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Business

Japanese firms eye shale gas revolution

Petrochemical joint venture will import propane as new raw material

by Jean-François Tremblay
December 1, 2016 | APPEARED IN VOLUME 94, ISSUE 48

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Credit: Idemitsu
A former Idemitsu plant that is now part of the Chiba Chemicals joint venture.
Credit: Idemitsu
A former Idemitsu plant that is now part of the Chiba Chemicals joint venture.

Petrochemical plants in Japan and the rest of Asia tend to use naphtha obtained from crude oil as their main feedstock, but the rise of U.S. natural gas production from shale has made naphtha less competitive. Chiba Chemicals Manufacturing is responding with plans to upgrade its facilities in Chiba, Japan, to process more propane gas instead.

Created as a competitiveness-boosting measure in 2010 by merging plants run by Idemitsu Kosan and Mitsui Chemicals, Chiba Chemicals has a total ethylene production capacity of 920,000 metric tons per year. The joint venture is already able to process some propane at the plant that formerly belonged to Idemitsu.

But Chiba Chemicals’ ability to use propane will quadruple after it completes facility upgrades at the site next year. By then, the unit will be able to rely on propane, supplied from an adjacent Idemitsu natural gas import terminal, for as much as half of its feedstock needs.

Idemitsu and Mitsui decline to confirm the source of their propane, although it is likely to be the U.S. They also won’t disclose whether they will build facilities, such as a propane dehydrogenation unit, that would widen the narrow product slate that gas-fed facilities yield when compared with naphtha.

Other companies in Asia are modifying plants, or building new ones, to consume gas instead of naphtha. For instance, in India, Reliance Industries plans to soon start consuming U.S. ethane at three petrochemical facilities in Dahej. Several petrochemical makers in Europe are also modifying plants to import U.S. ethane.

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