BP Rolls Out Process to Offset Europe Chemical Blues

(Corrects to clarify that research phase spans eight years in fifth paragraph of story published Nov. 7.)

BP Plc (BP/) is poised to roll out a new process for making acetic acid, a solvent used to produce plastic bottles, coatings and textiles, as the petrochemical maker turns to technology to counter weakened European markets.

The U.K. company is in the final throes of testing its SaaBre technology using different feedstocks than the established industrial process at a demonstration plant in Hull, England, and is poised to commercialize production, BP Global Petrochemicals Chief Executive Officer Nick Elmslie said at a briefing with media in London today.

The process can be used to produce the acid from alternative feedstocks, including natural gas, coal and eventually biomass. BP also announced a second an ethanol-based technology, Hummingbird, to produce ethylene, which would allow standalone plants in areas with access to ethanol like Brazil, to supply local petchems-based plastics industries with smaller volumes than the typical crackers required today.

“This is going to be very interesting for the market,” Elmslie said. “If you want a million tons of ethylene, you have to go and build a cracker in the U.S. or the Middle East. If you just want 100,000 tons, then it can be very difficult.”

Commercialization of SaaBre would culminate eight years of research, and the piloting of the technology at the site in Hull, acquired from Distillers in the late 1960s. With the advent of a more competitive U.S. chemical industry, BP is reversing an earlier reduction in research spending on petrochemicals as a means to develop niche products, Elmslie said.

Biomaterials

The company is looking to benefit from a trend among manufacturers of bottles to textiles for more environmentally friendly materials.

Ineos Group Holdings forced through an overhaul of its U.K. petrochemical facility to ensure its survival after it failed to generate a profit.

Refinery profits across Europe have declined amid increasing competition from larger, sophisticated new plants in Asia and the Middle East. The slump is also a consequence of the U.S. switching from being the biggest buyer of European gasoline to a competitor in export markets, as North American refiners benefit from a glut of cheap shale oil and natural gas.

BP may shut “the odd” smaller facility in northern Europe on the periphery of its petrochemical division, he said. A hot summer in Europe and warm weather in parts of Asia led to a pick-up in demand for materials used in water bottles, benefiting BP in the third quarter, Elmslie said.

Naptha crackers in Europe remain extremely stressed, he said. BP also produces paraxylene and purified terephthalic acid used in textiles and plastic containers for drinks and foods.

To contact the reporters on this story: Morgane Lapeyre in London at mlapeyre@bloomberg.net; Andrew Noel in London at anoel@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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