Phillips Petroleum to Commission $100 Million Polypropylene Unit in New Jersey

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Researched by Industrialinfo.com (Industrial Information Resources, Inc.; Houston Texas). Phillips Petroleum Company (NYSE: P) (Bartlesville, Okla.) is planning to start up a new 775 million pound per year Polypropylene (PP) unit this year at its refinery in Linden, New Jersey with mechanical completion during the third quarter and commercial operation in the early fourth quarter.

Construction for the new $100 million unit began in 1999 and is being carried out by Kvaerner (Bridgewater, N.J.) under an E+P+C/M (Engineering, Procurement, and Construction Management) contract. The unit will utilize UNIPOL technology, which Dow acquired last year in its purchase of Union Carbide. The project was originally scheduled for completion and commissioning in the spring of 2001 but many project delays and a soft PP market have contributed to its delayed startup.

When this project was originally approved in 1999, the owners were a joint venture consisting of Tosco Corporation and Union Carbide with Tosco Refining to be the operator of the new unit. Phillips purchased Tosco's refining business last year and Dow has elected not to take an equity position in the new capacity.

The facility will be made up of a single purification section and twin reaction producing homopolymers and random and impact copolymers, vent gas recovery and pelletizing. Larsen & Toubro Limited from India supplied three polypropylene reactors to the plant in 2000.

The deal has given Dow (Union Carbide) access to low-cost feedstock for its own operations as well as for wider market throughout North America. The resins produced are used to make a wide range of film, fiber and molded consumer and industrial products.

Phillips (Tosco) came to the deal partly motivated by the need to conform to the rigorous anti-pollution standards of Phase 2 reformulated gasoline (RFG) after 2000. Phillips is doing this by lowering the olefins content in its gasoline from Bayway, of which at least 85% must be RFG. Phillips can do this by removing the propylene alkylate that it now includes in its gasoline formulations, replacing it with butane when it can, and/or amylene alkylate. The joint venture will give Phillips an outlet for the propylene stream that is now being fed to its alkylation unit at the Linden refinery. Upgrading the propylene on site for use in polymerization is the cheapest solution.

The brownfield site next to the existing refinery suited both partners. They also received a bonus tax abatement from the local city authorities who saw the plant as important to the economy of the region.