Building a petrochemical facility reliant on the fossil fuel – gas – is one of the top-listed projects put forward by the Australian government aimed at stimulating the economy post COVID-19.
The $1.9bn fertiliser facility pegged for Narrabri in New South Wales is not a new idea, and it can’t get planning approval until gas company Santos’ long standing fracking proposal also for Narrabri is approved. But there must be hope for a go-ahead, with Santos and the fertiliser proprietor Perdaman Chemicals and Fertilisers already signing a partnership agreement – back in 2019.
THIS FACILITY IS ONE OF TWO NEW PETROCHEMICAL PLANTS THE PERDAMAN PROPRIETOR IS SEEKING APPROVAL FOR – the second is a $4.5 billion dollar mega-project at the Burrup peninsula in Western Australia, known as Project Destiny, and again, the deals have already been done, this time with gas giant Woodside.
But first – an explainer – what is a petrochemical plant? and thanks to Dr Peter Rimmer from the Australian National University for his early examination of this industry.
The production of petrochemicals uses hydrocarbons that would otherwise have been burnt or wasted in the refining process. The hydrogen element is the starting point for ammonia and nitrogenous derivatives used in the manufacture of fertilisers.
Rimmer continues: The petrochemical industry is characterised by high expenditure on plant and equipment, and needs a huge amount of gas, crude oil, and its derivatives. Large scale and continuous operation of plant functioning under stable conditions with assured markets is essential.
SO, THE PETROCHEMICAL INDUSTRY NEEDS FOSSIL FUELS TO EXIST, and because it is downstream, the industry is a profit booster to the gas industry.
Or it was…
The crash in the oil price, and the global impact of COVID-19 has seen oil and gas exploration and production, refining, and the downstream petrochemical industry, all showing signs of severe stress.
The question being asked on this episode of Gas Chat is, does the world post COVID-19 need more petrochemical facilities?
IEEFA’s US director of finance, Tom Sanzillo joins Bruce Robertson, IEEFA’s LNG/gas analyst based in Australia to discuss.