NOVA Chemical's Corunna, Canada Ethylene Unit Nearly Completes Switch to All-NGLs Feedstock, Exploits Marcellus Shale

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Researched by Industrial Info Resources (Sugar Land, Texas)--NOVA Chemicals (Calgary, Alberta) expects its Corunna ethylene facility in Ontario to be fully weaned from naptha feedstock and on a 100% natural gas liquids (NGLs) diet by the end of summer, a top executive said. The project to change the feedstock for the Corunna complex is part of NOVA's plan to take advantage of low-cost ethane from the Marcellus Shale, said Todd Karran, NOVA's acting chief executive officer and chief financial officer, during the company's second-quarter earnings conference call.

Industrial Info is tracking 10 NOVA projects in various phases of development, with a total investment value of $2 billion.

For the second quarter of 2014, NOVA reported a profit of $167 million, compared to profit of $201 million for the second quarter of 2013. NOVA attributed the 17% drop in quarterly profits to lower margins in the company's Joffre Olefins and Corunna Olefins segments. Revenue for the quarter fell to just less than $1.3 billion, from nearly $1.4 billion in the same quarter a year earlier.

NOVA expects its capital expenditures for the full fiscal year to total $750 million.

As part of its plan to capitalize on shale-derived feedstock, NOVA is considering the expansion of the 2.1 billion-pound-per-year (1.05 million-ton) Corunna ethylene facility by 20%, with an investment estimated at $400 million.

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Meanwhile, NOVA's project to convert the Corunna unit to 100% NGLs is nearly complete, Karran said. The plant is now running on 80% NGLs (versus naptha), he said, and will soon run on nothing but NGLs as ethane becomes available.

"We expect to discontinue running naptha in next few weeks," Karran said. "Following this, we will shut down our crude refinery unit [at the Corunna site]."

Karran said he expects the facility to produce fewer co-products, which should improve its profitability. The plant can produce up to 2 billion pounds (1 million tons) of co-products per year.

Also, NOVA's $900 million polyethylene 1 ("PE1") expansion project at its Joffre site in Alberta "is progressing well," Karran said. The project, which began in second-quarter 2013, includes installation of a new polyethylene reactor and will produce 950 million pounds (450,000 tons) per year of linear low-density polyethylene (LLDPE). The project will increase total plant capacity by 40%. Completion is expected in late summer of 2015, Karran said.

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NOVA's Joffre complex began taking feedstock from the Bakken Shale from North Dakota via pipeline in early summer, Karran said.

NOVA Chemicals is a subsidiary of International Petroleum Investment Company (IPIC), which is fully owned by the government of the Emirate of Abu Dhabi. NOVA made a $510 million special cash distribution to IPIC during the quarter, but Karran said IPIC continues to support NOVA's "2020" plan to capitalize on North American demand.

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