- The Column
- 🏭 The Column: Dec 8, 2023
🏭 The Column: Dec 8, 2023
Clariant's cellulosic bioethanol, reducing CO2 to CO, financing lithium, retrofitting a refinery, electrolytes, sodium sulfate, and licensing.
Good morning. I’m a little surprised that Clariant’s cellulosic bioethanol plans fell through. I think it’s the first time since The Column’s inception that we’ve seen an attempt to go from demonstration-scale to full-scale fail. But it’s a nice reminder that demonstration-scale sites don’t completely derisk the full-scale site.
Split-Form Contracting: A Project Contracting Form Extolled by Experts, But Can Investors and Lenders Accept It?
About half of what The Column tends to cover are updates to the status of various projects. I’m prompted by press releases that announce their plans to build a plant, the status of their final investment decision (FID), the selection of engineering, procurement and construction (EPC) providers, construction start dates, completion dates, and start up dates, etc. This pattern is no coincidence; it’s just the Stage-Gate process in action. Brad Price, a director over at NER, recently put together a blog post that reviews Ed Merrow’s book on contract strategies for major projects. There are some interesting nuggets here, namely that there seems to be a trend towards splitting the EP and the C, and towards modularization. [LINK]
What’s Going On:
Clariant is exiting cellulosic bioethanol
Pretty much all of the ethanol we use today is made by breaking down starch (the part of the plant, like corn, that we eat) with enzymes, and then fermenting the resulting glucose. We could alternatively get that intermediate glucose by breaking down cellulose (the part of the plant, like wheat straw, that we don't eat) instead of starch, and still do the same glucose-to-ethanol fermentation step at the end. But unfortunately it’s hard to break down cellulose—so, like Dow Chemical just 6 years ago, Clariant has decided to throw in the towel and exit the cellulosic ethanol business (after a year of trying to produce ethanol at the yields required for commercial viability at its first site in Romania). We’ve known that there were some concerns here for a while; they started up in June 2022, took a $241m impairment charge 6 months later, and then haven’t said much at all since then. [LINK]
SK Group reduced CO2 to CO
In case you haven’t noticed, there are a bunch of different researchers (in both academia and industry) trying to figure out cost-effective ways to utilize CO2. One of SK Group’s holding companies (SK Innovation) is looking to do so electrochemically by reducing CO2 to carbon monoxide (CO). They found that using diatomic forms of nickel and iron in the cathode worked better than the typical hundred-atom-cluster form, because smaller clusters means more sites for the reaction to take place. As interesting as that is from a scientific POV, it’s worth asking whether we should be targeting CO—I mean, you do a lot with it, but you need hydrogen if you want to make methanol or any of its derivatives. Do we really think that we can commercialize an electrochemical process that relies on a green hydrogen input and produces a commodity? Perhaps going straight to a specialty and not making hydrogen separately is a better call. That’s at least what OCOChem and Avantium seem to be doing. [LINK]
Standard Lithium needs financing
Back in February 2022, Standard Lithium signed a deal: they would set up a separate entity, fund it to complete a feasibility study for a waste-tail-brine-to-lithium-hydroxide plant, and give Lanxess the right (but not the obligation) to acquire up to 49% of that new entity. Now that that study is complete, Lanxess (aka the waste tail brine producer) has decided not to exercise that right, so Standard Lithium reached out to Citi (a bank) to help them finance the project. (If you’re unfamiliar with this project, Standard Lithium has developed a process that precipates lithium carbonate via CO2 addition, and they want to use Lanxess’s waste tail brine (they extract bromine from the brine and leave the lithium behind) instead of doing all of the brine extraction themselves. [LINK]
Retrofitting a refinery in Sweden
While the Nordic countries are fairly well known for their involvement in the world of oil and gas, it’s mostly Norway who runs that show, and it’s mostly about exploration and production, not refining. But that doesn’t mean the region is without refining capacity—Sweden’s largest refiner, Preem, operates two refineries in Sweden that account for 80% of the country’s total refining capacity: one in Gothenburg that processes 125,000 barrels per day (bpd), and one in Lysekil that processes 220,000 bpd. They’ve decided to convert that larger Lysekil petroleum refinery into a vegetable oil refinery that produces renewable fuels (such as sustainable aviation fuel) by hydrotreating, isomerizing, and refining vegetable-based triglycerides. [LINK]
Making electrolyte in Louisiana
There are a lot of different materials that go into lithium-ion batteries, but my favorite is ethylene carbonate (EC) because a) it’s surprisingly close to ethylene on the value chain, b) just as critical as any other component, and c) is made using CO2—to get to EC, just oxidize ethylene to make ethylene oxide (EO), and then react that EO with CO2. We use that EC as a solvent for various lithium salts, and we call the resulting solution an electrolyte. Currently Huntsman is the only producer of EC in the US, but that might change soon: China’s Capchem is looking to build a site in Louisiana, and seems to have support from the state of Louisiana. I think it’s odd that Huntsman hasn’t hopped on this given the IRA’s tailwinds, and I’m not sure why EO producers aren’t trying to license Huntsman or Capchem’s EC-producing-process. At the very least it would be good for public and investor relations. [LINK]
Tosoh is exiting sodium sulfate
There was a time when sodium sulfate was a bigger deal: we used to make copious amounts of this stuff as an intermediate in the production of soda ash (sodium carbonate), but then the Leblanc process was dethroned by the Solvay process. Of course, sodium sulfate was never the star of the show, but it wasn’t until this dethroning that we had to start making sodium sulfate intentionally, and that’s what Tosoh set out to do in 1988 when they started up this plant. But now there just isn’t much demand for sodium sulfate, so it has become increasingly difficult to operate profitably, which is why Tosoh had decided to close its site in Nanyo, Japan by September 2024. [LINK]
LyondellBasell’s latest licensing deal
Developing a new process in the chemical industry is a very complicated, risky, and long endeavor—Clariant’s recent failure, mentioned above, is a timely example. What that basically means is that if a) you develop a new process, b) your process is marginally better than your competitors, and c) your process produces a commodity product, then you have every reason to license your process to other operators. This is super common in the chemical industry, and LyondellBasell is well known for licensing it’s polyolefin-producing technologies. China’s Dongming Shengai is going to license LyondellBasell’s technologies to make PP, HDPE, and EVA, and LyondellBasell is going to collect the royalties (and enjoy the second order effect of converters being well-adjusted to their specific grades of polyolefins). [LINK]
Other Things Happen:
Huntsman Chemical and Zeta Energy made some progress on their lithium-sulfur batteries. Covestro is moving forward with its process intensification project at its TDI site in Dormagen, Germany. CF Industries acquired an ammonia plant in Louisiana for $1.7bn. Lummus Technology and Toshiba signed an agreement to marry their carbon capture technologies. A new spodumene-to-lithium-hydroxide plant in Germany just secured its feedstock. Toyo was awarded an engineering and procurement contract for a new acetylene black plant in Thailand. Ineos completed its acquisition of Eastman’s Texas City plant. Wanhua Chemical is going to start up its newest propylene oxide plant in the next couple of weeks.