GPCA '11: Dubai’s MEGlobal invests up to $50m in Canada MEG plant

14 December 2011 08:14 [Source: ICIS news]

DUBAI (ICIS)--Dubai-based MEGlobal is investing $40m-50m (€30m-€38m) to improve the conversion efficiency of its monoethylene glycol (MEG) plants in Alberta, Canada, the firm’s CEO said on Wednesday.

The company’s board has approved the capital investment for the project and the improved facilities are expected to start up in the summer of 2014 following a two-week turnaround, Ramesh Ramachandran, president of MEGlobal , told ICIS on the sidelines of the 6th GPCA forum in Dubai.

MEGlobal is a joint venture between Dow Chemical and Petrochemical Industries Co ( PIC ) of Kuwait that was set up in 2004. It markets 3m tonnes/year of MEG globally, including about 1m tonnes it produces at its three plants in Alberta.

Ramachandran said: “We are making a reasonable size investment of somewhere between $40-50m in our assets in Canada, primarily to improve operating efficiency.

“Conversion efficiency is going to improve so we are going to take the same amount of ethylene and produce less carbon dioxide which is a by-product.

“So we will make more glycol from the same amount of ethylene. It’s a substantial investment on the reactor design and on the catalyst.”

Ramachandran declined to elaborate on the extent of capacity increase that would result from the new investment.

But looking ahead, Ramachandran said that the company will have to build a new MEG plant “at some point”.

“There are no doubts about it. We are looking, but we have nothing to announce at this stage,” he said.

Separately, the company is supportive of the recent trend of producing bio-based MEG from ethanol but Ramachandran said the economics of producing the material from natural feedstocks needs to “satisfy the requirements needed to make a large capital investment”.

He said: “We will do everything possible to support the sustainability trend in [producing] MEG,” adding that the company is excited and “very supportive” of customers’ shift towards the use of bio-based feedstock.

But economics and “thermodynamics” have to coexist for bio-based MEG to succeed, he said.

For 2012, demand for MEG globally is expected to grow about 5-6% but the industry will be off to a slow start next year, according to Ramachandran.

“Once we get past the early Chinese New Year [celebrations] we think demand will start picking up again at a very brisk pace,” he said.

China will continue to drive the global MEG market, accounting for about 40-45% of overall demand, according to Ramachandran.

“China will continue to grow because of the polycondensation capacities that are coming on,” he said.

“Even to start up these plants they are going to need a lot of glycol so, for these polyester factories that need to start up just front-loading, it will require a lot of glycol which means with no new capacities coming on stream the market is going to be tight.”

MEG is widely used as automotive antifreeze and as raw material in the production of polymers, mainly polyethylene terephthalate (PET).