Canadian Chemical Producers Association

Canadian Chemical Producers Association

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  Canada’schemicalproducersresponsiblecare® Producedby:www.lockwoodmediagroup.com
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  *Trademark of TheDow Chemical Companywww.dowcanada.com HHeeaalltthh LLiiffeessttyyllee CCoommmmuunniiccaattiioonn TTrraannssppoorrttaattiioonn BBuuiillddiinngg After100years ofsweatingthesmallstuff,yourealizethereisnosmallstuff. Food. Shelter. Clothing. Transportation. Medicine. When you’re dealing with the essentials of life, no detail is too small. And the ramifications of just about everything can be rather big. That’s why, on 5 continents, in over 60 countries, the people of Dow continually push their mastery of science and technology. A mastery that has, at last count, produced over 59,000 patents and, more important, found its way into millions of products and services — improving them in ways big. And not so small.
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  From its earlyand rapid growth in the 1960s, the Canadian chemical industry has come a long way to solidify its position as a mainstay of the national economy. This special report looks at the road it has travelled and challenges that lie ahead. C A N A D A ’ S C H E M I C A L P R O D U C E R S 3 Climate change is a hot topic, but the Canadian chemical industry has had it on the front burner for more than a decade. The Canadian Chemical Producers’ Association (CCPA), whose member companies produce more than 90% of industrial chemicals man- ufactured in Canada, urged its members to take up the challenge of reducing greenhouse gas emissions in 1994, three years before the Kyoto accord was formulated. And CCPA had started tracking these emissions even further back – in 1992. “There was already a recognized need that we had to do something after the 1992 Rio Earth Summit,” recalls David Podruzny, CCPA’s vice-president of business and economics. “Consistent with our Responsible Care ethic, we felt that we were going to have to head down this road, and that the sooner we did, the better it would be for all concerned.” The chemical sector encompasses a diverse industry that produces organic and inorganic chemicals, plastics and synthetic resins. For Canada’s chemical industry, energy is a signi- ficant cost of doing business, and companies have worked for many years to improve the energy efficiency of their operations. And a long-term improvement in energy efficiency has brought an associated reduction in greenhouse gas emissions. Those reductions have occurred concurrently with industry growth. The chemical sector’s product output has increased nearly 26% since 1992, but total carbon-dioxide emissions by CCPA members from 1992 to 2003 increased by only 0.7%. In terms of global warming potential, CCPA member companies’ green- house gas emissions in 2003 decreased by 41% compared to 1992 amounts (measured in million tonnes carbon-dioxide equivalent). Some individual corporate performances stand out. Imperial Oil, for instance, has invested $14.5 million in capital projects to increase energy efficiency at its refinery/chemical operations since an energy study was carried out in 2000, with another $45 million committed. ERCO Worldwide has reduced fossil-fuel consumption by more than 94% at its facility in Buckingham, Que., through an innovative plan to turn waste hydrogen into fuel for its steam plant. Methanex has established a mechanism that treats its greenhouse gas emissions globally, rather than on a national basis. It developed an internal greenhouse gas emissions trading regime, just to track their emissions and reductions, and applied a value to the carbon to determine what it would be paying or reaping if it were selling and buying credits. For more than a decade, NOVA Chemicals’ Furnace Optimization Team worked to develop and perfect the ANK400 high-temperature alloy furnace tube coating. It reduces green- house gas emissions by reducing the frequency of the decoking process. The innovative coating inhibits the formation of catalytic coke within ethylene furnaces, enabling longer, more efficient furnace run times of more than 400 days – a significant improvement over the previous 30-to-40-day run times. An Industry With a Mission: Reducing Greenhouse Gas Emissions Energy and Feedstocks: Caught in a Bind The North American petrochemical indus- try relies heavily on natural gas – specif- ically, the liquid natural gas component ethane – not just as an energy source but also as its primary feedstock. But natural gas is at least 40% to 50% more expensive in North America than in the rest of the world, and not enough of the valuable ethane is stripped out of the gas before it exits the country. Caught in the crunch between growing demand, unstable supply and consequent high prices, industry leaders say it’s time for government leaders to step up with a coherent energy policy that will save their industry. Ramesh Ramachandran, president of Dow Canada, says chemical plants are closing and new investment is being driven offshore in a quest for reliable energy feedstocks. “When you couple the uncertain supply of ethane with the dramatic increase in the price of natural gas, Canada’s ability to compete on a global level has been seriously compromised,” he says. “From a global standpoint, it’s hard to come up with a rationale for large-scale capital investment unless we see major changes.” Many of his colleagues in Canada’s manu- facturing sector who use natural gas as a source of energy agree. In a survey of 72 companies representing $71 billion in output, 28% of respondents said that high energy costs will cause output to decline either “significantly” or “somewhat”. Higher energy costs have already led more than a third of respondents to either move investment out of Canada (12%) or to actively consider it (24%). High prices are already causing plants to operate at less than full capacity. Between 2000 and 2004, consumption of natural gas actually declined 6.75% while prices rose 24%. “The question we should be asking ourselves is how do we ensure that energy resources are used in the best possible way,” says Val Mirosh, vice-president of NOVA Chemicals. “We should be trying to upgrade the value of natural resources in Canada as much as we can.” Ramachandran points out that there’s plenty of worldwide demand to justify increased petrochemical investment – just not in North America. He says 120 chemical plants, each worth $1 billion-plus, are under construction around the world – but only one in North America. Yet Alberta is exporting its natural gas without extracting nearly half of cont’d on p.6
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  Shell Chemicals Happy 20th ResponsibleCare ® Responsible Care is a Canadian-made ethic which sets standards for chemical industry operations and public dialogue. Because continuous improvement is at the heart of Responsible Care, two decades is indeed something we can all celebrate. shell.com/chemicals Proud participant in:
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  C A NA D A ’ S C H E M I C A L P R O D U C E R S 5 Federal and provincial energy policies for years have promoted natural gas as the clean-burning fuel – the superior choice for residential and industrial heat and as fuel for electricity generating plants. Canadian chemical producers are wondering whether the country is figuratively paving the streets in gold and ignoring cheaper alterna- tives. Natural gas is a key raw material for their value-added processes. But chemical industry leaders say excessive demand has made natural gas so expensive, driving electricity prices higher along with it, that it undermines their ability to compete internationally. The over-reliance developed through decades when natural gas was plentiful and inexpensive. Now, burning natural gas for fuel at US$14 per mcf seems extravagant when you consider that the rate ranged around US$2 or US$3 in the early 2000s. The Geological Survey of Canada calculates that natural gas produces heat at a cost of US$9.52 per gigajoule versus only US$0.42 to US$2.17 per gigajoule for coal. Oil-fired heat costs US$9.69. Richard Paton, president of the Canadian Chemical Producers’ Association, is asking governments to consider the value-added uses of natural gas. “If you use that natural gas to make chlorine, sodium chlorate and polyethylene, you end up with 40 times the value that you began with,” he says. “That’s 40 times the value that Canada can get out of that product.” Paton says energy policymakers have failed to recognize chemical producers as value- added industries. “Governments see chemicals as ‘old economy’,” he says. “But the fact is that we transform natural resources into products through chemistry.” In doing so, chemical producers contribute about $47 billion a year to the Canadian economy, converting natural energy resources into many of the components and materials for the auto, clothing, fertilizer, food and pharmaceutical industries. That activity represents about 9.5% of the value-added manufacturing sector, according to Canadian Manufacturers and Exporters figures, approaching the auto industry’s 14%. But high natural gas prices and closely related electricity prices are threatening the chemical industry’s place in the Canadian industrial fabric, Paton says. Closures during the summer of the Canexus plant in Amherstburg, Ont., a Methenex plant in Kitimat, B.C., and ERCO Worldwide in Thunder Bay, Ont., were all attributed to North American natural gas prices. “We are a resource-rich nation,” says Paton, “but we find ourselves in a position where the key resource of natural gas has become too expensive to use. The same is happening with electricity, which is the means by which we transform products such as sodium chlorate.” Why do North American prices make producers here uncompetitive? Because those prices are not reflected elsewhere. Natural gas is not widely traded internationally due to the difficulty in transporting it. And other countries have not broadly adopted natural gas for heating, electricity-generation fuel or for their chemical industries. While North American chemical manufacturers use natural gas as the base for 70% of their upgrading production, producers in China, Japan and Europe use oil for 70% of their production. Oil, of course, is globally priced. Chemical producers would like to see governments promote more balance in energy sources and a lessening of dependence on Burn or Build? Getting the Most from Natural Resources Governments see chemicals as ‘old economy’. But the fact is that we transform natural resources into products through chemistry.
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  the valuable ethane– of the 420,000 barrels of ethane available from production each day, only 220,000 barrels are extracted. Industry leaders say industry-government co-operation needs to be brought to bear on the situation with an eye to upgrading valuable natural resources in-country as much as possible. “The markets are great for pricing and establishing the value of commodities,” says NOVA’s Val Mirosh, “but it doesn’t give a good signal of what you should do on a long-term basis in terms of developing these resources. It’s reactive instead of proactive.” Ramachandran is touting a model similar to royalty relief on capital and operating costs for the Alberta oil sands projects, which are also highly capital intensive. Such a policy for petrochemicals, he says, would help raise the massive amounts of capital needed to bring new ethane derivative plants on stream, and would also help supplement ethane extraction capabilities. “This would include negotiating with our colleagues in the gas industry to add an extraction plant straddling the Alliance pipe- line,” he says, “a plant that would capture the huge amount of Alberta ethane that exits the province on its way to Chicago.” While he supports stripping out more of the valuable feedstock components of natural gas to address the availability of ethane, Mirosh points out that government must also take the lead to lessen the unrealistic over- dependence on natural gas and encourage the use of other natural resources such as coal, nuclear, hydro and alternative energy resources. “Canada has tremendous opportunities,” Mirosh says, “because it is blessed with so many energy resources. We have to exploit those resources in a systematic and measured way. We have to look for new forms of energy and conservation.” 6 C A N A D A ’ S C H E M I C A L P R O D U C E R S natural gas. “The federal government can work with the provinces to get a clear idea of energy supply and demand,” says Paton, “and work out ways we can meet demand using all the resources available to us.” He also urges provincial policymakers, especially in Ontario, to revisit energy and electricity policies that have largely eliminated coal as a fuel for generating plants in spite of its low costs. “We’re looking for strong leadership on energy,” says Paton, “and not platitudes, wishful thinking and naiveté while industry leaves for lower-priced markets.” Putting Science to Work At DuPont, we are striving to be the world’s most dynamic science company. We’re working to address some of the toughest challenges and endeavouring to meet human needs for a safer world, effective communication, healthy, safe and affordable food, lightweight and durable materials, bio-based technology, and brilliant colours that decorate and protect. In 2005 we introduced more than 900 new products. Future innovations will focus on energy efficiency in buildings, alternative energy technologies, electronic materials and components, agricultural biotechnology, and biomaterials and biofuels. How we achieve our goals is important to us. Our actions are guided by our company’s Core Values. We’re also a member of the Canadian Chemical Producers’ Association and committed to its Responsible Care® principles and codes of practice. At DuPont, we put science to work to create sustainable solutions essential to a better, safer, healthier life for people everywhere. © Copyright 2005. E. I. du Pont Canada Company. All rights reserved. The DuPont Oval Logo, DuPont™ and The miracles of science™ are trademarks or registered trademarks of E. I. du Pont de Nemours and Company. DuPont Canada is a licensee. Responsible Care is a registered trademark of the Canadian Chemical Producers‘ Association Energy and Feedstocks cont’d from p.3
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  C A NA D A ’ S C H E M I C A L P R O D U C E R S 7 Simply put, Responsible Care began as the desire for an industry to assume stewardship of its products, the result of the strong leader- ship of chemical companies that recognized the industry had to make an unprecedented leap forward to adopt a different ethic in working with communities, governments and society. Responsible Care was conceived as a creative response to challenges faced by Canada’s chemical industry. Now, chemical industries in over fifty countries have adopted the Responsible Care formula. The seeds of Responsible Care were sown well before India’s deadly Bhopal gas leak in 1984. In 1977, the board of directors of the Canadian Chemical Producers’ Association (CCPA) approved the formation of an ad-hoc group to draft a policy paper on managing hazardous chemicals. CCPA’s directors endorsed a set of guiding principles in May 1978. Shortly after the unthinkable happened at Bhopal, CCPA’s board concluded that companies needed to review their operational procedures to identify potential weaknesses. Several companies had already begun this process, but the call went out for uniform action across the membership. Meanwhile, political dynamics were threatening the chemical-producing sector with a legislative onslaught, fully supported by a frightened public. Senior government officials let industry leaders know that chem- ical producers were bound to face unprece- dented regulation without significant action. Something had to be done, and be seen to be done. To that end, the board invited pollster Allan Gregg (then head of Decima Research) to gather data on public perceptions of the Canadian chemical industry. The national survey results discovered the most challenging and difficult public attitudes that Decima had ever measured relative to any industry. The perceived level of risk from the chemical industry was second only to that of the nuclear industry. This volatile political atmosphere sustained the momentum of the industry’s adoption of Responsible Care, and industry codes of con- duct gained approval in November 1988. The codes that were so painstakingly developed did not contain static requirements; instead, they required continuous performance improve- ment. Today, there are those who claim that Canada’s chemical industry really didn’t know what it was getting into with Responsible Care. Had the ethic been presented to CCPA’s membership in its present-day form, it may never have happened. Responsible Care represented a shift from a legalistic to an ethical way of thinking. The toughest part for members was that, for the first time, they took the step of subjecting themselves to scrutiny by outsiders, including community activists. They were no longer entitled to maintain secrecy about their internal operations, but would have to report to CCPA on vital matters. With that action, a fundamental change in corporate culture had definitely occurred — and it continues to this very day. A Brief History of Responsible Care CHEMICAL Responsible Care® Beyond what’s required. ISO 9000/14000 A grant from Imperial helped a wetlands society in Bonnyville, Alta., build a 10 kilometer walking trail and viewing stands where hikers can take a break while reading about the flora and fauna of the surrounding wetlands. When we manufacture and sell our products, we work to avoid upsetting that balance. It’s part of the Responsible Care Program. It includes our commitment to develop products that minimize risk to people and to educate them on their use. Energy and petrochemicals are essential to economic growth; however their production and consumption need not conflict with protecting health and safety or with safeguarding the environment. *Trademarks of Imperial Oil Limited. Imperial Oil, licensee. ® Trademark of the Canadian Chemical Producers’ Association. Used under license by Imperial Oil. Life is a delicate balance…
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  SODIUM CHLORATE SODIUMHYDROXIDE CHLORINE HYDROCHLORIC ACID GROW TH THAT ’S FIRMLY ROOTED IN EXPERIENCE. You knew us as Nexen Chemicals, a division of Nexen Inc. Now we are Canexus. Although our name has changed, we haven’t.We are the same chemicals company with six plants across North America and South America, and more than 400 employees. We are proud of our outstanding record in health, safety, and environmental performance.We continue to be active members of the Canadian Chemicals Producers Association and strong supporters of Responsible Care®. We carry with us the same standards and values that have made Nexen Inc. a Top 50 Employer for three years in a row. Canexus is headquartered in Calgary, AB and manufactures and markets inorganic chemicals including sodium chlorate, chlorine, caustic soda and hydrochloric acid. Canexus is one of the world’s largest producers of sodium chlorate, used as an environmentally-preferred bleaching agent in the pulp and paper industry; and also produce chlor-alkali products for a variety of market applications. We are aggressively growing existing facilities as well as pursuing new international opportunities in South America and Asia. As part of our business growth and leadership succession plans, we are seeking to hire a number of seasoned individuals with experience in the chemicals industry for a variety of positions. To learn more about us and these opportunities please visit our web site. www.canexus.ca TSX: CUS.UN