OxyVinyls planning $1.1 bil expansion, overhaul of Texas chlor-alkali unit

OxyVinyls, the chemical division of Occidental Petroleum, is planning a $1.1 billion expansion and modernization project at its chlor-alkali plant in La Porte, Texas, according to documents filed with the Texas Comptroller's Office.

The company's plan, dubbed Project Orca, involves an expansion and upgrade of current system equipment and processes with integration of new equipment that better utilizes membrane cell technology.

The documents, posted June 6, did not reveal higher capacities for chlorine and caustic soda production at the La Porte site, known as Battleground.

They said the proposed work would address potential future industry regulations that could require the company to cease using its existing production technology.

"The benefits of this project would help to ensure long-term viability of the Battleground plant operations," the documents said.

The La Porte site can currently produce up to 527,800 mt/year of chlorine and 580,000 mt/year of caustic soda.

EPA regulations

Potential regulations facing US chlor-alkali producers include the US Environmental Protection Agency's proposal on April 5 to amend the 2016 Toxic Substances Control Act that seeks to eliminate all use of chrysotile asbestos in chlor-alkali manufacturing associated with diaphragm-grade caustic soda.

The EPA's proposal to prohibit the import, processing or distribution of chrysotile asbestos for asbestos diaphragms would take effect two years after its effective date as a final rule. The EPA aims to publish a final risk evaluation by Dec. 1, 2024.

Chrysotile is the only form of asbestos known to be currently imported, processed or distributed for use in the US, according to the EPA. The EPA's April 5 announcement of the proposed rule that would prohibit such use said the use of asbestos diaphragms in US chlor-alkali production has been declining and currently accounts for about one-third of overall output.

The American Chemistry Council opposes the proposed rule and said on April 5 that if final, it would ban the manufacture of nearly one-third of US chlorine and caustic soda with "significant adverse effects on the supply of the nation's drinking water" by sharply reducing chlorine supply.

Chlorine is used for water treatment and is the first link in the production chain of polyvinyl chloride, a construction staple used to make pipes, window frames, vinyl siding and other products. Chlorine also is used to make pharmaceuticals, refrigerants, crop sprays, hydrochloric acid, bleach and other products.

Caustic soda, a key feedstock for alumina and pulp and paper industries, is a byproduct of chlorine production. A reduction in diaphragm-grade caustic soda production would involve a reduction in associated chlorine output as well unless replaced with another production technology such as membrane-cell.

Some US diaphragm-grade output already has been eliminated. OxyVinyls in 2021 shut down its Niagara Falls, New York, chlor-alkali unit that could produce up to 170,000 mt/year of chlorine and 180,000 mt/year of caustic soda because rail rates to move chlorine had risen so high that it was no longer economical to transport.

Modernization of plants

In February, Occidental CFO Robert Peterson said during the company's fourth-quarter 2021 earnings call that OxyVinyls was investing in a study regarding modernization of "certain" US Gulf Coast chlor-alkali assets to convert to membrane-grade from diaphragm-grade caustic soda capacity.

The switch would reduce carbon intensity per ton of caustic soda produced and allow for expansions of existing capacity, he said.

Olin, the world's largest chlor-alkali producer, also has shut diaphragm-grade caustic soda output, deeming it less valuable than the purer membrane-grade.

Olin has shut 20% of diaphragm-grade capacity at its Plaquemine, Louisiana, chlor-alkali unit and halved that capacity at its McIntosh, Alabama unit with plans to shut the remaining 50% in the third quarter of 2022. The company also shut a 230,000 mt/year chlor-alkali unit at its Freeport, Texas, complex in 2021.

Of the five US chlor-alkali producers, only Olin, OxyVinyls and Westlake produce both diaphragm-grade and membrane-grade. Formosa Plastics USA and Shintech each produce only membrane-grade.

The EU regulations required chlor-alkali producers that used mercury-cell technology to convert to less toxic membrane-cell or shut down by the end of 2017.

Seven plants that had produced 665,000 mt/year, or 5.5%, of Europe's chlorine capacity ultimately shut down, while another 1.4 million mt/year of capacity was converted to membrane-cell technology.