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Document Number: 

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A-90-19 

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jj NEWS A-90-19 

H-l-73 

DIVIDING THE CHECK 

FOR CLEAN AIR 

A Clean Air Act proposal by Rep. 

John D. Dingell (D.. MI) could levy a 

sizable emissions fee on industrial boilers operated by the chemical industry 

and other manufacturing companies in 

the U.S. The House Energy and Commerce Committee, which Dingell chairs, 

has primary jurisdiction over the Clean 

Air j^ct. 

The Dingell plan would imposea 10-

year tax of S55/ton on industrial boiler 

emissions that emit more than 100 tons/ 

year of sulfur dioxide (SO J. A $45/ton 

tax would be levied on utilities. According to the Environmental Protection Agency, the U.S. industrial sector 

emits about 5 million tons/year of SO,, 

while utilities give off about 15 million 

tons/year. Fees would apply to cogenerators and independent power producers and government facilities, while 

boilers operated by hospitals, colleges, 

universities, or residential apartments 

would be exempt. 

The proposal is part of Dingell's plan 

to spread the costs of acid rain controls 

expected to be borne primarily byMidwestern utilities, J^ bill proposed 

by President Bush, on the other hand, 

requires utilities to foot the bill for 

equipment purchased or actions taken 

to reduce emissions. The White House 

opposes any cost-sharing plan based on 

a fee or tax to industry. 

For years, the cost-sharing issue has 

ensnared Congress in regional 

squabbles. Legislators from Midwestern states believe acid rain control costs 

should be spread evenly among all states 

rather than just the heavier polluters. 

Legislators from states with cleaner 

emissions want credit for cleanups they 

havp already paid for. 

The chemical industry is still studying Dingell's proposal. Mark Nelson, 

director of legislative affairs for DuPont, 

says an emissions tax would prompt 

industrial sources to switch to cleaner 

fuels like natural gas. But another observer says instead of trying to spread 

around the cost of the clean air bill, 

lawmakers should be trying to reduce it. 

Dingell says he offered the plan 

because he is concerned about increasDingell: Spread the cost of acid rain. 

ing acrimony among committee members over acid rain. He warns that the 

issue "has the potential to turn close 

friends into lasting enemies and divide 

this committee on many issues for years 

to come." 

CONRAD B. MACKERRON 

in Washington 

SHELL PLANS 

FOR MORE 

EO/EG 

Shell Chemical (Houston) is poised 

to announce a major increase in its 

U.S. ethvlene oxide/ethylene glycol 

(EO/EG) capacity. Sources say the 

company is close to a final decision on 

a plan to build a new 450-million lb/ 

year EO/EG facility, probably at its 

existing production site at Geismar. 

LA. 

The company's 830-million lb/year 

EO capacity at Geismar is being expanded to 870 million lbs/year. If approved, the new unit would start up 

around 1993. pushing Shell ahead of 

Texaco Chemical (Bellaire. TX) as the 

second-largest EO producer behind 

Union Carbide (Danbury. CT). 

Sources say the EO unit will be 

slightly larger than necessary so it can 

support an EG unit plus production of 

otherdcrivatives. and ensure merchant 

availability. Supply of EO to the mert-.hani market has beon decroasingsince 

several majors decided to up EO derivatives production. 

Texaco Chemical and Union Carbide, formerly major suppliers to the 

merchant EO market, already announced withdraw from merchant business sales. They plan to increase production of other EO derivatives, particularly fiber-grade ethylene glycol for 

export, and ethanolamines. 

Shell is a supplier to the U.S. merchant EO business, and combined capacities of its two existing EO plants 

exceed captive demand. The merchant 

SLOWING GROWTH IN 

NORTH AMERICA 

fm billions of pounds) 

1989 1991 1995 

Ethylene oxide 

Capacity 

Demand 

Utilization 

Ethylene glycol 

Capacity 

Demand 

,, Utilization 

Soute Tacnon iU K • 

8.05 

7.28 

90% 

7.58 

6.06 

80% 

lonoom 

8.58 

7.69 

86% 

8.06 

6.36 

79% 

10.63 

8.45 

80% 

10.35 

6.96 

67% 

market is already small, at under 10% 

of total production, with buyers mainly 

the merchant ethoxylators who use EO 

to make detergent intermediates. 

"The merchant EO market has been 

extremely tight." comments Marilyn 

Bradshaw. business manager at Colin 

A. Houston & Associates (Mamaroneck. 

NY). "Some ethoxylators ... are unable 

to obtain sufficient EO." 

Shell, the only producer integrated 

into EO and detergent alcohols, is 

dominant in ethoxylation. But Texaco 

and Ethyl's (Baton Rouge. LA) recent 

tie-up also gives them an integrated 

position. 

EO prices have remained remarkably stable this year, in contrast to tabs 

of many other commodity chemicals. 

While there has been some slight wear, 

ening in prices, contract tabs have 

dipped only recently, from about 60 

cts lb to about 55 cts/Ib. and are expected to stay firm much of nexi 

Carbide has dominated EO expansion headlines with its plan to si 

S400 million to increase total EO/EG 

capacity by 1.2 billion lbs/year. Thr 

company is doubling capaciiv ul It* 

EO EG unit at Taft. LA to 950 milln»n 

lbs year and adding 800 million lbs' 

12 Crtemicaiweek NovemDe' '5 1989 
P.3 
I -NEWJi 

year to EO/EG capacity at Prentiss. AB. 

But despite the opportunity for 

merchant EO sales, the likelihood of 

another new EO/EG plant raises worries about overcapacity in the EG market. Tabs have been drifting in a weak 

market; producers have been cutting 

contract tabs to 40 cts/lb, and spot 

prices are 10 cts/lb below that level. 

Roger Lee, a consultant with Tecnon 

(U.K.) (London), says. "In North America. MEG utilization rates are at about 

80% in 1989 and should stav around 

that" levej until 1991/92." But if all... 

scheduled expansions for EO/EG come 

on stream, he adds "utilization rates 

could drop down to 67% by 1995." 

ANDREW WOOD 

USSR DEVELOPS 

FREE-MARKET FEVER 

The Soviet petrochemicals trading 

firm Neftechimexport is putting together 

the first limited trading company in the 

USSR. The company, to be called Naftek. will group together more than 50 

petrochemical and synthetic rubber 

complexes with the aim of developing 

overseas trade and coordinating investment. 

Major chemical production complexes such as those at Tomsk. Omsk, 

Tobolsk, Ufa, Angarsk, and 

Nizhnekamsk will come under the aegis of Naftek, to be headed by Valerie 

Kuzmin, director of Neftechimexport. 

In addition, Naftek will incorporate a 

string of smaller units and the Moscowbased bank. Neftebank. 

The creation of Naftek is a major step 

in transforming the Soviet chemical 

industry into a market-oriented sector 

of the economy. It follows the merger 

earlier this month of two ministries, 

covering chemicals and oil refining and 

petrochemicals, into a single unit. During a recent visit by a high-level Soviet 

delegation to West Germany, Victor 

Rudnev, general director of 

Soyuzchimexport, the state export organization, said he believes that in the 

future central planning will play a reduced role in the chemical sector as 

well as in the wider Soviet economy. 

"A major reorganization of the Soviet chemical industry is now under 

way," he says. Enterprises will be increasingly geared to self management 

and financing, he adds, with the government only playing a role in projects 

too large for one entity to undertake. 

Rudnev was in Dusseldorf for the 

15th anniversary celebration of Sobren. 

a joint venture of Soyuzchimexport and 

West German companies. The Soviets 

have similar ventures in Austria. Belgium. Finland. France. Spain, and 

Sweden. Talks are also under way on a 

new Soviet trading venture in the U.S.. 

as well as in India and South Korea. 

Such ventures are expected to be useful 

in the opening of foreign trade, thanks 

to their knowledge of conditions and 

laws in the Soviet Union. 

Last year Soyuzchimexport did 12% 

of its business through overseas ventures, and Sobren accounted for onequarter of that. Since last May Soviet 

enterprises have been allowed to trade 

directly on foreign markets, which could 

reduce the amount of business handled 

by Soyuzchimexport. In addition, separate agencies have been set up for fertilRestructuring 

aims at 

increased 

foreign business 

izers, methanol, and crop-protection 

products—Soyuzagrochimexport—and 

for petrochemicals—Neftechimexport. 

But Rudnev says experience shows 

there won't be too much impact on 

Soyuzchimexport, and the company still 

has pacts with about 80 enterprises 

covering trade on foreign markets. 

In Dusseldorf, Adolph Smirnov, 

director of Kirishineftechimexport. a 

major aromatics trader and producer, 

said two joint ventures are under discussion with Western partners. Those 

include a possible detergents project 

with Italian and Yugoslav firms and a 

lubricants venture with a U.S. company. Kirishineftechimexport is also 

planning to build a new aromatics plant 

in the USSR. 

Sabyr Sandybayev. director of the 

AktiubinsR chemical plant in 

Kazakhstan, says his company is discussing boron compounds development 

plans with Mir Prace of Czechloslavakia and Chinese firms. The company 

produces sulfuric acid, oleum, single 

superphosphate, boric acid, and boron 

compounds. Genadii Goroboi. deputy 

director of Association Suyuzreactiv. is 

also interested in improving business 

with the West. 

Updating the the Soviet chemical 

investment program. Rudnev confirms 

that financing and growing unease about 

ecological issues—particulary in western Siberia—have hampered the larger 

projects. "Perhaps our Greens are 

greener than yours," Rudnev observes. 

Discussions are under way concerning a new location of the proposed 

Mitsubishi joint venture at Nishnevartovsk. where conditions are harsh. One 

idea concerns extending a gas pipeline 

to Omsk or Tomsk, where infrastructure alreadv exists. 

' NATASHA ALPEBOWICZ 

in Dusseldorf 

A.H. ROBINS 

GETS A NEW 

START 

The Supreme Court's refusal to hear 

arguments relating to A.H. Robins' 

(Richmond. VA) bankruptcy reorganization could marR the start of a more 

promising era for the $930-million/year 

drug company. The court's decision 

ends more than 15 years of litigation 

over injuries and deaths related to use 

of Robins' Dalkon Shield intrauterine 

device. Ancjit opens the way for American Home Products (AHP: New York) to 

complete its buy of Robins. 

The takeover will up AHP's sales to 

more than $7 billion/year. It puts overthe-counter products such as Robins' 

cough medicine Robitussin and allergy 

drug Dimetapp in the same portfolio 

with AHP's household names such as 

Advil and Anacin. Combined OTC sales 

will equal roughly $1.4 billion. 

Other synergies are expected in prescription drugs, where about 1.300 

Robins sales representatives will be 

added to AHP's U.S. force of 1.800. 

Research and development efforts could 

be enhanced. Robins spends about S65 

million/year on R&D. and AHP laid out 

S260 million this year, about half what 

drug giants Merck and Glaxo spend, 

says health-care analyst Arvind Besai. 

of Mehta & Isaly (New York). 

* f 

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16 Chemicalweek'NovemOer 15. 1989 

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