Category Archives: Business

Filthy Lucre, Again

Yet another reprint of posts from the past, this time from April 11, 2008.

As usual, Th’ Gaussling’s most interesting observations of the ACS meeting are of a proprietary nature and will have to go with me to the grave. Our student and academician friends can expound openly on what lights their fires. The lusty satisfaction of compelling oratory in the darkened halls of convention centers is part of the reward for the cardinals of the academy.  Members of the merchant class have to be satisfied with better dining.

People who are involved in personnel issues often speak of an employees “deliverables” as their work product. For those lucky enough to be in the academy, the work product includes teaching young minds, conducting research, and participating in the dissemination of the results in the form of papers and conferences.

For we chemists who did the deal with the devil in exchange for filthy lucre, our performance is rated somewhat differently.  Like academics, our performance metric only starts with some understanding of science. Once it is possible to begin understanding a thing, the task of transforming a process or material property into an item of commerce begins. In the chemical industry we do the most important reaction of all- the transformation of chemicals into money.

The part of the brain that sees a stick on the forest floor that resembles a tool is the same part of the brain that scans a molecule and sees latent functionality or value. The extraction of value from a composition or a process is a complex anthropological activity. Product development is anthropological because it involves the use of tools and organizational structure to provide products or services that are exchanged between groups.  

An industrial science group has to isolate value in some material property and contrive to bring some product or service into being.  But to get it to market, the science tribe has to cooperate with those with other skills. Organizations often resemble a confederation of tribes who cooperate with complex rituals and methods of exchange.

US LNG output to double by 2027

According to BloombergNEF, the United States is on course to double its natural gas liquefaction (LNG) capacity by 2027. US export capacity is expected to rise to 169 million metric tons per year with the opening of 3 new projects slated for funding approval this year. They are- Venture Global’s Plaquemines LNG, Sempra’s Port Arthur LNG, and NextDecade’s Rio Grande LNG. This new capacity will place the US well ahead of Qatar in annual production.

Appendix

LNG should not be confused with LPG, Liquified Petroleum Gas. LPG is a mixture of the somewhat heavier hydrocarbons propane, propylene, butylene, isobutane and n-butane. LPG is a fuel gas and can be used as an aerosol propellant and refrigerant.

LNG is composed mainly of methane (CH4) with a smaller amount of ethane (C2H6). Lesser amounts of propane and butane are isolated and sent to a separate stream. Natural gas is “sweetened” prior to cooling to remove corrosive hydrogen sulfide (H2S), carbon dioxide (CO2) gases as well as helium, mud, water, oil and mercury. Once the impurities are removed, the remaining methane/ethane mixture is cooled to −162 °C for bulk transport. On arrival at its destination, it must undergo a regasification process. In some locations seawater can be used to vaporize the LNG for injection into pipelines.

As an alternative to sea water heat transfer for regasification, LNG can be utilized for its “cold energy” potential. One application uses low temperature LNG as a refrigeration coolant for producing liquid oxygen and liquid nitrogen. Another use of the cold energy is to cool the exhaust of a gas turbine in a closed joule cycle with argon as the fluid.

Since we are talking about gaseous hydrocarbons, there is also a category of liquid hydrocarbons called condensates that accompany the production of natural gas and must be channeled into a separate processing stream because, well, they are liquid. Raw natural gas straight out of the ground may have varying amounts of condensates-

  • Crude oil wells can produce natural gas called associated gas and condensates may be entrained in the gas flow.
  • Dry gas wells produce gas that have no associated liquids.
  • Condensate wells produce natural gas with associate natural gas liquid.

Wikipedia explains the condensate situation in greater detail.

Euphemisms This Morning

A collection of euphemisms from a single 30 minute meeting.

Cold eyes review– outside review

Get engaged– bring into the group

Out of pocket– gone

Dot eyes and cross Ts– tidy up details

Just to jump in– I’m interrupting

The old pot makes the best stew– try an old method

Reach out– contact someone

Get on the radar– pay attention to

Just a bit of corporate-speak here. Nothing out of the ordinary.

I have a collection of salty and scatological euphemisms from my days on the farm and while working in construction, but I keep them close to my chest. I think others are grateful for that.

Lithium as a Chemical

Today we hear about lithium batteries ad nauseum. Everyone is anxious to achieve a bright battery-powered electric future for happy motoring. Mineral exploration has revealed a few new sources of lithium and mines are increasing production. Battery factories are ramping up and R&D keeps turning out tweaks in battery technology. Many are betting on or prophesying the eventual phase-out of hydrocarbon fueled motor vehicles.

Lithium is quite scarce and is the 25th most abundant element on earth with about the same crustal abundance as chlorine although this may vary with the source. For the most part, lithium is fairly widely dispersed in the earth’s crust but it is subject to concentration by hydrothermal transport, forming evaporite deposits or briny ground water. Lithium is also a component of the mineral spodumene which can be found in pegmatites within some host formation. An uncommonly rich site was at the Foote Company Mine in the Kings Mountain Mining District of North Carolina. This operation produced lithium carbonate, Li2CO3. This is a common finished product because it can be removed from a solution of lithium chloride by treatment with sodium carbonate to precipitate the poorly soluble lithium carbonate.

This light metal has many chemical uses apart from batteries. For instance, organolithium reagents are a vital part of the chemical industry clocking in at about $1 billion per year in sales. Organolithium reagents are an indispensable part of organic synthesis. Switching to a reagent with a different metal usually does not work well, giving poor results or the wrong reactivity.

Today we’re seeing organolithium prices rise dramatically with little expectation that it will ever come back and no clue of how it plays out in the future. If a few select lithium reagents, e.g., LiAlH4 or n-butyllithium, go off the market, it will be a bad day for the organic synthetic industry as well as for chemical R&D in general. It is an unexpected consequence of the switch to reduced carbon EVs.

LNG Ships and Shipping

An interesting bundle of factoids arrived in my daily newsletter from the American Petroleum Institute, API. The cost of shipping LNG is disclosed. I’ll just cut and paste it for convenience. The source is Freightwaves.

From API- “Liquefied natural gas charter rates were estimated to average $313,000 per day for the most efficient LNG carriers and $276,700 per day for tri-fuel, diesel engine carriers as of Monday, according to Clarkson’s Securities, some analysts predict rates could climb as high as $500,000 per day or even $1 million in the fourth quarter amid tight ship availability on the spot market. “According to brokers, owners can now achieve three-way economics, which means they are compensated not just for a regular round voyage but also for positioning voyages,” said Clarksons Securities analyst Frode Morkedal.”

Ok, I like big boats and I cannot lie. When you look into the shipping vessels themselves you can find a wondrous horde of information on LNG carrier details, such as tri-fuel, diesel engine (TFDE) powered ships. These are ship propulsion systems that drive the propellers with electric motors that in turn are energized by generators driven by engines that can burn diesel oil or LNG.

There are many advantages to the TDFE propulsion systems. Due to the low boiling point of LNG (-161.5 C), loss of LNG to evaporation is unavoidable. Fortunately, the boil-off vapor from the LNG tanks can be piped down to the engine room and used for propulsion. This LNG boil-off can be used to generate steam or can be used directly by powering two-stroke engines. The newer TFDE system, or the DFDE (Di-Fuel Diesel Electric) engines require less space than conventional diesel engines with all of their ancillary features. This leaves more room for payload.

The Bright Hub Engineering site says that a typical TFDE electric generator system produces 8 to 12 megawatts of power from each of its 4 generators at 6600 to 11000 volts at 60 Hz. The electric propulsion motors are coupled together with a reduction gear to turn the props.

As alluded to above there are duel fuel 2-stroke marine engines in use. The duel fuel engines combine Heavy Fuel Oil (HFO), also called bunker fuel, or Marine Diesel Oil (MDO) with LNG in the Diesel cycle with a load range of 10 to 100 %. The mixture of HDO or MDO with LNG is injected directly as opposed to being premixed with air. Because the autoignition temperature of LNG is high, a small amount of pilot oil is injected as well to ensure ignition. The actual mixture used can be adjusted to best match the price and availability of the fuel oil.

The di- and tri-fuel systems have the advantage of producing considerably less pollution that conventional bunker fuels. This is especially important in port where emission controls can be very strict.

Oil & Gas Companies and Their Gaping Holes

According to E&E News, the government is releasing $560 million of a total of $4.7 billion to fund the cleanup of orphan oil and gas wells in 24 states. It is part of the Infrastructure, Investment and Jobs Act.

From the E&E article-

“Historic oil and gas activity in regions like Appalachia and the West goes back more than a century, with many old wells lost. Additionally, oil and gas price busts have left more wells abandoned, their original drillers out of business or difficult to trace. When left unchecked, those wells can release greenhouse gases like methane and pose combustion risks.

All told, states have flagged more than 10,000 high priority wells for cleanup, the first in line of a nearly 130,000 backlog of unreclaimed known well sites, Interior reported today. That number is expected to rise as federal funds bolster state efforts to identify hidden or lost orphans.”

According to a June 16, 2020, article in Reuters, drillers are required to pay a bond up-front to pay for remediation in case they go bankrupt. In reality, the system is a patchwork of state and federal regulations that are underfunded. The article goes on to say-

The U.S. figures are sobering: More than 3.2 million abandoned oil and gas wells together emitted 281 kilotons of methane in 2018, according to the data, which was included in the U.S. Environmental Protection Agency’s most recent report on April 14 to the United Nations Framework Convention on Climate Change. That’s the climate-damage equivalent of consuming about 16 million barrels of crude oil, according to an EPA calculation, or about as much as the United States, the world’s biggest oil consumer, uses in a typical day. (For a graphic on the rise in abandoned oil wells, click tmsnrt.rs/2MsWInw )

The whole thing is a century-long train wreck- we could have easily followed along as it happened. The extractive industries have a long history of leaving a hazardous and unsightly mess in their wake so there is nothing new here. Industry has socialized the cleanup cost and kept the profits.

It is pathetic that someone would even have to remind them to at least seal the damned well when they were done with it. Walking away from a well that is or could be venting natural gas and hydrogen sulfide is obviously unethical. Transfer of ownership or bankruptcy should be no excuse by statute.

States like North Dakota, for example, have statutes relating to wells having “abandoned well” status.

For various reasons, wells stop producing.  State law requires that the site be reclaimed and directs the Industrial Commission to oversee that process.

The upstream exploration and production (E&P) side of the oil & gas industry should collectively pay for this. However, like most businesses, they will only respond to the threat of added costs. But, we’re not asking them to split the atom. This issue could be solved at a single board of directors meeting at any E&P company.

Naturally, the oil & gas lobby will howl like banshees at the very notion of holding the industry responsible. Refiners and distributors of distillates, I think rightfully, will say that they are not at fault. So it has to be upstream.

But what about the owner of the mineral rights? Should they be free from liability? Not being a legal scholar, I can only surmise that this is old turf.

A modest excise tax on every barrel of oil or every million cubic feet of gas would accumulate into a sizeable fund over time. But would E&P companies just leave every abandoned well uncapped thinking that they have already paid for it? Hard to say. There would be legions of corporate cost accountants and executives working on it though.

American voters have yet to elect a congress or legislature that will write law to hold E&P oil & gas or somebody responsible for the blight that oil & gas brings. The industry lobby knows that all they have to do is float out the twin dementors of lost jobs and economic despair to frighten the public into submission. Works every time.

When Colorado tried to pass a ballot initiative recently to ban oil & gas well operations within some expanded distance from residential neighborhoods, the industry had employees on the streets protesting even in my own small bedroom community. They seemed convinced that their livelihoods were in imminent danger. The initiative was voted down. Basically, it would have barred most drilling within cities. Would this have cost jobs? Well, I think that the frosting on the cake would have been ever so slightly thinner.

Literacy in the Permian Basin Oil Field

There was an interesting article cited from the Houston Chronicle in today’s news letter from the American Petroleum Institute. Here is the link. Unfortunately there is a pay wall.

From the API news letter- “Low levels of adult literacy and limited access to higher education in the Permian Basin are compounding the skilled labor shortage already facing oil and natural gas companies as the industry’s digital transformation creates a growing need for workers with specialized skills. Ray Perryman, founder of consulting firm The Perryman Group, estimates that Permian Basin residents could lose almost $425 million in potential earnings and $292 million in economic output unless literacy skills improve, a challenge that’s being addressed by initiatives such as the Permian Strategic Partnership.”

Even in the rough and tumble world of the oil patch, folks need to be a little more educated to keep it going forward.

I could crack wise about education in the Republican Evangelical Republic of Tejas, but I’ll leave it alone this time. This problem speaks for itself.

Chaos at the EPA

It’s difficult to describe how badly the New Chemicals division in the Office of Pollution Prevention and Toxics (OPPT) at EPA is performing these days, but let me try. The commercialization of new chemicals (not on the TSCA Inventory) not otherwise regulated requires that new chemical substances (NCS) be reviewed and granted following a Pre-Manufacture Notice (PMN) or a Low Volume Exemption (LVE) submission under the Toxic Substances Control Act (TSCA), should they meet internal criteria regarding safety. Exposures and doses to workers or the environment may be measured by the applicant or modeled using EPA in-house software. R&D only chemicals are exempt from such evaluation no matter the scale.

The application process requires the disclosure of the NCS composition and structure, the manufacturing and/or use operation in considerable detail, physicochemical properties and, if available, a wide range of worker and environmental hazards. Imported chemicals not on the TSCA inventory also require TSCA approval just as though they were being manufactured in the USA. Food, drugs and pesticides are not controlled under TSCA. Under penalty of law, all submissions must have the best and most accurate available information, particularly with regard to hazard information. No fibbing allowed.

The issues I’m about to recount started sometime in early 2021. Some speculate that a particular interpretation of the law promulgated by TSCA was adopted. I can’t provide references, however.

By statute, an LVE filing for instance, must be examined and be given a grant, conditional grant, or denial within 30 days. It is currently taking much longer than that: 60 to 100 days or longer. I have some that are still pending after 7 months. PMN filings take longer to process, about 9-12 months. or worse.

Aren’t these delays just a petty annoyance? Well, no. Part of a new product development timeline is getting regulatory approval. If this approval is subject to large delays with uncertain outcomes, then the launch date can become very fuzzy. The consequence for the end user is that scheduling their production activity becomes impossibly vague. Denials of LVE and PMN filings are not uncommon. Don’t expect a lot of sympathy from customers about EPA problems.

The last thing you want is some plebe right out of school with no professional experience in commerce to be handing out the regulatory death penalty to your expensive new technology. Handling hazardous materials safely and without environmental harm is done all day every day all over the world. There is a saying in the chemical industry: If you think safety is expensive try having an accident. There is considerable financial incentive to running a chemical plant safely and within regulations.

There seems to be a troubling issue involving the assumptions that EPA makes in regard to handling the NCS. The feedback I receive suggests that the engineers and toxicologists are ruling based on the worst case exposures that they imagine are going to happen. They imagine that workers and the environment will be exposed to the NCS as if workers aren’t wearing personal protection equipment (PPE) or there was no barrier to the environment. You can plainly state that these exposures won’t happen and state why, but they want evidence evidence that they cannot define that something will not happen. In other words, they want proof of a negative.

Another problem with EPA seems to be the sophomoric view that chemical hazards can always be abated by using safer chemicals. There may be a speck of truth to this generalization. In the formulations industry, for example. Replacing hazardous ingredients in mascara or shampoo with those that are less hazardous may be quite uncomplicated. Reducing chemical hazards is part of ethical business operations and is expected with ISO 9001 registration. The catch for chemical manufacturing is that the chemical features that make chemicals reactive and hazardous are usually the same features that make them essential to synthesis. Except for solvents and filter aid, unreactive chemicals are not very useful in synthesis. Synthetic chemistry is about manipulating the reactive features of one molecule with another to yield a useful product.

The delay issue is not unknown to EPA. In fact they are painfully aware of it all the way up to the EPA administrator. The good folks at EPA are doing their best with absurdly limited resources. We’re told that the TSCA division is 50 % understaffed, and many of the staff they do have are inexperienced. They have a computer system that is obsolete by many generations. You can see this by filing on their website. They have taken to denying submissions that are flawed in a minor way rather than continuing to work with the applicant to fix the problem. This excess fastidiousness ratchets down their backlog, at least in the short term.

The problems at EPA stem from the inability of congress to buckle down and provide proper funding. Only congress can act to boost staffing or computers. Lobbyists are working on it but, unfortunately, this is not an appealing issue for a congress person to take up and run with. Maybe we can get that cancerous A-hole Tucker Carlson to howl about it on the tube. Then we might see some movement.

For Students. Thoughts on Chemical Process Scale-Up.

Chemical process scale-up is a product development activity where a chemical or physical transformation is transferred from the laboratory to another location where larger equipment is used to run the operation at a larger scale. That is, the chemistry advances to bigger pots and pans, commonly of metal construction and with non-scientists running the process. A common sequence of development for a fine chemical batch operation in a suitably equipped organization might go as follows: Lab, kilo lab, pilot plant, production scale. This is an idealized sequence that depends on the product and value.

Scale-up is where an optimized and validated chemical experimental procedure is taken out of the hands of R&D chemists and placed in the care of people who may adapt it to the specialized needs of large scale processing. There the scale-up folks may scale it up unchanged or more likely apply numerous tweaks to increase the space yield (kg product per liter of reaction mass), minimize the process time, minimize side products, and assure that the process will produce product on spec the first time with a maximum profit margin.

The path to full-scale processing depends on management policy as well. A highly risk-averse organization may make many runs at modest scale to assure quality and yield. Other organizations may allow the jump from lab bench to 50, 200, or more gallons, depending on safety and economic risk.

Process scale-up outside of the pharmaceutical industry is not a very standardized activity that is seamlessly transferable from one organization to another. Unit operations like heating, distillation, filtration, etc., are substantially the same everywhere. What differs is administration of this activity and the details of construction. Organizations have unique training programs, SOP’s, work instructions, and configurations of the physical plant. Even dead common equipment like a jacketed reactor will be plumbed into the plant and supplied with unique process controls, safety systems and heating/cooling capacity. A key element of scale-up is adjusting the process conditions to fit the constraints of the production equipment. Another element is to run just a few batches at full scale rather than many smaller scale reactions. Generally it costs only slightly more in manpower to run one large batch than a smaller batch, but will give a smaller cost per kilogram.

Every organization has a unique collection of equipment, utilities, product and process history, permits, market presence, and most critically, people. An organization is limited in a significant way by the abilities and experiences of the staff who can use the process equipment in a safe and profitable manner. Rest assured that every chemist, every R&D group, and every plant manager will have a bag of tricks they will turn to first to tackle a problem. Particular reagents, reaction parameters, solvents, or handling and analytical techniques will find favor for any group of workers. Some are fine examples of professional practice and are usually protected under trade secrecy. Other techniques may reveal themselves to be anecdotal and unfounded in reality. “It’s the way we’ve always done it” is a confounding attitude that may take firm hold of an organization. Be wary of anecdotal information. Define metrics and collect data.

Chemical plants perform particular chemical transformations or handle certain materials as the result of a business decision. A multi-purpose plant will have an equipment list that includes pots and pans of a variety of functions and sizes and be of general utility. The narrower the product list, the narrower the need for diverse equipment. A plant dedicated to just one or a few products will have a bare minimum of the most cost effective equipment for the process.

Scale-up is a challenging and very interesting activity that chemistry students rarely hear about in college. And there is little reason they should. While there is usually room in graduation requirements with the ACS standardized chemistry curriculum, industrial expertise among chemistry faculty is rare. A student’s academic years in chemistry are about the fundamentals of the 5 domains of the chemical sciences: Physical, inorganic, organic, analytical, and biochemistry. A chemistry degree is a credential stating that the holder is broadly educated in the field and is hopefully qualified to hold an entry level position in an organization. A business minor would be a good thing.

The business of running reactions at a larger scale puts the chemist in contact with the engineering profession and with the chemical supply chain universe. Scale-up activity involves the execution of reaction chemistry in larger scale equipment, greater energy inputs/outputs, and the application of engineering expertise. Working with chemical engineers is a fascinating experience. Pay close attention to them.

Who do you call if you want 5 kg or 5 metric tons of a starting material? Companies will have supply chain managers who will search for the chemicals with the specifications you define. Scale-up chemists may be involved in sourcing to some extent. Foremost, raw material specifications must be nailed down. Helpful would be some idea of the sensitivity of a process to impurities in the raw material. You can’t just wave your hand and specify 99.9 % purity. Wouldn’t that be nice. There is such a thing as excess purity and you’ll pay a premium for it. For the best price you have to determine what is the lowest purity that is tolerable. If it is only solvent residue, that may be simpler. But if there are side products or other contaminants you must decide whether or not they will be carried along in your process. Once you pick a supplier, you may be stuck with them for a very long time.

Finally, remember that the most important reaction in all of chemistry is the one where you turn chemicals into money. That is always the imperative.

Convincing Industry of the Utility of Your Chemical Method or Reagent

It is not uncommon to read in chemistry papers or hear speakers from academic institutions making the assertion that certain problems exist that their method or reagent may solve. Perhaps a particular catalyst may give rise to a set of useful transformations or said catalyst may be fished out and reused in many other runs. Or, maybe the reagent in development affords spectacular yields or stereoselectivity. Given that an industry might have blockbuster products that share certain features or pharmacophores, an efficient method for synthesizing that feature is likely to be of genuine interest.

Chemical research coming from an academic institution in the USA is almost always executed by students and/or postdocs. In the case of graduate students, the work is done as part of their degree program and is designed to achieve certain goals or to explore a question. Regardless, it is not done to achieve a commercial purpose with product sales in mind. Student research is conducted with training and publication success as the goal. Graduate success and publication are the work products of academics.

If it transpires that a particular academic wants to do work that is also of commercial interest, that work should include certain commercial sensibilities associated with chemical production. Every business has its own list of development criteria in use. It will have a basis on in-house equipment and skills, company policy, safety, economic imperatives, working capital, required profit margins, environmental permits, available economies of scale, specialty or commodity products, etc.

Adopting a new reagent for an existing chemical product can be very problematic for a business. For production pharmaceuticals, it is likely to be impossible for management to actually contemplate the trouble involved in changing an approved process. For other industries a similar problem exists. Changing a reagent in an existing process will likely require the customer to approve the change and the drafting of an updated specification. And, for their trouble they are going to demand a reduced price. I’ve received and given that talking to on a few occasions myself.

If the change is very early in the reaction sequence of a lined-out process, there may be a chance to do a replacement or change a step. Maybe. Remember that customers usually do not like change in regard to the chemical product they are purchasing. They want and need consistency. Even improving purity can be bad if it results in the final product surprising the end-user in some way.

I would offer that if an academic worker wants to make a difference in commerce, they should concentrate on the final product in the application. It may be that an existing product could be made cheaper by your wonder reagent, or perhaps some me-too congener. Your reagent may be superior in a functional group transformation, but that is likely to draw yawns. How does your reagent add value to a process in concrete terms?

By adding value I mean to say, increasing profit margins. Costs in manufacturing are broadly divided into raw materials, labor, cost of sales and other overhead. They are not all easy to minimize. For instance, a mature product may be priced according to commodity scale pressures. That is, there are numerous suppliers and low margins in the market for producers. If the cost of goods sold is driven strongly by raw material costs, unless you can wangle a breakthrough in raw mat prices, staying price competitive may involve a race to the bottom of the lake. However, if labor is the major driver of cost, you may have a chance to increase margins by reduction in man-hours per unit. That reduction would come from any of a number of labor saving strategies.

Labor savings can come in many forms. More efficient use of existing equipment can lead to an increase of capacity and throughput over the year if the turnaround time between runs is shortened. Process intensification can also increase throughput and consequently reduced labor hours per kg of product. Higher reaction temperatures benefit kinetics as do increased space yields by running at higher concentrations. Just beware of the reaction enthalpy per kg of reaction mass (specific enthalpy). It is very possible to over-intensify and bring on problems with safe operation and side reactions.

For the academic aiming to be technologically relevant in a concrete way you have to think like the owner of big equipment. Idle equipment is not earning revenue. Busy equipment at least has a chance if it is done efficiently. Telescoping a process so that more steps can be run in the same vessel without solvent changes or excessive purification is always desirable. Moving material between vessels is time consuming and likely labor intensive.

More questions to consider. Does a reaction really require an overnight stir-out. And at reflux? Do you have a method of in-process checks that allow the next step to proceed? What is the minimum solvent grade you can get away with? Can you replace methylene chloride with anything else? What is the minimum purity raw material you can get away with? Unnecessarily high purity specs can be very expensive. Your customer will suffer from this as well.

Learn to get pricing from bulk suppliers. Use those unit prices for your cost calculations. For God’s sake, don’t use the Aldrich catalog for pricing. Remember, you’re trying to make a case for your technology. There should be a costing spreadsheet in your write up.

That’s enough for now. I gotta go home.