Shell and CNOOC Sign Deal to Enter Commercial-scale Polycarbonate Production
2020-01-14    []

Shell says it has signed a memorandum of understanding with CNOOC Oil & Petrochemicals Co. (CNOOC; Beijing) to build what would be Shell’s first commercial-scale polycarbonate (PC) production unit, using newly-developed Shell technology, at the companies’ Nanhai joint-venture petrochemicals complex at Huizhou, China. The project is "a very clear proof point that Shell will continue to grow in chemicals, and grow more in performance products and differentiated products," Thomas Casparie, executive vice president/global chemicals at Shell, tells CW.

Shell says it has started constructing a development unit for the new, patented PC technology at the company's Jurong Island petrochemicals complex in Singapore, as an interim step. The development plant is scheduled to start up in 2021. Casparie says he is "confident" the company will reach a final investment decision on the commercial-scale PC plant, which would be a single-train unit with a nameplate capacity of 260,000 metric tons/year. This is the largest single-train PC plant that can currently be built worldwide, Shell says.

 The new technology is based on diphenyl carbonate (DPC). Shell says it has developed the technology in recent years to achieve significant advantages in cost, safety, efficiency, and CO2 footprint. Shell will combine its DPC technology with melt-phase PC technology licensed from EPC Engineering & Technologies (Arnstadt, Germany), it adds.

 IHS Markit analysts say the PC market in China is in oversupply due to numerous capacity additions, and they estimate a worldwide PC surplus of about 1.6 million metric tons (MMt) annually in 2020-24, despite robust demand growth. However, Casparie says the cost advantages of the DPC-based technology would enable the plant at Huizhou to be competitive even in these challenging market conditions.

 "Chemical value chains are very cyclical," Casparie says. "Capacity additions are more 'lumpy' than overall demand growth. PC is no different, so it's important to have a competitive advantage. We believe we have that, both in terms of capital costs and especially in efficiency and energy use."

 The PC plant at Huizhou would benefit from China's low construction costs and from feedstock integration with the rest of the Nanhai complex, which produces the key raw materials phenol and ethylene oxide, Casparie says. "We believe the plant would make money in a down-cycle," he says.

 One important environmental advantage is that Shell's DPC route to PC does not use phosgene, which is used in the traditional technology for producing PC from bisphenol A. The main advantage is that the new process uses CO2 so has a lower carbon footprint, Casparie says.

“We have an advantaged route to production and are looking at investment in a number of commercial-scale units to serve the growing number of polycarbonate customers,” says Casparie. He declines to comment on specific locations for additional plants, but says "our ambition is to enter the PC market with not just one unit. Ultimately our desire is to grow from here."

Shell’s planned PC production units will also produce alkyl carbonates, used for lithium-ion batteries, it says.

 Shell estimates the worldwide PC market at 4 MMt, with China accounting for about 50% of the total.The company estimates worldwide PC demand growth at 4%/year with the Chinese market growing at about 4.8%/year.

The Shell-CNOOC Nanhai petchems complex is the largest single-site ethylene complex in China, also producing a range of derivatives, and has been highlighted by Shell as key to the company's growth ambitions in chemicals.


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