Port Bureau Updates – September

Enterprise to Build PDH 2 Plant; Supported by Long-term Agreements with LyondellBasell



LyondellBasell Industries N.V. (LyondellBasell) and Enterprise Products Partners L.P. (Enterprise) has announced that their respective affiliates have executed long-term contracts that support construction of Enterprise’s second propane dehydrogenation (PDH) plant (PDH 2). PDH 2 will have the capacity to consume up to 35,000 barrels per day (BPD) of propane and produce up to 1.65 billion pounds per year of polymer grade propylene (PGP). PDH 2 will be located at Enterprise’s complex in the Mont Belvieu, Texas area. The facility is scheduled to begin service in the first half of 2023.

“For nearly 30 years, Enterprise has proven to be a capable, reliable partner for LyondellBasell,” said Bob Patel, chief executive officer of LyondellBasell. “As we aim to meet the growing demand for our products, ensuring a long-term supply of feedstock is critical. These agreements allow us to leverage Enterprise’s construction expertise, operating experience and robust network as we continue to deliver an outstanding value proposition for our customers.”

“We are very pleased to enter into these agreements to further expand our already extensive relationship with LyondellBasell,” said A.J. “Jim” Teague, chief executive officer of Enterprise’s general partner. “PGP is a primary petrochemical that can be converted into hundreds of products that improve the daily lives of people around the world. Demand growth for these propylene-based products is strong and PDH 2 will provide cost-advantaged supply assurance to our customers, enabling expansion of their downstream businesses to satisfy this global demand.”

Enterprise has licensed Honeywell UOP’s Oleflex propane process to produce PGP. Enterprise has over 25 years of experience with this technology. The company’s existing isobutane dehydrogenation (iBDH) plant, which uses the Oleflex butane process, commenced operations in 1993. The partnership is currently building a second iBDH facility utilizing the same process, which is expected to be completed later this year and is on time and on budget.

Teague added, “With the combination of LyondellBasell as an anchor customer, our use of UOP’s Oleflex technology and S&B providing engineering and construction services, I am highly confident of a successful project that will grow Enterprise’s cash flow per unit and enhance the value of our partnership.”

Enterprise began its fee-based midstream petrochemical service business with the development of its first propylene fractionator in 1978. PDH 2 is being developed with this same fee-based model. These anchor contracts are service-based under which Enterprise processes LyondellBasell-provided propane to PGP for a fixed fee. This fee-based model leverages Enterprise’s integrated value chain by providing sourcing and storage from Enterprise’s NGL storage facilities in Mont Belvieu and delivers PGP into its open market storage hub and growing network of PGP pipeline infrastructure. Enterprise’s network of PGP assets includes more than 300 miles of delivery pipelines, 26 PGP connections, more than five million barrels of storage capacity, and an export terminal on the Houston Ship Channel. Enterprise is currently expanding PGP refrigeration facilities at the terminal, which will enable the company to load more than 5,000 barrels per hour of PGP, as well as co-load PGP and LPG on very large gas carriers.

Enterprise’s Mont Belvieu NGL fractionation and storage system supporting PDH 2 currently has 760,000 BPD of NGL fractionation capacity, with another 300,000 BPD under construction. In addition, these complexes have more than 100 million barrels of NGL and petrochemical storage, providing unparalleled reliability and flexibility. The integration of the PDH 1 and PDH 2 plants with Enterprise’s propylene fractionation facilities provides operational flexibility for both processes, and a combined PGP supply of more than nine billion pounds per year.

Construction of PDH 2 is expected to provide approximately 1,500 to 2,000 jobs, which will further support economic activity in the greater Mont Belvieu and Baytown area.

SemGroup to be Acquired by Energy Transfer in $5 Billion Transaction

SemGroup Corporation announced on September 16 it has entered into a definitive merger agreement whereby SemGroup will be acquired by Energy Transfer LP (E or Energy Transfe) in a unit and cash transaction valued at approximately $5.1 billion, including the assumption of debt and other liabilities.

Under the terms of the agreement, which has been unanimously approved by the Boards of Directors of both companies, SemGroup shareholders will receive $6.80 per share in cash and 0.7275 of an ET common unit for each SemGroup share, or approximately 40% cash and 60% equity. The equity consideration received is expected to be treated as a tax-free transaction. The transaction values SemGroup at $17.00 per share, and represents a 65% premium to SemGroup’s closing share price of $10.28 on September 13, 2019, and an 87% premium to SemGroup’s 20 day volume weighted average price (VWAP) as of the same date. Upon closing, SemGroup shareholders are expected to own approximately 2.2% of ET’s outstanding common units.

SemGroup Chief Executive Officer, Carlin Conner, said, “This strategically and financially compelling combination will result in SemGroup joining one of the largest midstream energy companies in the country, with a strong footprint in all major U.S. production basins. The combined entity’s size, scale and financial profile will ensure that SemGroup’s assets, including our Gulf Coast terminal, mid-continent footprint and our Canadian joint venture SemCAMS Midstream, benefit from significant growth well into the future. We look forward to leveraging the increased pipeline connectivity and expanded terminalling infrastructure that the combined entity provides.”

The transaction is expected to close by late 2019 or early 2020, subject to obtaining regulatory approvals, SemGroup shareholder approval and other customary closing conditions.

ExxonMobil and Mosaic Materials to Explore New Carbon Capture Technology

ExxonMobil and Mosaic Materials announced they have entered into an agreement to explore the advancement of breakthrough technology that can remove carbon dioxide from emissions sources.

Mosaic Materials has progressed research on a unique process that uses porous solids, known as metal-organic frameworks, to separate carbon dioxide from air or flue gas. The agreement with ExxonMobil will enable further discussion between the two companies to evaluate opportunities for industrial uses of the technology at scale.

“New technologies in carbon capture will be critical enablers for us to meet growing energy demands, while reducing emissions,” said Vijay Swarup, vice president of research and development for ExxonMobil Research and Engineering Company.

“Our agreement with Mosaic expands our carbon capture technology research portfolio, which is evaluating multiple pathways — including evaluation of carbonate fuel cells and direct air capture – to reduce costs and enable large-scale deployment. Adding Mosaic’s approach will allow us to build on their work to evaluate the potential for this technology to have a meaningful impact in reducing carbon dioxide emissions.”

“Through this agreement with ExxonMobil, we look to accelerate the pace of our development and demonstrate the business and environmental benefits that our technology can offer,” said Thomas McDonald, chief executive officer of Mosaic Materials. “Our proprietary technology allows us to separate carbon dioxide from nearly any gas mixture using moderate temperature and pressure changes, substantially increasing energy efficiency and decreasing costs.”

Mosaic Materials’ agreement with ExxonMobil is part of Mosaic’s commitment to accelerate the impact of its innovative, low-cost technology, and is Mosaic’s latest direct engagement with companies across a range of industries to demonstrate both the cost reductions and the environmental benefits of employing Mosaic’s solutions.

This engagement builds upon ExxonMobil’s extensive portfolio – in collaboration with startups, academia and governments – to develop next-generation energy technologies that improve energy efficiency and reduce greenhouse gas emissions. ExxonMobil supports Cyclotron Road, a fellowship for entrepreneurial scientists that is managed in partnership between Lawrence Berkeley National Laboratory and Activate, an independent nonprofit.

ExxonMobil also recently announced a 10-year, up to $100 million agreement to research and develop advanced lower-emissions technologies with the U.S. Department of Energy’s National Renewable Energy Laboratory and National Energy Technology Laboratory.

With a working interest in approximately one-fifth of the world’s total carbon capture capacity, ExxonMobil has been able to capture about 7 million tonnes per year of carbon dioxide and has cumulatively captured more of it than any other company since 1970.

Brownwater University Offered in Houston, October 29 – 31

Brownwater University will be held at the Houston Pilots’ facility in Deer Park, October 29 – 31, 2019. Brownwater University is a cooperative effort between the U.S. Coast Guard, the Inland Barge Industry, and the Lone Star Harbor Safety Committee. It is a free 2-day educational conference bringing together stakeholders across all facets of brownwater operations in the Western Gulf. Listen to, and participate in, panels on topics such as equipment and personnel, operations, navigation safety, and ship and barge interactions. On the third day, participants can try their hand at a pushboat simulator.

Register to attend at www.eventbrite.com/e/brownwater-university-2019-houston-area-tickets-72082200803.

San Jacinto College Opens LyondellBasell Center for Petrochemical, Energy, & Technology

San Jacinto College marked the grand opening of the new LyondellBasell Center for Petrochemical, Energy, & Technology (CPET), on September 18, with more than 350 elected officials, industry partners, community members, faculty, and staff.

The new, cutting-edge training facility is located at 7901 W. Fairmont Parkway, on the College’s Central Campus, placing it square in the heart of the largest petrochemical manufacturing complex in the United States, where 90 companies operate 132 plants within a 13-mile radius of the College’s new facility.

The College’s new $60 million facility spans a 151,000-square-foot complex with a separate 8,000-square-foot, two-story process training unit, 35 custom interior labs, including a multifunctional glass pilot lab, 20 interactive classrooms, 4 custom workstations, advanced control rooms, and conference, training, and assembly spaces to accommodate academic, community, and industrial functions.

Students will have access to hands-on training experiences as they work toward associate degrees and industry certifications in Electrical Technology, Environmental Health and Safety Technology, Instrumentation Technology, Nondestructive Testing, and Process Technology.

As part of the Center’s offerings, the College will be expanding its contract training. Through these efforts, the College will work with companies to create customized and confidential employee training for incumbent workers, maximizing the region’s ability to capitalize on the College’s new facility, faculty, and resources.

For more information about the Center for Petrochemical, Energy, & Technology, visit sanjac.edu/cpet

  • Date October 8, 2019
  • Tags 2019 September