2011/12 – Neil A Burns LLC, Review & Outlook
Surfactants and Oleochemicals
As regular readers know, this does not purport to be a journalistic blog. We leave that to the talented and industrious like Doris de Guzman of ICIS, whose work in the field of surfactants, green chemicals and oleochemicals journalism is oustanding.
Rather, what we do here is to comment occasionally on things that we find interesting and important from a personal perspective, given our involvement in the surfactant field:
The very first week of 2011 saw some announcements that were quite significant from a surfactant point of view. Shell signed an MOU with Qatar Petroleum for construction of, among other things, the world’s largest MEG plant (EO, a surfactant feedstock, is also a precursor of MEG). Bayer announced its interest in working with partners at its Martinsville, VA site to support building of a Marcellus Shale ethane fed ethylene cracker (downstream options being of course, EO and ethoxylates). Shell is a prime candidate. Meanwhile in Poland, PCC Rokita consolidated its position as a leading producer in the region with an ethoxylation capacity expansion. Later that month the BASF/Sinopec JV in Jiangsu China announced further capacity expansions in nonionic surfactants.
At 2011’s ACI meeting in Orlando, the talk was inevitably concerning the dizzying rise in surfactant feedstock prices – especially the lauric (C12/14) oils. Laurics continued on a tear of their own, finally peaking in the first week of March of 2011 as the laws of supply and demand worked and pricing came back into line. However, as many manufacturers will tell you, it is not so much the pricing level, but the volatility that really causes havoc. For these reasons, the keen interest shown in a “third leg to the supply chain” as we have called it here, manifested itself at ACI and continue throughout the year, with our friends Solazyme and Elevance having respectively completed and announced an IPO during the year. Both companies have had a significant impact already on the feedstock plans for some major surfactant producers and their importance in this market is set to grow.
Another major development at the ACI concerned the keen interest shown in the new ethoxylation technology launched by Desmet Ballestra of Italy. Projects are now underway worldwide, including in Japan, The Netherlands, Russia and China. Intense interest in North America in ethoxylation capacity, no doubt fuelled in part by the Shale gas phenomenon (referenced above) is also driving a lot of work by Ballestra in this region. A mid-year summary of Ballestra’s activities in all of its key surfactant related technologies of sulfonation, ethoxylation and fatty alcohols is published here.
Our foray into the surfactant conference business got started in earnest in 2011. I had first approached ICIS Conferences in October of 2010 with the idea. We then put together the First ICIS World Surfactant Conference in May of 2011 as a trial effort. This trial clearly tapped into a real industry need for a senior executive focused, commercial, “class-room style” conference, focusing in-depth on the key economic drivers of the surfactant industry. The conference sold out twice (moving to larger – but still cramped quarters) finally accommodating over 150 attendees. In addition to first-class keynotes from Pascal Juery of Rhodia and Kongkrapan Intarajang of Emery, the delegates were very impressed by the “new kids on the surfactant block” - Solazyme and Elevance, who rounded out the day and a half with a riveting description of a surfactant world freed from a dependence on volatile and unpredictable oil markets (both petro and oleo). Given the outstanding success of this first conference, ICIS and Neil A Burns LLC put together a business venture for the production of surfactant conferences throughout the world. We then quickly followed up with the First ICIS Asian Surfactant Conference in Singapore in November – another outstanding success with speakers and attendees from all across the region. Going forward, the Second ICIS World Surfactant Conference is already scheduled for April in New York and we have penciled in additional conferences in Europe and Asia for later in 2012. Part of the mission of the our venture with ICIS is surfactant training courses focusing on technical and economic aspects of the business. Ideas are certainly welcome for the content of these courses as we are still very much at the stage of syllabus development.
Something not entirely surfactant related, but still worth a mention, is our very rewarding involvement with SiVance LLC, the former silicones business of Clariant. We joined the board and shareholder group of this company in 2009 and worked with the management team to complete a carve-out from the parent and restructuring of the business to form an independent specialty silicones company active in markets including coatings, electronics, cosmetics and pharmaceuticals. Come mid-2011, we essentially were presented with an opportunity too good to pass up and so our PE sponsor, GenNx360 Capital Partners and the board engaged our good friends Houlihan Lokey to explore options for selling the business. The process was completed to the benefit of all stakeholders by the end of September of 2011 and the business found a new, permanent, home with the innovative company (and, in my view, star turn at the Montreux Conference in 2010) Milliken. Best wishes to Craig and the team at SiVance (now Milliken Chemical).
In addition to our own ICIS surfactant conferences, 2011 was a busy year for speaking engagements. CESIO in Vienna in June was a great opportunity to connect with the international surfactant community. Our review of the event was blogged here. Shortly after CESIO, we participated in an event in Washington DC which turned out, somewhat unexpectedly, to be pivotal in terms of how we are going to spend our time in 2012.
A couple of weeks after CESIO at the end of June, we spoke at the ACS 15th Annual Green Chemicals and Engineering Conference in Washington DC. The theme of my talk was (what else?), surfactants and the use of renewable feedstocks therein. We had a fairly decent attendance as my talk was part of a CM&E sponsored afternoon session on the business impact of green chemistry. Interestingly, there was, in the audience, Rob Bettigole, the managing partner of Elm Street Ventures, an early stage VC fund headquartered in New Haven, CT and among whose LP’s in the fund is Yale University. As it turned out, Rob had been in touch regularly with Yale’s Department of Green Chemistry and Green Engineering, where a brilliant PhD candidate, Patrick Foley, had been working on a brand new surfactant chemistry based on renewable carbohydrate chemistry. So between the first meeting and November 4th, we worked together to finance a company and execute an exclusive global licensing deal with the University. The new company, P2 Science, Inc., is now operating from a new laboratory in Science Park in New Haven and numerous discussions with customers and partners are underway. The company has an extremely busy speaking schedule for the coming year as the new technology is introduced to a range customers in a range of markets.
Toward the end of the 2011, two very interesting trips hit home to me the importance, again, of the role of feedstocks in surfactant developments. Our week in Cartagena, Colombia was interesting in that it highlighted the vigorous efforts underway in that country to develop a palm oil, palm kernel and derivatives industries in biodiesel, surfactants and detergents. Fedepalma and Cenepalma are making a real difference in the agricultural economy in Colombia. Following that trip, a couple of weeks in Malaysia and Indonesia, including a speaking engagement at PIPOC, generously underwritten by the Malaysian Palm Oil Board, also underscored the importance of this industry to the region.
Looking forward to 2012, we see a lot of time and energy spent in assisting P2 Science getting to the next stage with their new surfactant chemistry. Our consulting clients (who we do not name) will continue to keep us interested and involved in some fascinating new initiatives. We also look forward to further major projects with Ballestra in sulfonation and ethoxylation. On the conference front, our focus is on the second NYC surfactant conference followed by a first conference in Europe and a repeat conference in Singapore at the end of the year.
Best wishes for a successful 2012.