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NOVA Chemicals Expanding Ethylene Operations

In an effort to capitalize on emerging feedstock opportunities and growing North American demand, NOVA Chemicals Corp. is planning to build new polyethylene lines and expand ethylene production at two facilities, the Canadian chemical giant said Tuesday.

Calgary-based NOVA, which is a subsidiary of Abu Dhabi-based International Petroleum Investment Co. (IPIC), said it has begun feasibility and engineering work for the construction of two polyethylene lines at its sites in Alberta and Ontario and will complete studies for a further debottlenecking of a low-density polyethylene line at its Mooretown, ON, facility. The engineering and feasibility studies are expected to be completed by mid-2012, and start-up of the debottlenecking project and polymer expansions is targeted for 2014-2017.

To support the polyethylene expansions, NOVA said it will grow ethylene supply through the increased utilization of its Joffre cracker near Red Deer, AB, and expand its Corunna cracker, about 180 miles southwest of Toronto.

"This planned increase in ethylene production will be supported by emerging, cost-competitive feedstock supply from a diverse portfolio of new feedstock sources, linked to both shale oil and shale gas development, oilsand upgrading off-gases and expansion in supply from conventional ethane extraction capacity," NOVA said.

Williams recently signed a long-term agreement to produce up to 17,000 b/d of ethane and ethylene from oilsands off-gas for NOVA (Daily GPI, March 29). The expansion of two Alberta off-gas facilities, scheduled to begin operations in early 2013, would allow Williams to process off-gas from Alberta's massive oilsands operations in support of NOVA's operations.

In early May NOVA said it had signed a memorandum of understanding (MOU) with a subsidiary of Range Resources Corp. for a long-term supply of ethane from the Marcellus Shale for its Corunna cracker. That announcement came just days after Dow Chemical Co., the largest consumer of propylene in North America, and Range signed an MOU for Range to deliver ethane supplied from the Marcellus Shale to Dow's existing chemical operations in Louisiana (see Shale Daily, April 25).

Last week Fitch Ratings affirmed NOVA's senior secured bank credit facility rating at "BB+" and revised NOVA's Ratings Outlook to "Positive" from "Stable," based on NOVA's strong operating performance over the past several quarters and its significantly improved credit profile following its acquisition by IPIC.

"NOVA benefits from robust demand and tight supply in its core Olefins/Polyolefins segment, which mainly produces ethylene and polyethylene. The resulting favorable pricing environment coupled with low costs for light, natural gas-based feedstock enable high operating profits and margins," Fitch said.

NOVA recently reported 1Q2011 profit of $163 million, up almost 70% compared with $96 million in 1Q2010. Higher sales volumes in the olefins segments and selling prices that increase more than feedstock costs helped the Olefins/Polyolefins unit increase operating profit to $282 million in 1Q2011 from $185 million in 1Q2010, NOVA said.

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