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US-based TPC Group supports North American crackers in processing their co-product crude C4 streams. The company is also a producer of methyl tertiary butyl ether (MTBE) and gasoline feedstocks. Argus spoke with Ed Dineen, the chief executive officer, on the state of the industry. 

How would you describe the state of the petrochemical industry in 2024 and what lies ahead for TPC?

The industry is definitely in a recovery mode. Our demand is up. We had a good year last year, but it was not so good particularly for the chemical markets. Our fuels business was good, and our business model insulates us from some of the commodity swings that we saw or declines that we saw last year. Our BD (butadiene) demand for first quarter was up about 20pc from what it averaged in the second half of last year. Our polyisobutylene businesses is up strongly as well… We have an expansion coming on in the third quarter of this year, adding roughly 180mn lb/yr of BD capacity in our Houston plants. We've also been successful in 2023 in terms of incremental capacity additions that don't really involve capital investments. We literally added 17pc to our BD capacity and in 2023 on a volume basis with operational improvements for BD, diisobutylene, and hydrotreating capacity. 

TPC has made huge strides in restoring financial stability in the last few years. Are there any recent steps or updates that you would like to highlight? 

Our balance sheet is in great shape. Our net debt to EBITDA is probably around 0.6. Usually less than three or four is considered good. There were years when we were well over 10. Balance sheet wise we're very strong, liquidity is very strong. We are buying back $50mn of debt…Last year we used some of that liquidity to buy out our second largest shareholder.

How has lighter cracking in the US the last several months impacted your supply of feedstock crude C4? How do you meet the challenge during times of light-feedstock cracking? 

For a number of years now, we just assumed it's going to be ethane cracking…That sets the basis for the crude C4s that we think we're going to get. (This) in turn sets the basis for how much butadiene we need to sell. Our BD volumes are up, and those can't go up without crude C4s going up. We have sourced more contractually, and we're buying spot material where we can find it. We still have capacity in our system. We're adding capacity with the plans we have this year and the continued partnership we have with BTP (BASF-Total Petrochemicals). We’ll have more than sufficient capacity to handle the new crackers that are coming on in the 2026-27 timeframe. We'll be able to handle that if we're successful in contracting with those who are building new crackers now, Dow in Canada and CP Chem in east Texas.  

Of the growth prior to the expansion that we have in the third quarter, where is the bulk of that growth? Is it on BD? 

I say BD, but we also we have hydrotreating—that unit we've expanded about 20pc in 2023. In our five-year plan, we think we can expand it another 20pc. We can either take crude C4s and separate the BD to make BD or we can take the crude C4s and make more raffinate. And frankly in 2023 it was better economics to make raffinate than BD, because BD prices have declined. That's changing. We (also consider) the contractual commitments we have—we need to fulfill our BD customers’ demand. But we do have the flexibility at times to shift between chemical markets and fuel markets. That's one of a number of factors why we had a good year last year because we were able to use that flexibility and move material around. 

In the long-term, we feel BD is going to be the more valuable product, but there will be times when the fuel markets or raffinate are going to have more value. We now have greater capability to shift between those markets. BTP also has hydrotreating capabilities so we're talking about yet another option that that we could have. 

And is that in the early phases at this point with BTP? 

Yes, we do have the partnership, and we are extending the partnership. And then we're talking about possibly broadening it beyond crude C4 processing to include some hydrotreating capability. 

And the hydrotreating for BTP is more to yield propylene? 

It’s metathesis driven, but we think there's a fair amount of excess capacity in that unit.  

We were curious about the timing of the Louisiana/southwest Texas BD expansion project. Did it primarily have to do with permitting and completion of the project or as you know is it also market driven, especially considering the crude C4 shortage? 

No, the timing is not influenced by those market conditions. In this business, you're going to have short-term moves up or moves down. The timing was primarily driven by our putting additional environmental controls on our boilers, and that needs to be complete before we can fully implement the debottleneck. 

Is TPC still on track to surpass the company’s production output pre-Port Neches closure?  

This year we'll process 20pc more crude (C4) than what we had back in 2019. But it’s not all butadiene production, because we've got the hydrotreating capacity. We've put the BTP partnership in place, and we've moved that up in volume. We're expanding Houston. We have hydrotreating. The collective of all that is actually greater than where we were back in 2019. We're proud of that.  
What are TPC’s futures plans for the MTBE unit in Houston?  

The plan is to keep producing MTBE. It’s been a great business particularly most recently. We have no plans to exit it. We are creating more optionality in the business. Next month we'll be wrapping up what we call FEL-2 on a propane alternative where we could make propylene. We view that as an option, so it's not it's not in our plans to go ahead and implement that. But if markets change, if we see things going in a different direction, we could have the ability to do that. We think it's very capital-advantaged versus building a grassroots PDH (propane dehydrogenation) unit. We also can take the isobutylene and put it directly into raffinate. And that gives us some different outlets. But right now, our base plan for the next five years is that we're going to be in the MTBE business.  

How will you make your decision on whether to FID a new PDH unit on the US Gulf coast? 

If we could market the propylene on a sort of propane-plus basis to help reduce risk. We've done a great job of reducing commodity risk in this company. For example, if you said that BD prices would drop by 80pc, you would think that TPC would have been in a world of hurt. We were not, because of the business model we have. The area where we still have commodity exposure is the MTBE business. Now recently that's been good commodity exposure because it's been higher. It’s not always going the case. That would be one factor--if we were confident that we could market the propylene on a basis where we took more risk out for our company. Obviously, we're doing the FEL-2 to get a better handle on the capital. That's another consideration and then obviously, the view of the long-term MTBE markets is a factor too. It would have to add value above the MTBE value.  

You said you’re not getting out of the MTBE business, but how do you see demand for MTBE in the coming years? 

We have a partnership with one of the biggest marketers and blenders of gasoline… We think there's going to be continued demand, because it's very good octane and very clean burning. A lot of people prefer it in gasoline compared to the oxygenates and alcohols. 

Are there any other things you would like to highlight about TPC and its future? 

We are spending a fair amount of capital this year, around $125mn. Some of that's on the boiler conversion that I mentioned, the controls, restoring our technical center at the Houston site, and a lot of risk mitigation projects… This is probably the peak for us in terms of capital expenditure unless we do a project like the PDH. That would be a big capital project, but generally we see the capital spending trending down because we're completing a lot of the risk mitigation projects and rebuilding the infrastructure. These are things that you don't need to do every year— once you rebuild all the cooling towers, they should last 20-30 years. 2024 is a heavy capital spend year for us.  

Ed Dineen picture


By Michael Camarda and Angie Joe