Petrochemical Companies form Cracker of the Future Consortium and Sign R&D agreement

Companies to explore electrical cracking to potentially reduce greenhouse gas emissions

Six petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) today announce the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies have agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.

Base chemicals, which include ethylene, propylene, butadiene and BTX, are produced in steam crackers and mainly transformed into plastics. These are used for lightweight components in vehicles, improving passenger safety and comfort and reducing fuel and emissions. Plastic packaging saves and preserves food from field to table. Overall, polymers make a major contribution to resource and energy efficiency and positively impact society.

Polymers will always be needed, especially in emerging, renewable energy-related technologies, where they are crucial, for instance for wind turbines, solar panels and batteries. The chemical industry has been at the forefront of those innovations and will continue to deliver solutions for a more sustainable future.

Steam crackers represent the principal opportunity for reducing the industry’s greenhouse gas emissions. One option currently under consideration is to electrically heat the cracking furnaces, rather than rely on fossil fuels.

Using electricity produced from renewable sources would significantly reduce cracker emissions. The key challenges in developing electricity-based cracker technology are ensuring that the chosen emissions reduction solution is technologically and economically feasible compared to the current process; that it fits into a future low-carbon value chain; and that it can be implemented in time to meet policy targets. Assuming these challenges are met, developing and implementing electricity-based cracker technology will help the sector maintain sustainable operations while reducing the carbon footprint of its products.

Following the signature of the agreement, the members of the consortium have begun exploring and screening technical options. If a potential technical solution is identified, the parties will determine whether to pursue joint development project(s), including R&D activities that could include a demonstrator for proof of concept in the case of base chemicals.

Trilateral Strategy

The collaboration is a direct result of the Trilateral Strategy for the Chemical Industry drawn up by the North Rhine-Westphalian, Flemish and Dutch ministries of economic affairs and the industry associations VCI (Germany), Essenscia (Belgium) and VNCI (Netherlands) to boost the sustainability of the chemical sector. The Trilateral Strategy to “become the world ́s engine for the transition towards a sustainable and competitive chemical industry cluster” was presented to the European Commission (link) in late 2017. Three tables have been set up to elaborate strategy: Energy, Infrastructure and Innovation.

The Innovation Table has three key success factors: technical innovations to enable the energy- and feedstock transition, digital transformation to enhance competitiveness, and framework conditions to enhance innovation through cross-border cooperation.

Chemical Cluster

The trilateral region of the Netherlands, North Rhine-Westphalia and Flanders was a logical choice as a European starting point, since the combined region is the largest chemical cluster in the world with annual revenue of €180 billion and 350,000 jobs.

The six members of the Cracker of the Future Consortium, chaired by the Brightlands Chemelot Campus, aim to create innovative value propositions in developing sustainable technologies together in line with competition law.

‘This is a unique collaboration that aims to reduce our industry’s carbon footprint for the betterment of society as a whole, ” says Bert Kip, Chair of the Trilateral Innovation Table and CEO of Brightlands Chemelot Campus. “It demonstrates the commitment of our industry to collectively seek technological solutions to minimize greenhouse gas emissions from our operations. We are proud to have taken this first step together and look forward to the successes that lie ahead.”

REFS

Published on brightlands.com

Stora Enso will Convert the Oulu paper mill into a Packaging Board mill

Stora Enso has decided to invest approximately EUR 350 million to convert the Oulu paper mill in Finland into packaging production. The investment includes converting paper machine 7 into high-quality virgin-fibre-based kraftliner production, and the closure of paper machine 6 and sheeting plant. Production on the converted machine is estimated to start by the end of 2020.

“The conversion of Oulu Mill will enable Stora Enso to further improve its position in the growing packaging business and take a major step forward in its transformation. We have proven competence in running large conversion projects successfully, as we have already converted one paper machine at Varkaus Mill to produce kraftliner,” says Stora Enso’s CEO Karl-Henrik Sundström.

The typical end uses for kraftliner are in packaging segments that require high strength, quality and purity, such as food, fruit and vegetables as well as heavy duty packaging. Production will target global export markets.

“Economic growth, sustainability and food safety are key market drivers in the packaging business. This conversion will allow us to provide customers with an innovative kraftliner product with high-performance qualities in terms of strength, printability and food safety,” says Gilles van Nieuwenhuyzen, EVP, Stora Enso’s Packaging Solutions division.

To transform Stora Enso further from declining and low EBITDA business to growing higher profitability business, the Group will invest approximately EUR 350 million in the conversion during 2019–2022. This will increase the Group’s earlier estimated capital expenditure for 2019 from EUR 540–590 million to EUR 610–660 million.

The market dynamics of woodfree coated paper have deteriorated further, and therefore Stora Enso must accelerate its transformation by increasing capital expenditure from the earlier estimate.

Following the conversion, Oulu Mill’s EBITDA margin is expected to improve by 15–20 percentage points, once the kraftliner machine is running at full capacity approximately four years after start-up.

At full capacity, the investment is expected to meet the Packaging Solutions division’s profitability target, operational return on operating capital (ROOC) of 20%.

The investment will include a new world-class line for virgin-fibre based kraftliner (both brown and white-top) with an annual capacity of 450 000 tonnes, the modification of the pulp mill and drying machine for unbleached brown pulp, as well as investments to enhance the mill’s environmental performance.

The project will start with ground work in the summer of 2019, and about 200 contractors will work at the Oulu Mill site during the project.

The converted Oulu Mill will directly employ approximately 180 people. Wood consumption at the mill will increase by 0.5 million m3 to 2.4 million m3 annually. Wood will be purchased mainly from private forest owners in Northern Finland.

As an outcome of the co-determination process started on 25 March 2019, 365 people will be permanently laid off. The initial estimate on the maximum number of employee reductions was 400 people.

The redundancies will mainly take place by the end of year 2020, when Oulu Mill will cease to produce woodfree coated papers. Stora Enso will provide support to the people who will not continue working at the Oulu Mill after the conversion.

At maximum 20% of the redundancies can be managed through pension arrangements.

“We will be working closely together with other Stora Enso locations, the city of Oulu and other stakeholders to support in re-employment for those employees who will not have a position in the new organisation. Our support will include outplacement services as well as individual and group trainings for re-employment. We will also offer financial support for employees starting up their own companies,” says Kati ter Horst, EVP, Stora Enso’s Paper division.

Stora Enso will book a cost of EUR 31 million as an item affecting comparability (IAC) relating to layoffs, restructuring expenses, asset write-downs and impairment reversals, of which EUR 7 million will be recognised in the second quarter of 2019 and EUR 24 million in the following five quarters.

The restructuring related costs will have a cash impact of approximately EUR 19 million when paper production at the mill ends.

Oulu Mill’s current capacity is 1 080 000 tonnes of woodfree coated papers annually. Typical end-uses for woodfree coated papers are e.g. high-quality advertising and magazines.

Paper production is expected to continue until the end of September 2020.

REFS

Stora Enso will convert the Oulu paper mill into a packaging board mill