Review of 2nd ICIS World Surfactant Conference

NYC – April 25th and 26th, 2012

I was again very pleased to be able to co-produce and chair the third surfactant conference in our series with ICIS. This time, we upgraded and expanded our venue – at the Grand Hyatt, Jersey City, with a stunning view across the Hudson River of the Manhattan skyline.

200 friends and colleagues from all parts of the surfactant value chain spent one and a half days listening to outstanding speakers and networking with each other in the breaks and drinks reception. The proceedings were reported in ICIS Chemical Business and, of course, in Doris De Guzman’s outstanding Green Blog, which live-tweeted essentially the entire conference. A special mention should also go to our friend Sarah Gorback at Elsevier, who tweeted extensively and was instrumental in supporting our partnership with “Focus on Surfactants” newsletter to which all delegates received a free subscription.

Here, I make a point or two regarding each of the speakers and hopefully give you a flavor of the type of event that we will produce coming up in Budapest, September 13th and 14th at the First ICIS European Surfactants Conference. Some of the links in my notes below may require a subscription to ICIS in order to view.

Keynote speaker, Mark Miller of BASF, gave a wide-ranging overview of that company’s challenges and opportunities in the field, pointing out that a balanced portfolio of renewable and petrochemical feedstocks is essential to the BASF’s success. He noted that refined EO is tight in the USA and speculated on who would take the plunge to invest accordingly.

Our M&A Speaker this time was the well known investment banker, Peter Young of Young and Partners. M&A activity is slowing according to Peter. The shaping of our industry, however, by M&A is likely to continue as opportunities for M&A abound in the surfactant value chain.

Martin Herrington of IP Specialties gave a stimulating and thought provoking overview of the fatty alcohol market, pointing out that “natural ” products’ growth may be hard to sustain in the face of cheap shale gas and ethylene in North America.

Next up was the widely known expert on EO, Doug Rightler, who proceeded to give a beginner’s crash course and advanced level seminar on EO economics – all compressed into 40 minutes. A highly rated speaker and sought after consultant, we were fortunate to have him speak at our event.

In the tradition of breaking some news at our conferences, Harish Davey of Reliance came to the podium and announced Reliance’s entry into the surfactants market in India – in order to support their growing consumer products and retail business. This is a huge piece of news and we were honored that Reliance chose our conference to announce it first.

After lunch, Victor Zubb of WheatOleo (a Soliance company) reviewed some interesting new developments in I&I cleaning ingredients. Biomass from wheat used in sophorolipid surfactants for I&I.

Rhodia’s speaker, Chris Houston (new to the company and a veteran of the industry) delivered some novel insights the oil and gas field and its importance for surfactants. Overall the oilfield chemicals market is worth $53Billion (!)

L’Oreal’s Jeanne Chang gave us a look inside the raw material innovations at the major global personal care company. She referenced the company’s adoption of the 12 principles of green chemistry and the outstanding work in glycoside chemistry in the Proxylane range of anti-aging products.

Heliana Kola of the Battelle Memorial Institute generated substantial discussion and debate around her presentation on the ingredients in laundry detergents in North and South America. Quite astounding, the impact of enzymes on the level of surfactants used in detergents.

Our focus on Latin America was kicked off by Todd Nelmark of Oxiteno. His survey of the surfactants markets in Mexico and Latin America was simply unique for a market heretofore little analyzed deeper than the macro level.

Colombia’a emerging palm industry was the focus of our next presentation. Colombia is the fourth largest palm producing country in the world, behind Malaysia and Indonesia (natch) and Thailand. Monica Perez was a stand-in speaker at the last minute and really opened our delegates eyes to the potential right here in the Americas for palm derivatives. Colombia is clearly in the running to be the “next Malaysia” just a few hours flight from Houston.

Wrapping up the first day, was Jim Heaney of Colgate, who gave us an encouraging but realistic assessment of the political challenges in South America, especially in Argentina and Venezuela and the cost pressures of doing business in the region where customers appreciate renewability but will not pay extra for it.

Opening up day two of the conference, I set the stage for the “What it Takes” mini-conference which took its name from a book by Richard Ben Cramer about the 1988 US presidential race. The book looks at the then candidates, Bush Sr., Dole, Dukakis, Hart, Gephardt and Biden and tracks the campaign through the lens of who really has what it takes to become president of the USA. In the same way, on our second day, we focused in on the leading new technologies in the surfactant supply chain and invited the delegates to consider who, if any, among them really has what it takes to impact our industry and become the “third leg” of the supply chain stool alongside petrochemical and oleochemical feedstocks. To tee up the discussion, we invited P&G and Seventh Generation to relate from their perspective what it takes to get an ingredient into their consumer products and onto the supermarket shelf.

After the challenge was laid down by P&G and 7th Generation, first into the lion’s den was Tim Dummer of Solazyme, a favorite of prior conferences, who reported on the continued solid progress of the company in commercializing engineered oil derived from sugars via the action of heterotrophic algae. THe company’s first plant in Brazil is slated for start-up in the second half of 2013.

Next up, Wei Huang of LS-9 described the company’s one-step conversion of sugars directly into oleochemicals, via enzymatic routes. A different approach to that of Solazme and very interesting to our delegates.

Another ICIS conference, regular, Elevance, then took the stage to update the group on their progress with their two announced bio-refineries, 180KMT/yr in Indonesia and 270 KMT/yr in the US. Ambiitious goals for their blend of commodity olefins and specialty building blocks derived via metathesis of vegetable oils.

BIll Rothwell of Codexis, a newcomer the ICIS conference speaker circuit, but with deep experience in the global surfactant supply chain, spoke next. They are entering the market for fatty alcohols with their Codexol brand product made from sugars via a microbial route.

My colleague, Patrick Foley, was next with a change of pace, getting in-depth with some novel, patented chemistry that has formed the basis of a brand new 6 month old company, P2 Science. P2 is commercializing a range of specialty ingredients, both novel and drop-in, for consumer products.

Last to enter the arena to convince the crowd that they had what it takes, was Amyris, ably represented by Frederik Ngatung. Amyris synthetic biology platform seeks to employ the versatile farnesene intermediate to enter the fatty alcohols market in the near future.

In summary, I can say that I have never enjoyed myself more at an industry event. It was again and honor to chair a meeting as content-rich and important as this and I hope the delegates got as much out of it as I did. Registration for Budapest , September 13 & 14th is open now. I am told the venue is outstanding and that we will sell it out. I hope to see more friends and colleagues there.

Zero Waste Refining for Specialty Chemicals Production

What do J-Lo, Manchester United and Biomaterials have in common? They are all connected to our CM&E Lunch at the Penn Club, Mid-town NYC, Thursday September 8^th.

Our September 8^th panel discussion features speakers from Coty, makers of the latest Jennifer Lopez Fragrance, AON, risk management specialists and sponsors of Manchester United Football Club and Blue Marble Biomaterials, whose proprietary processes for the conversion of biomass into chemicals was recently commercialized in a new facility in Missoula, Montana.

Still wondering how we can pull this disparate grouping together into a compelling and coherent whole? Check out the program here – or better yet, just sign up and we will see you on the 8^th September.

The Penn Club is a beautiful location with outstanding lunch service; but space is limited and this event will sell out. I therefore encourage all those interested in attending to register now. We cannot promise appearances by Ms. Lopez or Wayne Rooney but the compelling program will be accompanied by the usual superb networking with chemicals executives, investment bankers, venture capitalists, analysts and many others.

The First ICIS World Surfactants Conference

(May 12^th and 13^th Weehawken, NJ)

I was honored to chair the first ICIS World Surfactant Conference, which took place last week after about 7 months of planning between myself and the ICIS conference team. Based on the feedback I got from many people, whose counsel and opinion I value, the event was a success. The ICIS folks agreed and some preliminary planning has already been done around the next conference. Nothing has been finalized, but I can give you an early hint about one aspect. The venue will be much bigger! Why? Because last weeks conference actually sold out twice – even after getting more space – and the people on the waiting list are already vowing to register early next time.

To give you a flavor of what around 150 people experienced in the room over 1^1/2 days, I note below, the line-up of speakers and just one interesting point that I took away from each while chairing the conference. More comprehensive coverage of the event will no doubt appear in ICIS Chemical Business magazine over the coming weeks and in the ICIS Green Chemicals Blog, penned  by our good friend and colleague, Doris De Guzman who pretty much live-tweeted the entire proceedings (complete with “twitpics”) from the front row.

Neil Burns of Neil A Burns LLC: I tried to give an overview of the key issues that would be explored during the conference – which I summarized as Value Chain, Volatility, Sustainability, Globalization and M&A. Not as catchy as Tom Nelsons “VUCA” but set the tone for the rest of the event.

Pascal Juery of Rhodia : Company is focusing on sustainability and growing regions of the world. They have been in Brazil for 100 years. Still lot of room to grow and consolidate as the specialty surfactant market is still very fragmented.

Bill Tittle of Nexant: North America set to become a net exporter of EOD’s as advantaged ethylene is converted to purified EO for ethoxylation.

Mohammad Al-Bibi of Farabi Petrochemicals: Farabi will commission a second 120 KMT/yr LAB plant in 2012 helping ensure the middle east remains a net exporter of LAB going forward.

Kongkrapan Intarajan of Emery Oleochemical: Emery’s aggressive growth strategy is driven by vertical integration (Sime Darby and PTT parents), Global Presence and Technology Access (recent ventures with Aekyung in Korea and ERCA in the Netherlands). By 2015, the business mix is expected to be 50:50 base oleochemicals : specialty derivatives.

Janet Crawford of Akzo Nobel: Tallow now costs 60% more than crude oil on lb for lb basis. At this point, expect to see demand destruction in surfactant markets.

Gillian Morris of Kline and Co. : $800 Million market for specialty surfactants in personal care with still 45% of that in Europe!

Jochen Flucht of Henkel: Henkel will play at all stages of the supply chain; including, for example, hedging kerosene for their LAB/LAS purchases.

Brian Chung of Rhodia: 100% naturally derived SLES, uses ethylene oxide made from ethylene derived from ethanol made from molasses via fermentation.

Tom Nelson of P&G: P&G is working with LS-9, Amyris, Braskem and others to try to mitigate the volatility and price pressures from traditional petrol and oleo raw material supply chains.

Icilio Adami of Desmet Ballestra: The new enhanced loop ethoxylation technology represents a breakthrough in terms of efficiency, throughput and capital cost effectiveness for ethoxylation.

Chris Cerimele of Houlihan Lokey: The surfactant industry continues to eb shaped by M&A. Western companies tending to divest oleochemicals while Asian oleochemicals companies tending to seek technology driven investments.

Alessandra Lancellotti of Frost and Sullivan: There are 15,000 companies in personal care in Brazil and the country is the number three consumer of such products in the world.

Bob Moser of Brenntag: Distribution is a fragmented market with plenty of room to grow. Brenntag has a 6.9% market share followed by Univar at 6.0% and Nexeo (formerly Ashland) with 2.8%.

Walter Rakitsky of Solazyme: Walt opened up the “surfactant revolution” part of the conference with a vision of designer oils produced via genetically engineered algae from a variety of biomass feedstocks. Technology is proven and being scaled up by this company that has already filed for a $100 Million IPO after being funded by VC and strategic investors.

Andy Shafer of Elevance : Andy rounded out the surfactant revolution with his vision of the Elevance metathesis technology as implemented in a series of biorefineries (180 KMT/yr first unit to commission this year in Surabaya). These plants to provide surfactant feeds from sourced uncoupled with crude or palm oils.

In summary, I was very pleased with the quality of speakers and participation by the delegates. Given that, I regarded myself as very fortunate to be able to chair the event and to work with such a talented team at ICIS in putting it together. Next year – a bigger venue and a continued focus on high profile, interesting speakers.

Take a look at our “Press and Downloads” page. There you can see a copy of an article we published in last months INFORM magazine which illustrates the drivers behind some of the changes affecting the surfactant industry today. Interestingly the article features two companies set to speak at the 1st ICIS world surfactant conference that we are organizing May 12 and 13 with ICIS.

The Next Revolution in Specialty Chemicals?

There is constant debate about when and how quickly we will run out of oil, but there is no doubt that, at some point, we will. The term “peak oil” has passed into the popular lexicon to describe the point at which oil production reaches its highest historical level, a point beyond which, literally and figuratively, it is downhill for oil producers. Recent analysis by “The Oil Drum” illustrates various predictions of when and at what point, global oil and natural gas liquid production reaches its peak. Most predictions are grouped around “about now” as the time that the peak is reached.

The issue of peak oil has implications, of course for transportation and other essential areas like heating. Not as widely discussed, at least in the mainstream media is its implications for the chemical industry and surfactants in particular. Crude oil based products end up as alcohol sulfates, ether sulfates, linear alkylbenzene sulfonates, alcohol ethoxylates, nonylphenol ethoxylates, softener, conditioner and antimicrobial quats and amphoterics. That is, in essentially every major surfactant class used in every class of detergent, personal care and industrial cleaning product. Try maintaining basic personal, household and institutional hygiene for a day without oil.

Our blog post on surfactant economics discussed current issues with feedstock pricing and volatility but really did not address the long term issue of what happens when these feedstocks run out. Some companies however, are building a business around addressing this question and their activities are starting to have a direct impact on the future of the chemical industry and the surfactant and oleochemical industries in particular.

These companies are focusing on chemicals made from naturally occurring bio resources (or biomass) like vegetable oils, switchgrass, non-food and food crops, algae and other sources of triglycerides and carbohydrates. The current wave of activity grew out of the bio-fuels initiatives around ethanol (from Corn (maize) in the US, Sugar in Brazil) and biodiesel (from soybean oil in the US, palm and Canola in other parts of the world). Bio-fuels grew in response to the abovementioned “peak oil” scenario. While many companies started chasing the brass ring of a gasoline substitute, a number realized that an easier, quicker, higher margin way to get to market is to use bio resources, instead of oil, natural gas or crops, to make chemicals for use in diverse markets like cosmetics, lubricants, coatings, detergents, polymers and many other niche applications.

Today, there a number of these bio-chemical companies that are working with some innovative and potentially game-changing technology for chemicals production. A popular business model revolves around  biorefineries, which take biomass (as noted above) and produce existing chemicals more cost effectively than the traditional routes from oil, natural gas or traditional crop vegetable oil (like palm oil) splitting. A secondary market opportunity is to produce new, custom tailored chemicals that are not available via the traditional routes.

An outstanding resource for understanding and tracking this emerging segment is the ICIS Green Chemicals Blog, to which your author credits his initial realization that this field will bring about the next revolution in specialty chemicals and related markets.

In fact, the author of the ICIS Green Chemicals Blog will be moderating, with me, a panel luncheon discussion hosted by the NY ACS, Chemical Marketing and Economics Group on March 3^rd in New York. Further details here.

The following table lists some companies active in this growing field. The first two listed, Martek and Novomer will be panelists at our March 3^rd CM&E meeting.