Sarnia-Lambton could still get plant, Nova Chemicals says
Nova Chemicals says Sarnia-Lambton is still in the running for a new polyethylene plant after the company announced a joint venture this week with Total and Borealis that could see a new US$1.7-billion ethylene cracker, and a new polyethylene plant, built on the Gulf Coast in Texas.
“Nova continues to explore building a new polyethylene facility using our proprietary Advanced SCLAIRTECH technology,” Nova spokesperson Meaghan Kreeft said in an email.
“The base case remains in the Sarnia-Lambton region, and we expect a final investment decision in 2017.”
Nova first proposed building the new Sarnia-Lambton plant in 2011, and has been working through municipal planning approvals for a site on Rokeby Line, next to its Corunna plant.
The company has said construction of a new polyethylene plant in Sarnia-Lambton would also be tied to an expansion of its Corunna site to boost its output of ethylene, a chemical it makes from natural gas liquids and uses to make polyethylene.
Nova is a major employer in Sarnia-Lambton’s Chemical Valley, and already operates a polyethylene plant near Mooretown, and one near Corunna.
George Mallay, general manager of the Sarnia-Lambton Economic Partnership, said he expects the plans for Chemical Valley and Texas will be considered separately by Nova. “The project here will compete on its own merits,” he said.
Nova Chemicals is a wholly owned subsidiary of the International Petroleum Investment Company of the Emirate of Abu Dhabi, United Arab Emirates, which also owns 64 per cent of Vienna, Austria-based Borealis.
Nova said in a news release this week the joint venture with Borealis and Paris-based Total would see a new cracker built alongside Total’s refinery in Port Arthur, Texas, near Houston, and a new polyethylene plant in Bayport, Texas. Total would own half of the joint venture, which would also include an existing Total polyethylene plant in Bayport.
The joint venture’s two new Texas plants are expected to start up in 2020, following a final investment decision in late 2017.
“This opportunity will complement Nova Chemical’s existing asset structure in Canada and broaden our (polyethylene) product slate as we continue to grow our business in the Americas,” Nova CEO Todd Karran said.
A new polyethylene plant Nova built in Alberta recently has begun production.
A decision by the company to move ahead with construction of a new Sarnia-Lambton plant “would send a signal to the market that we’re still an excellent place for investment,” Mallay said.
“With all the stuff out there about electricity prices in Ontario, and cap-and-trade, and all that kind of stuff, it would be timely.”
Along with the ongoing employment, a new Nova plant would generate a large number of construction jobs, “which we need, badly,” Mallay said.
Kreeft said a significant amount of the cracker project is expected to be completed during a turnaround set to begin in August.
She added preliminary work on the pipeline project is underway.
The joint venture Nova announced with Borealis and Total is part of a “second wave” of North American polyethylene expansion, according to David Barry, senior editor with Houston-based PetroChem Wire.
“The first wave is coming online this year,” with the second round expected to begin production in 2020 and beyond, said Barry, who reports on polyethylene, polypropylene and polystyrene markets.
That expansion will leave North America with a large amount of polyethylene production capacity, he said.
“A lot of it is going to have to be exported, because the domestic demand growth in North America is going to be pretty steady at right around GDP levels, two or optimistically three per cent.”
Barry said the thinking is that emerging economies, in places like India and China where more packaging material will be used as more people enter the middle class, will “drive the bigger demand growth that will justify these projects.”