Chemical Tango

Perhaps it was the inspiration of Buenos Aires, where ornate old-world architecture mingles with modern glass fa??ades. But the 27th annual meeting of the Asociación Petroqu??mica y Química Latinoamericana (APLA), the major Latin American chemical industry association, saw the juxtaposition of old and new visions for the region's chemical industry.

One of the perennial visions at such meetings is of building a lot of new petrochemical capacity. The 800-plus delegates who attended the meeting in Argentina late last month got their share of that vision from regional executives who outlined their plans for big new projects. But they were also presented with a new idea: The Latin American industry doesn't have to rely only on oil and natural gas; itcan also tap into its enormous potential in biobased feedstocks.

Oscar Vignart, president of Dow Chemical Argentina, opened the conference by noting that the region is enjoying growth in petrochemicals far in excess of world norms. Demand for many of the industry's products, he said, is expanding at 5–8% annually.

To continue growing, Vignart stressed, the region needs to tap into low-cost raw materials. New complexes have to be competitive globally, even with plants in the resource-rich Middle East—not an easy task in the volatile world of hydrocarbons. For example, petrochemical companies in Argentina, where Dow has a major facility, face natural gas shortages.

Other Latin American countries are faring better. Brazil has been increasing its chemical capabilities by leaps and bounds with the support of Petrobras, its state oil company. "Our company's strategy has been to enlarge our involvement in the field of manufacturing chemicals," Paulo Turazzi, manager of new projects at Petrobras, told attendees. Between 2008 and 2012, the company plans to invest $4.3 billion in chemicals.

Turazzi said Petrobras is particularly keen on projects that unlock synergies between petrochemicals and its refining operations. The linchpin of this strategy is an $8.5 billion petrochemical complex planned for ItaboraÍ, in the state of Rio de Janeiro. Instead of the customary ethane or naphtha, the feedstock for the proposed plant will be heavy crude oil originated in Petrobras' offshore wells.

An oil refinery at the heart of the complex will employ a Petrobras fluid catalytic cracking technology that aggressively breaks down hydrocarbons to maximize petrochemical production and minimize fuels output. "If we produce any fuels, it will be because we cannot convert the hydrocarbons into chemicals," Turazzi told C&EN after his presentation.

The complex will have the capacity to make about 1.3 million metric tons of ethylene per year. It will also produce propylene, aromatics, and a host of downstream chemicals like polyethylene and polypropylene. Petrobras says it intends to begin construction at the end of next year and have the plant completed by the end of 2012.

The ownership structure of the project has yet to be hammered out, however. Petrobras and Ultrapar, a local company that owns ethylene oxide maker Oxiteno, are the known partners on the project. Another potential participant is a new company that may be created by merging petrochemical assets held by Petrobras and Unipar, a conglomerate that controls Brazil's PetroquÍmica União.

Other Petrobras chemical projects around Brazil include polypropylene, purified terephthalic acid, polyester, and acrylic acid plants to be built with private partners.

A chemical meeting in Latin America, where companies thus far have been unburdened by the Kyoto protocol, may seem like an odd place to talk about global warming. But Theo Walthie, former head of Dow's hydrocarbons and energy business, gave a presentation on industry's need to embrace the changes that will stem from regulations addressing global warming. "Let's not see it as a threat; let's look at it as a business opportunity," he said.

One such opportunity is ethanol made from renewable raw materials. Whereas ethanol makers in the U.S. and Europe typically need government subsidies to survive, Brazil's sugarcane-based production process is economical on its own. "You have many more opportunities than the rest of the world," Walthie told the attendees.

Diego Ordoñez, director of Dow's hydrocarbons and energy business in Latin America, went further. "There are certain geographies that are positioned to wield a competitive advantage in renewables," he said, "and Latin America is one of those geographies." Ordoñez noted that the region already is a world leader in sugarcane and soy production. It also has the land and climate to further boost crop yields.

Dow is pursuing several projects incorporating biobased raw materials. In China and the U.S., the company plans to make epichlorohydrin and propylene glycol from glycerin, a by-product of making biodiesel. In Brazil, it's designing a plant that can produce 350,000 metric tons of polyethylene annually from ethylene made from ethanol. The company's partner is local sugarcane processor and ethanol maker Crystalsev.

At the APLA conference, Brazilian chemical giant Braskem was promoting its own ethanol-based polyethylene, which it dubs "green polyethylene." Manoel Carnaúba Cortez, who oversees the Braskem project, said the process uses heat and a commercially available catalyst to remove ethanol's hydroxyl group, yielding ethylene and water. The company plans to build a 200,000-metric-ton plant by the end of 2009.

According to CarnaÚba, the process is competitive with petrochemical routes to ethylene when oil prices are above $60 per barrel, as they are today. Another advantage is that every ton of polyethylene made with the process will capture about 2.5 tons of carbon dioxide. Production of a ton of petrochemical-based polyethylene, on the other hand, emits about 3.5 tons of CO₂. Thus, Carnaúba anticipates that customers using ethanol-based polyethylene will receive carbon credits they can use or trade. "We can sell it at a premium because of the carbon credits," he predicted.

Similarly, for its ethanol-based ethylene project, Dow is interested in receiving credits under the Clean Development Mechanism, whereby firms from developed countries receive credits for carbon-saving projects in the developing world.

The progress of such projects, and perhaps others incorporating biobased raw materials, will no doubt be a theme for Latin American chemical meetings to come.