PRAXAIR CHEMICALS GMN GATE REVIEW:

Gate 0: Air Enrichment in Acrylonitrile Process

Project Overview I. Brief Concept Description:

Acrylonitrile is produced commercially by the air-based ammoxidation of propylene in

a fluidized catalytic bed. In air enrichment, additional oxygen is added to the air
stream while additional propylene and ammonia are added to the reactor. The result
is a production increase.

Evaluation Team: Jennifer Humenik, Matt Wagner, Jesse Tijerina

Executive (Summarize the idea evaluation conclusions and the recommendations to Praxair’s decision makers):

Summary (1) I. Conclusions:

Technology Readiness:
 Commercially ready
 Praxair was involved in a commercial demonstration with Sohio (now
Innovene) in Greenlake, TX, in 1984. A 15% increase in acrylonitrile
production was achieved using ~25% oxygen. Innovene is believed to
continue to use enrichment opportunistically.
 Praxair was also involved in a commercial demonstration of DOI with Sterling
Chemicals in Texas City, TX, in 1994. The results were similar to what would
be expected with air enrichment. A 7.5% production increase was obtained

Market Pull:
 There is currently an oversupply in the market. SRI (June 2005 report)
reports that there was 6.0 million metric tons of capacity worldwide in 2004.
SRI also reports production of 5.2 million metric tons in 2004 - an 86.7%
operating rate.
 There are idled plants both in the US and Mexico that can quickly be brought
on line if the market were to get tight.
 Since AE technology for acrylonitrile is a capacity debottleneck application,
the conclusion is that there is no apparent market pull for is since there is
currently idled capacity.

II. Recommendations:

 Recommend to not move forward on this project, due to insufficient market

demand.
 Either we kill it or put it in queue for re-assessment if the Market situation
changes.
 Question: How should we record this?
 However, we recommend that we do keep tabs on what Sterling decides to
do with their Texas City facility as this will have a significant impact on the
supply and demand balance.

Preliminary (List Key technical / financial / market-customer)

Analysis of Key I. Technical

Issues (4)  No issues – proven technology

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PRAXAIR CHEMICALS GMN GATE REVIEW:

Gate 0: Air Enrichment in Acrylonitrile Process

II. Commercial: (Customer-Market)

 Capacity compared to consumption is in surplus in North America and in deficit in

Asia. 2004 world production was reported at 5.2 million metric tons. Available
capacity in 2004 was 6.0 million metric tons. This represents an operating rate of
86.7%
 SRI reports the global market to be quite balanced, but that can quickly change
depending on some strategic decisions that Sterling needs to make. Since
Sterling idled the plant earlier this year, due to a shortage of propylene feedstock,
and other suppliers have taken turnarounds, supply has tightened. This plant
represents 4% of global supply.
 However, Pemex has just announced that they are restarting a 60,000 tonne/yr
idled plant. They do not have customer requirements for all of this capacity, but
hope to export to the US, since they lack sufficient storage (CNI June 21, 2005).
Also, Shanghai Secoo recently (April) started up 260 tonne/yr plant in Caojing
(CNI April 5, 2005)
 Sterling is evaluating two options, either idling the plant, or shutting down one
uneconomical reactor. If they idle their plant permanently (740 mm lbs/yr), we
may want to take another look at the market (though if additional idle capacity can
be restarted, it may not matter). If Sterling decides to restart, but idle
permanently the most economical reactor (210 mm lb/yr), then A. Akhras feels
there may be an opportunity for enrichment at Sterling. A byproduct of the
process goes into sodium cyanide production. We may not want to invest
resources at Sterling, however, if the market will not support other opportunities.
 Since Innovene licenses the vast majority of the ACN plants, we really would
need to engage Innovene before we would have any success in selling O2
enrichment to ACN producers.

Document I. Approvals:
Results: Decision
(Go / No Go): GMN Leader: ___________________ Date: _______________

GMN R&D Director: _________________ Date:_______________

II. Assign Leads:

Technical Lead: ______________________ (name)

Market Lead: ______________________ (name)

III.Gate Review Minutes (any concerns/reservations noted, etc.)

End

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