Nitrogen+Syngas 368 Nov-Dec 2020
30 November 2020
2020 A tumultuous year
YEAR IN REVIEW
2020 A tumultuous year
A look back at some of the major events of 2020 for the nitrogen and syngas-based industries, as well as a look forward as to how 2021 might look.
This year has certainly been one of the most eventful in living memory, as the world has faced the huge disruption and loss of life brought on by the coronavirus pandemic. The virus has confined people to their homes for extended periods and shut down all manner of ‘normal’ economic activity, from long distance travel to – on occasion – routine visits to restaurants or attendance at concerts or sporting events. Beginning in earnest in China in February, and moving on to the rest of East Asia, as well as Europe and North America by the end of March, the pandemic led to extended ‘lockdowns’ for billions of people, and still continues to work its way around the world, with South America and India now badly affected, while the colder months in the northern hemisphere and more people spending time indoors are feeding a ‘second wave’ of cases in Europe and America.
The effect upon economies has been profound, as much of normal life has been forced to shut down. Oil and gas prices have slumped as demand has fallen, and most of the world has spent the year in recession. For the chemical process industries, much of the disruption has been via the almost complete shutdown of international air travel and associated quarantine regimes that mean people are simply not able to travel. Face to face conferences have become a thing of the past, and we have all had to become familiar with the ins and outs of video conferencing, with all of its foibles. Engineers have not been able to go to sites to oversee plant construction or start-ups or deal with production problems, leading to a much greater emphasis on the kind of digital plant services that we highlight elsewhere in this issue.
Ammonia
On the market side, most governments have moved to try and protect farming and agriculture, and being an outdoor activity that lends itself to social distancing, the impact of Covid-19 on fertilizer demand has not been great, although restrictions at ports have led to some dislocations in the supply chain. However, periodic shutdowns or operating restrictions at industrial sites have led to a fall in demand for technical nitrogen. The reduction in demand has collided with an already oversupplied market, and while as prices have fallen, so some plants have been forced to idle. Some of these were temporary shutdowns, but some not. While Nutrien said that the idling of its PCS-02 ammonia plant on Trinidad in May was temporary, in September it announced that the PCS-03 ammonia plant at the same site would be closed down “indefinitely”.
Methanol
New methanol capacity during 2020 came on-stream at Bushehr in Iran (1.65 million t/a) and on Trinidad, where the Caribbean Gas Chemical Ltd facility will produce 1.0 million t/a at capacity, with a small DME side-stream. Two smaller new plants in India are also in commissioning. Covid had a major impact on methanol markets; use of methanol for fuel blending as well as in other fuel end uses like MTBE was constrained by the fall in car use. Falling oil prices and rising coal prices in China also impacted upon the economics of methanol to olefins production, the main driver of Chinese imports. Methanol prices nosedived, and a wave of temporary shutdowns began, led by Methanex, who idled their Titan plant on Trinidad in March, and their Chile and New Zealand plants in April. MHTL also idled their number three methanol plant on Trinidad in April. Other investment decisions were postponed – work on the 1.8 million t/a South Louisiana Methanol plant was halted in April, and Methanex deferred work on its third plant at Geismar.
Urea
In spite of the pandemic, new urea capacity has continued to enter an already oversupplied market. In Egypt, the new KIMA plant at Aswan began production in the second quarter, with a capacity of 400,000 t/a of urea. Ramagundam Fertilizers and Chemicals Ltd at Ramagundam in India followed in June, adding another 1.27 million t/a – part of the new wave of Indian urea capacity, and the huge Dangote complex began producing urea in September, after start-up was deferred from March by the Covid pandemic and a shortage of available engineers – this will ultimately ramp up to a full capacity of 2.6 million t/a.
There have been some shutdowns as well – Petrobras closed its final remaining 650,000 t/a plant at Araucaria in Brazil in January, and the rationalisation of Chinese urea capacity continued, balancing new capacity somewhat, but the market remains oversupplied. Even so, there were some bright spots on the demand side of the equation – India had a good monsoon season and record demand for urea, importing 5 million tonnes in July alone, and leading to predictions of record imports for 2020 as a whole. Brazil’s imports also continue to rise, both due to rising demand and falling production as plants are idled.
Sustainable production
Outside of the short term, this year has seen terrible bushfires rage first in Australia in January, and then across the west coast of the United States in September and October, a reminder of the extreme weather events that we face as atmospheric CO2 levels rise. China has unveiled new targets on carbon reduction, and the focus on sustainable chemical production has continued to intensify. This year we have reported on reducing the CO2 intensity of hydrogen production (July/August), low carbon methanol production (Jan/Feb), hydrogen for fuel cells (July/August), and green ammonia production and sustainable nitrate production (May/June). There has also been increasing interest in ammonia’s use either as a hydrogen carrier to bridge the gap between renewable electricity sites to final consumers, and even as a clean-burning marine fuel.
Beirut
Sadly, the year has seen tragedy over and above that provided by Covid-19. In August, the explosion of an estimated 2,700 tonnes of ammonium nitrate being stored in the port of Beirut once again threw an unwelcome spotlight upon the AN industry. Outside of a few investigations into how existing stocks of AN are being handled in a few countries, there do not currently seem to be any new restrictions in train, but it is a salutary reminder of the risks that the industry must continue to try to mitigate through good practise.
Technology
Other technological developments in 2020 included Haldor Topsoe’s launch of its new TITAN reformer catalyst range at the Nitrogen+Syngas conference in the Hague. We also reported on a new ammonia synthesis catalyst developed by Casale/Clariant in the March/ April issue. In our July/August issue we reported on how new technologies and digital solutions are making construction sites safer, and in Sep/Oct we reported on different approaches to solving problems in nitric acid plants (see graphic from this article, right).
Next year
Unfortunately, in spite of a massive global push towards finding and delivering a vaccine, it looks as though Covid is going to be with us for most of next year as well. Intermittent lockdowns and restrictions are sure to continue, and although industries have mostly managed to find a way of working around restrictions for the time being, it’s sure to continue to dampen down any recovery in the short term. Governments have borrowed heavily to support populations unable to work, and may be reluctant to commit to large investments until they see a clear end in sight.
However, an overhang of current builds is still out there, and much more urea capacity is due to come onstream next year. Of India’s five government-sponsored projects, following this year’s start-up at Ramagundam, three more plants are due to begin operations next year. The Gorakhpur, Barauni and Sindri plants were reported in August to be 80%, 74% and 73% complete, respectively, and are all looking at start-up in 2021, each with a capacity of 1.3 million t/a. Brunei Fertilizer Industries is also due to complete a new 1.3 million t/a urea plant next year, adding to the glut of capacity in the urea sector. It remains to be seen however whether 2020-21 produces a hiatus in capacity building that may rescue oversupplied markets.
