Port reaps new business after Frankford chemical plant sale

Posted: May 07, 2012

After Sunoco Inc. sold its Frankford chemical plant to Honeywell International Inc. last year and cut back shipments of key raw materials, Honeywell lined up alternative suppliers in the Gulf of Mexico to bring thousands of tons of a critical industrial chemical for making nylon into the Tioga Marine Terminal in Port Richmond.

That has meant a big gain for the Philadelphia port — an additional 300,000 to 400,000 tons of liquid bulk cargo bound for the Honeywell plant will arrive this year, bringing the total of such cargo to “well over one million tons,” said Robert Blackburn, the Philadelphia Regional Port Authority’s senior deputy executive director.

Before divesting the Frankford facility, Sunoco was the sole local supplier of the compound, made from benzene and propylene. At the Bridge Street plant in Frankford, the chemical, cumene, is converted into another chemical, phenol, which Honeywell sends to another of its facilities in Hopewell, Va., to turn into the main ingredient other companies use to manufacture nylon for carpet fiber, clothing, and plastic in automobiles.

When Sunoco ran the operation, it could move chemicals from its local refineries directly to the plant. Now cumene must come on oceangoing vessels that need port facilities.

With Sunoco closing the Eagle Point and Marcus Hook refineries and threatening to close its South Philadelphia refinery, Honeywell has to buy cumene from refineries 2,000 miles away. It arrives at two piers owned by the port authority and leased to Kinder Morgan Terminals at Delaware and Allegheny Avenues.

“Overall, we had a 16.7 percent increase in tonnage in the first quarter,” including a 15 percent increase in Kia and Hyundai autos coming into South Philadelphia headed to dealer showrooms, Blackburn said. “But overwhelmingly, the increase was from liquid bulk, which was up 124.2 percent in the first quarter.”

Because of the distance the ships travel from the Gulf Coast — Texas, Louisiana, Mississippi, and Alabama — Honeywell is making many deliveries up the Delaware River that it didn’t used to make.

“Absolutely, we are seeing more barges and ships. Kinder Morgan’s facility is busier,” said Dave Vattimo, vice president of business development for Kinder Morgan Terminals. “Honeywell is a big customer of ours, and this has been a great addition.”

For Honeywell, a diversified company with four business units and 140,000 employees worldwide, it has been a homecoming. AlliedSignal Inc., which merged with Honeywell in 1999, sold the Frankford plant to Sunoco in 1998.

By owning the manufacturing operation, Honeywell has been able to broaden its portfolio — making phenol for its own manufacturing needs, and exporting some to customers in Europe and Asia, said Erin Kane, business director for chemical intermediates at Honeywell.

As a result of the Frankford purchase for $85 million, Honeywell is also selling acetone and alpha-methylstyrene, by-products of making phenol. “We have customers for all three products,” Kane said. Honeywell said it pays a competitive price for its cumene but declined to be specific on costs. Honeywell said cutbacks it announced Friday at a specialty products facility in Claymont, Del., were unrelated to the Frankford operations.

On Friday morning, a U.S. Shipping Corp. tanker registered in Wilmington carrying cumene from Corpus Christi and Houston unloaded at a dock south of the main Tioga terminal. An intricate system of pipes took the liquid to storage tanks across the road, as well as directly onto a barge that delivered it to the phenol plant about two miles north on the river.

More than one billion pounds of cumene flow annually to the Frankford plant. This year, 75 percent will come from oil refineries mostly in Texas, and 25 percent will still come from Sunoco’s Philadelphia refinery. Sunoco agreed this week to be acquired by a Texas pipeline company for $5.3 billion. Negotiations to sell the refinery are continuing.

“Depending on what happens with the refinery, we are prepared to take 100 percent out of the gulf,” Kane said.

“The plan is to continue to maximize the operation. We continue to invest in it,” she said. “We took possession of the plant in July. Now that we’ve got it fully integrated, we are broadening our commercial reach and ramping up the new supply chain.”

It’s a been a relief for the 160 workers, who thought Sunoco might close the facility. “We’re very happy — ecstatic — that we still have a plant to operate,” said chemical operator John Ash, 42, of South Philadelphia.

“Honeywell is spending money repairing the place, bringing it up to speed,” said Ash, vice president of Steelworkers Local 10-667. “It’s looking like there’s going to be a future here now, whereas under Sunoco’s rule, it was kind of doom and gloom. We never could make any money. Since Honeywell has bought us, they say we are making money.”

Tom Marlow, 48, of Holland, Bucks County, maintains equipment, including the tanks, pumps, and pipes at the Kinder Morgan docks. “There’s been a significant increase” in activity, he said. “It’s keeping everybody working, that’s for sure. It’s a big shot in the arm for us. With all these refineries closing, everybody gets on edge. I’m glad to see something is improving.”

Contact Linda Loyd at 215-854-2831 or lloyd@phillynews.com.

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