🏭 October 2022: Round-Up

Good morning. Welcome to the October 2022 Round-Up! Before getting into it, please consider completing The Column's survey (should take 1 minute). Oh, and the referral program is back—more rewards to come—just wanted to get it up and running (check it out at the bottom).

Here's what we talked about last month:

• Oct 5th ($): BASF's ethanol dehydrating catalyst and Ingevity's specialty polyol expansion

• Oct 7th ($): Chemours' Nafion expansion and Ineos' new ethane cracker

• Oct 10th: Mitsubishi's upcoming MMA project and Shin-Etsu's new cardboard coating

• Oct 12th ($): LyondellBasell's molecular recycling site and Air Products' green H2 plans

• Oct 14th ($): Covestro's new aniline plant and capturing CO2 in Louisiana

• Oct 17th: SK On and direct lithium extraction and BASF's losses in Germany

• Oct 19th ($): Shell, Technip Energies, and CO2 capture and BP's $4.1B RNG acquisition

• Oct 21st ($): Exxon and LyondellBasell's plastic sorting plant and blue powder for sodium-ion batteries

• Oct 24th: Exxon sold its Montana refinery and Ineos bought into caustic potash

• Oct 28th ($): Clariant's pyrolysis oil cleaners and Chevron, LyondellBasell, Air Liquide, and Uniper's collab

• Oct 31st: Welcome to Feedstockland: exploring the role of the chemical industry in society

In the two previous versions of this monthly round-up (September and August) I've tried to bucket what was covered in The Column into three narratives: scale, sustainability, and specialty. My goal with that approach was to synthesize The Column's random smattering of topics into some cohesive story.

The problem I'm having is that most of these stories aren't meaningful over monthly intervals, and that I end up just going surface level on everything again. So this month I'm going to just present you with all the links to the previous editions (listed above) and then go a little deeper on a couple of topics I thought were the most interesting.

The first one I want to talk about a bit more was in the Oct 19th ($) edition featuring BP's acquisition of Archaea Energy, about which I said:

I think this might sound a little weird to the unfamiliar. Why is this "non-real solution" profitable with plenty of room to grow?

What I'm getting at here is that just because something is technically possible, and economically feasible, doesn't mean that it's ever going to be the dominant world-saving-solution we're looking for. This sort of argument is tough to sum up succinctly, but Banholzer's way of doing it gets to the point:

Banholzer is just saying that we shouldn't waste capital on solutions that won't take the cake in the end. I'm not taking the same stance—I'm just saying that it's worth clarifying which solutions we talk about have potential to take the cake, and which will just take a piece.

Since this is a big cake you can still satisfy shareholders with a piece. For example, if BP's RNG business goes from being 0.85% of total natural gas consumption (what it is today) to some unknown practicality upper bound of 5%, then they can reasonably expect to turn this $140 million EBITDA business to a $1 billion+ EBITDA business.

The second thing I wanted to talk a bit more about is related to the Oct 28th ($) edition where I talked about the co-development of blue and green hydrogen:

To which a reader responded an excellent question:

It's true that we do operate chloralkali at large scales—we even talked about ($) Chemours looking to market its same chloralkali membrane material for green hydrogen electrolyzers.

Instead of saying that electrolysis is "not as easy to scale" I probably should have said something like electrolysis "can't scale as rapidly". My hypothesis is based on a few factors: (1) you need fresh water for water electrolysis, (2) you need renewable energy for it to be green, and (3) less equipment is needed to convert grey hydrogen into blue hydrogen than to build green hydrogen capacity from scratch.

The freshwater thing means that you probably need to do large scale desalination via reverse osmosis prior to doing the electrolysis thing (Paul Martin covers this extensively).

The renewable energy part is conquerable, but it begs the question—why aren't chloralkali producers rapidly trying to convert to renewable energy? Aside from the fact that none of them seem to be doing anything in this regard, it is probably technically challenging.

The last bit has to do with a capital comparison: what's cheaper per incremental kg of sustainable hydrogen? Spending $30 million on a carbon capture unit to get 1 million tons per year, or spending $300 million for 30,000 tons per year? Maybe it depends on who you ask. A company with billions of dollars worth of methane steam reforming assets is probably a lot more inclined to convert to blue instead of tear something down to build green.

The last thing I wanted to talk more about was the upcoming plastic sorting site being built by ExxonMobil, LyondellBasell, and Cyclyx.

It's interesting to me because it's the furthest up the waste stream that I've seen petrochemical companies go. To be clear, this isn't a recycling site, the purpose of this site is to separate mixed waste plastic streams prior to any mechanical or molecular recycling. I think this has more to do with trying to make sure pyrolysis oil streams have consistent molecular composition, and less about trying to eliminate bad actors in the plastic waste mix, like PVC.

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