lubricants.
It is our intention to build a new world scale LAO unit on the Gulf Coast of the United States, Bob Learman, CEO of League City, Texas-based Ineos Oligomers, said in a June 27 news release. The unit will have an initial capacity of 350,000 metric tons, and like our existing units, it can be built with a further 50 percent expansion in mind. So ultimately the capacity could reach over 500,000 metric tons.
Learman noted Ineos Group already has a significant footprint on the Gulf so it has ready access to key resources. We have been working on this project for the past year, and it is now ready to scale up for a new phase of activity, he continued. The project is targeted for completion by the end of 2016.
LAOs are the main building block for polyalphaolefins. Common end uses of LAOs include motor oils, drilling fluids and household plastics from polyethylene.
The expansion of our LAO capacity will also provide significant additional feedstock capacity to support the anticipated growth of our PAO business, Learman stated.
Kevin Ratliff, market manager LAO/PAO Americas, said Ineos will use the new LAO production to support the expected growth in U.S. demand as well as global growth.
Our LAO technology also produces a high percentage of C10 and C12 alpha olefins, which are needed for the growing PAO demand, Ratliff told Lube Report. Ineos Oligomers is the number one producer of low viscosity PAO. While the overall growth of the lubricant market is moderate, it continues to demand higher performing products. This demand for higher performing lubricants drives the need for top-tier base stocks like PAO. Therefore, with the joint growth in higher performing polyethylene and lubricants, we foresee a need for both LAO and PAO capacity.
The company said it is also evaluating incremental expansion opportunities at its Canadian site. Our LAO unit in Joffre, Alberta, was initially designed to be expandable by 50 percent, stated Karel Brabant, Ineos Oligomers operations director. Therefore, we have a number of opportunities to access additional capacity in capital efficient ways. The first step of this program is well underway with a project that will expand the units capacity by 10 percent. The project will be completed by the end of first quarter 2014.
The global demand for lubricants has been impacted by the current difficult conditions in both the Europe and Asian automotive sectors, said Joe Walton, Ineos Oligomers business director. Despite this backdrop, our PAO business has been quite resilient. It will continue to benefit from lubricant reformulation activity to attain better fuel economy and to lower carbon emissions. Ineos Oligomers is the worlds largest merchant supplier of PAO, and our investment plans will ensure we maintain this position.
The company built a new PAO train at its Feluy, Belgium facility in 2009. More recently, we have just completed a 10 percent debottleneck of our facility in LaPorte, Texas, Walton noted. Furthermore, we have a project engineered for a 15 percent debottleneck at Feluy. These incremental capacity additions will allow us to support PAO growth until we add an additional new train, the size and timing of which will be aligned with the development of the market.