IPC'18 Keynotes at International Petrochemical Conference

AFPM President and CEO Chet Thompson extended a welcome to over 3,000 attendees at the 43rd IPC; this year in San Antonio, and which this weekend will host NCAA’s Final Four basketball.  He noted that the state of our global petrochemical industry is strong, with robust and growing demand for products.  Projects in the US and China are abundant, and other regions like the Middle East and India are responding to a global increase in the middle class. The “Tax Cuts and Jobs Act” has lowered corporate tax, and the Administration is rolling back regulations that were burdensome but having little environmental impact. What is still needed from these US politicians is streamlining and certainty in project approvals, at every level of government.

AFPM supports free trade and has asked the Administration to abandon the idea of tariffs on aluminum and steel, which could escalate needlessly into a global trade war. AFPM also supports NAFTA: the trade in petrochemicals has tripled since it was signed in 1993, in San Antonio. The petrochemical industry is also under threat in several countries and localities that wish to ban plastic bags and packaging. Industry should face this head on, address the full life cycle of their products, and always be good stewards. So let us stop letting others define our industry and speak out: not so much about what we make and how, but why. Speak to how plastics preserve freshness, make durable clothes, improve fuel efficiency of cars through lighter weight – in general a force for better quality of life.

Finally, he asked us all to remember Jon Huntsman Sr – true gentleman, man of faith and conviction, who helped grow an industry and gave back to the community in myriad ways.

22nd Petrochemical Heritage Award to Gary Adams
This award was in recognition of Gary’s contribution to the industry, particularly when he headed up Chemical Markets Associates Inc (CMAI) which was acquired by IHS in 2011 and became IHS Markit. He was known for his insightful questions and helped shape regulations and the industry. In accepting this prestigious award, Gary first credited the Science History Institute, and its role in helping our industry realize that problems have been solved in the past and will be in future. He noted that the Founders Club, founded in 1983, was instrumental in getting the IPC established as an event separate from the annual NPRA meeting. Note NPRA, founded in 1902, although renamed American Fuel and Petrochemicals Manufacturers, is now truly global in an increasingly interconnected world.

Gary also credited his wife Carol as his secret weapon – her skill in engaging dinner guests in an informal interview, which helped share the values and beliefs they both held. He acknowledged Jon Huntsman as a beacon for our industry, and for life. The best way we can recognize him is to keep doing things the way he would have: continue to attract good people, starting with investing in STEM education.

In his career with CMAI, he learned a lot from involvement in regional petrochemical associations, particularly in Europe with their professionalism, and in Iran with their passion for trade liberalization. He was most proud of how CMAI, as not representing any supplier, could sit down with politicians and regulators to share insights on god business practices and sound science.

Panel Discussion – Feedstocks, Energy and Capex: Who Has the Real Advantage?
A moderator and three panelists shared viewpoints on the following topics: supply and demand balance, Capex including infrastructure, competitiveness of US shipping, ethane preference.
Short-term supply & demand show China as dominant in demand, but that could change over time, so flexibility is important. Decision-making on China is not always clear: e.g. shutting a plant for months, rather than run it at a reduced rate: it may relate to having state investors vs. private investors. On the supply side, US has a long-term advantage in NGLs which helps to feed China’s petrochemical industry which has a higher proportion of propylene and its derivatives, compared to using ethylene and its derivatives in most other developed economies. Feedstock export has changed since earlier days when the US did not have sufficient petrochemical terminals. What feedstocks get shipped may change further e.g. mixed ethane/propane, so shippers need to remain flexible.

 China in its drive for self-sufficiency has also invested in coal-to-olefins and methanol-to-olefins, although newer environmental regulations are making coal-based projects more expensive. Reliability in CTL and MTL, for which the technology has only been around since 2010, needs to and should improve. Over time, if free trade prevails, China’s current Capex and labor cost advantage should come to parity with the rest of the world, as labor costs rise with middle class incomes. Chinas still outperforms other countries in getting projects built on-time. The often-cited Capex advantage may not include costs outside of the process and utilities, such as port and rail. Whether to export liquids or pellets is also a determinant in where to locate a plant.

Panel Discussion:  Government Policy as a Factor in Locating Operations
The CEOs of AFPM and three of the member companies tackled the following topics: factors that impact siting, what US regulations should change, tax reform and tariffs, Gulf Coast vs other locations, immigration policy.
Each CEO has comprehensive internal review for siting, in which government regulations, particularly delay and uncertainty – although not the dominant factor – could make the difference between one location and another. The regulatory impact goes down to the state and local community level, being welcome and seen as being able to contribute to the local economy can overcome initial concerns.

Having an established area infrastructure, including storage, rail, pipelines and ports, has helped US plants to be concentrated on the US Gulf Coast. When asked about other locations, the panel did not dismiss the potential to build sites in the US Shale Crescent or Alberta – but perhaps after more such supporting infrastructure is in place. Constructing in a non-attainment area adds costs, mainly for credits which still are priced high.

Finally, it remains to be seen if the skilled workforce in the US can also achieve on-time projects. The lack of a guest worker program continues to hurt projects in the US, and difficulty in striking the right balance between expat and local workers around the world.

This summary covers the first morning, and our HP editorial team will produce more coverage for IPC’18, freely accessible as posts on our website at www.hydrocarbonprocessing.com/conference-news

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