Business roundup: September 2006

Alaskan oilfield in hot water

Crude oil prices suffered a roller coaster ride in August alongside a drama unfolding at BP’s Alaskan oilfield, the largest in North America. Attention has focused on the oil company since March, when up to 270,000 gallons of crude leaked from its transit line in Prudhoe Bay, Alaska, US. The spill was followed by news that BP had missed a US deadline to inspect its pipelines (Chemistry World, July 2006, p12).  

On 7 August, BP announced it had begun ’an orderly and phased shutdown of the Prudhoe Bay oilfield following the discovery of unexpectedly severe corrosion’. Oil prices soared to record highs - crude oil futures traded on New York’s Mercantile Exchange jumped as much as $2.09 (?1.11) to trade $76.85 a barrel, reported the Financial Times. Oil futures traded on London’s ICE (Intercontinental Exchange) futures exchange hit a record of $78.08, gaining as much as $1.91. BP estimated that a complete shutdown would cut oil production by 400,000 barrels a day. The Prudhoe Bay oilfield, which lies 250 miles north of the Arctic circle, accounts for eight per cent of US oil production. 

Within hours, BP issued a statement saying it was investigating the possibility of keeping portions of the oil field open. On 11 August, the company announced it had decided to continue production at Prudhoe Bay’s western operating area. Extensive repairs are underway over on the east side of the oilfield, where heavy corrosion has been associated with oil leakage. The company says it will replace the main oil transit lines at Prudhoe Bay. 

News that BP was to keep half the oilfield in production as it repaired the other half was greeted with relief by the financial markets. This, coupled with news of a cease fire in the Middle East, meant that crude oil futures traded on New York’s Mercantile Exchange had dropped to $73.03 a barrel.  

Kilo-scale expansion at Onyx

New kilogram-scale labs have been opened at Onyx Scientific at Sunderland, UK, along with installation of stability ovens. The outsourcing specialists say the new facilities are designed to meet their clients’ changing good manufacturing practice requirements. 

Akzo Nobel acquires Flood

Dutch chemical company Akzo Nobel has taken over The Flood Company, the largest independent wood care business in the US. This follows the acquisition of Sico, the Canadian decorative coatings company, as Akzo Nobel expands its presence in the North American coatings market.

US nanotech investment

The US National Center for Manufacturing Sciences (NCMS) has completed a National Science Foundation-funded survey of over 600 senior executives in leading US organisations to assess private and public investments in nanotechnology under the National Nanotechnology Initiative. The report cites few early successes but a host of barriers, including the high cost of processing, long time-to-market and unclear societal barriers, alongside insufficient capital. 

Change at the top for Pfizer

US drug giant Pfizer has unexpectedly switched chief executive Hank McKinnell with the company’s vice chairman, Jeffrey Kindler. McKinnell, who was due to stay in his position until February 2008, will remain Pfizer’s chairman of the board until his retirement in February 2007. ’The pharmaceutical industry is undergoing unprecedented change,’ said Kindler. ’In response, we will transform virtually every aspect of how we do business, focusing on actions that create and sustain value for our shareholders.’ Kindler, a graduate of Harvard law school, oversaw a major legal victory for Pfizer when it won patent protection for its biggest selling drug, Lipitor. 

Shell invests in Singapore

Oil company Shell has taken a final investment decision to proceed with the construction of a new world-scale ethylene cracker on Bukom Island, Singapore. The new Shell Eastern Petrochemicals Complex is an integrated refinery and petrochemicals project that will include modifications and additions to the Bukom refinery and a new world-scale monoethylene glycol (Meg) plant using Shell’s technology. The 800,000 tonnes per annum-cracker will be ideally positioned to supply cracker products to the new 750,000 tonnes per annum Meg plant, according to Shell. 

Philips swap IT for toothbrushes

Dutch electronics firm Philips is to sell over 80 per cent of its €8.3 billion (?5.6 billion) semiconductors business to a consortium of three private equity firms: Kohlberg Kravis Roberts; Silver Lake Partners; and AlpInvest Partners. ’As a stand-alone company, the semiconductors business will have every opportunity to realise its full potential and we are very pleased to have found strong partners that share our belief,’ said Philips CEO Gerard Kleisterlee. Philips says it is shifting from running ’cyclical activities’ to focus on healthcare and lifestyle markets. 

Declining animal rights extremism

Statistics published by the Association of the British Pharmaceutical Industry (ABPI) show a significant reduction in animal rights extremist activity in the UK. Attacks on private homes were down 50 per cent compared with the same period last year. ’These figures mark a sea change in the level of attacks and harassment in the UK and substantive progress towards Government objectives,’ said Philip Wright, director of science and technology at the ABPI. 

Dow shares tumble

Dow Chemical, the largest US chemical manufacturer, reported a 19 per cent drop in second quarter profit and warned that 2006 earnings could fall because of high energy costs, sending shares to the biggest drop since 2002. Net income fell to $1.02 billion (?0.54 billion) from $1.27 billion a year earlier. ’This was a challenging quarter for Dow, with increases in feedstock and energy costs that out-paced our ability to raise prices,’ said Dow’s chief financial officer, Geoffery Merszei. Meanwhile, German chemical company BASF, the world’s biggest chemical company by sales, announced a 15 per cent increase in income from operations. Record costs of raw materials increased the pressure on margins, agreed BASF, and price hikes were inevitable. 

Nanoforum first

UK Trade & Investment - a government organisation providing integrated support services for UK companies engaged in overseas trade, and foreign businesses focused on the UK - is inviting businesses within the nanotechnology sector to attend the first ever international business-partnering event for the European nanotech industry. The event, on 24 October in London, UK will feature four workshops, focusing on bionano, healthcare, nanomedicine; nanomaterials; nanofabrication & integration; and metrology & standards.

Chinese emissions trading hits the jackpot

The United Nations has approved a Chinese chemical plant’s sale of greenhouse gas emissions credits to the World Bank in the world’s largest ever emissions trading deal. The Changshu 3F Zhonghao New Chemicals Material company, in Jiangsu province, will receive €438 million (?295 million) for cutting HFC-23 (trifluoromethane) emissions by the equivalent of 10.43 million tons of CO₂  annually for the next seven years. The World Bank will buy the company’s emission reductions on behalf of a partnership of overseas public and private sector buyers, according to a report in the Xinhua-run Shanghai Securities News. 

Lucrative deal to thaw Moscow

UK chemical company Zirax has secured a ’de-icing contract’ worth $12.5 million (?6.6 million) with Moscow city council, Russia. Zirax, which specialises in calcium chloride, has held the contract for the three previous winters. The new contract extends Zirax’s license to de-ice Moscow’s infrastructure until April 2007. Moscow city council will acquire approximately 30,000 tonnes a year of calcium chloride pellets and 20,000 tonnes a year of Zirax’s specialist de-icing product, ’Ice Melt’, which will be used to ensure that transport links and essential services remain functional.