The explosion last week at Total Petrochemicals’ Carling, France olefins complex could have repercussions beyond the tragic loss of life that was the immediate outcome of the blast. The accident could hasten the permanent closure of the complex’s No. 1 steam cracker—the unit that exploded—as well as most of the complex’s downstream plants, according to speculation in the French press.
One French newspaper, Les Echos, says that the workforce at Carling was already resigned to the closure of the cracker in 2013, the scheduled date of the unit’s next maintenance turnaround, even before the accident. Total permanently shuttered the complex’s other olefins plant, cracker No. 2, earlier this year under a previously announced restructuring.
The Carling cracker is one of Europe’s least efficient, given its inland location, lack of integration with a refinery, and less than world-scale capacity. The cracker receives naphtha feedstock by pipeline from Total refineries elsewhere in France. As a result, Carling is regularly touted by industry analysts as a prime candidate for permanent closure when the full force of competition from the many world-scale, ethane-based plants starting up in the Mideast forces a restructuring of Europe’s petrochemical sector. Analysts’ other candidates for closure include Ineos’s G4 cracker at Grangemouth, U.K., a move Ineos says it is evaluating right now, and Fina Antwerp Olefins’ No. 1 cracker at Antwerp, which is already offline, having been idled “temporarily” for an indefinite period for economic reasons. Polimeri Europa announced plans earlier this month to take its Porto Torres, Italy, cracker offline for two months due to poor margins but it scrapped the plans when workers protested, and local and national government officials intervened. They feared that the two-month shutdown could be a prelude to a permanent closure.
Total has never said officially that the Carling cracker might close. Group CEO Christophe de Margerie told workers last week on a hastily arranged visit to the site that its near-term future was secure and Philippe Goebel, CEO of Total Petrochemicals France said in a press interview last week that he does not see the logic of a permanent closure in 2013. However, rebuilding the Carling cracker will be costly, given that a key section of the plant was virtually destroyed by the explosion.
Total consequently may have a tough decision to make. Should it invest to rebuild a plant that it was planning to close anyway? And, even if it is not Total’s intention to close the Carling cracker—or at least it was not until last week—what is the point of reconstructing a plant that will soon be drowned economically and financially by a tsunami of cheaply produced petrochemicals from the Mideast?
Key players in any discussions over the Carling cracker’s future will include Arkema and Ineos, the plant’s main customers. Arkema consumes propylene at an acrylic acid unit at Carling, and Ineos receives ethylene by pipeline from Carling for consumption at a polyethylene complex at Sarralbe, France. Arkema is in talks with Total on alternative supply sources of propylene, and Ineos may be able to obtain some of its required ethylene supplies at Sarralbe via an ethylene pipeline linking Total’s cracker complexes at Lavera and Feyzin, France with Carling.
A possible project to build ethylene and propylene pipelines from BASF’s Ludwigshafen complex to Carling could safeguard the long-term future of the Arkema and Ineos plants. The French government recently launched a feasibility study for the 150-km pipelines, but the project would not be completed until 2019. The study was welcomed by the regional authorities of Lorraine, France, where Carling is located—and by trade union officials—as a means of preserving the local petrochemical industry. But the authorities and unions voiced concerns that Total would use the pipeline project as an excuse to close the Carling cracker. Last week’s accident has perhaps given the company an additional reason to close the plant.