INTERVIEW: TPC Group increasing butadiene capacity: CEO

TPC Group's southeast Texas petrochemical complex severely damaged by a pair of 2019 explosions is a fully functional terminal, and the company aims to expand its Houston butadiene plant's capacity by 20%, CEO Ed Dineen said March 31 in an interview.

"We feel pretty good about how this plan is unfolding," he said.

The Port Neches site, which had made 20% of US butadiene supply, shut down after the November 2019 explosions damaged the butadiene processing facility, sending one tower high into the air. The explosions damaged surrounding tanks as well.

Butadiene is used to make synthetic rubber and resin. The Port Neches site could produce more than 426,000 mt/year of butadiene and raffinate before the blasts.

In February 2020, the company said TPC was evaluating and planning to rebuild parts of the complex in the coming years, but would operate the site as a terminal in the interim.

Throughout 2020, TPC then forged a deal with butadiene producer BTP, a toll processor with 410,000 mt/year of butadiene capacity, to buy those volumes to fulfill sales obligations. TPC provides logistics and storage facilities to supply a steady stream of crude C4s to BTP, which extracts butadiene and raffinate to TPC for distribution.

BTP also has an import terminal, where TPC receives butadiene mostly from Asia for the company and its customers.

As for rebuilding butadiene processing capacity at the Port Neches site, he said TPC's evaluation showed a rebuild would be expensive and take up to five to six years to complete.

The company has pushed those plans back, awaiting word on future US ethylene capacity additions and further study, while focusing on expansions of current operations. Dow Chemical is planning to build a net-zero carbon emissions ethylene and derivatives complex in Canada, and Energy Transfer Partners has contracted with KBR to provide license and engineering for a new olefins production facility to be built on the US Gulf Coast.

"Once those plans are a bit more solidified, we would take steps to add more crude C4 processing capacity to support the new ethylene plants," Dineen said.

In the interim, TPC is increasing butadiene processing capacity at existing facilities.

BTP will increase output once the company wraps up a turnaround in May, Dineen said. The company has ramped up a hydrotreater at its Houston complex that had been underused that can take crude C4s and make raffinate to service crude C4 suppliers. And TPC aims to increase output at its 544,310 mt/year butadiene unit in Houston by 20% by Q1 2023, pending permit approvals.

Butadiene markets seen strong in 2022

Regarding butadiene market conditions, Dineen said he sees global prices remaining high in Asia and Europe, which depend on naphtha to feed crackers. Naphtha prices have strengthened alongside crude, while ethane-dependent regions like the US see a wider advantage of lower ethylene prices.

He said cost pressures in naphtha-dependent regions were seen prompting ethylene rate cuts, particularly in Europe where some producers saw negative margins with the sharp runup in naphtha prices.

That has reduced global supply of crude C4s and butadiene, Dineen said.

TPC has not faced issues securing import butadiene supply despite logistics and vessel space logjams that have arisen for other petrochemicals, he said.

But those issues, which have stymied US resin exports, could prompt resin production rate cuts -- and upstream ethylene production cuts -- in the coming weeks or months.

"So far we haven't seen cracker operating rates decline yet, but at some point that could be a bigger issue," he said.

Automotive demand is seen strong through 2022 as well, he said.

TPC met with tire producers recently, who were "pretty bullish," not just for new cars but also replacement tires.

"We're running our capacity flat-out," he said.