Houston – Lyondell Chemical Co. said Tuesday it will build an integrated pilot plant in Pennsylvania to further develop its proprietary one-step, direct oxidation propylene oxide (PO) technology.

To be located at Lyondell's Technology Center in Newtown Square, Pa., the pilot plant will be the final demonstration of the technology before commercialization. Lyondell's operating capacity for PO is about 4 billion pounds per year.

"We have been working for many years on a technology that will produce PO in one step without requiring an auxiliary feedstock facility, such as a hydrogen peroxide plant," said Ed Dineen, Lyondell senior vice president of chemicals and polymers. "The added benefit of our technology is that it produces PO without a co-product such as styrene or tertiary butyl alcohol. Now that our extensive testing of the lab-scale process is complete, we are ready to pilot the process on a much larger scale."

Dineen said the three current leading commercial methods of PO production are the propylene oxide/styrene monomer (POSM) process and the propylene oxide/t-butyl alcohol (PO/TBA) process, both of which were invented by Lyondell, and the chlorohydrin process. All three processes require greater capital investment to build a plant than the direct oxidation technology, he said.

"We believe the POSM process is the best technology available today to produce PO because of its significantly lower cash costs. We continue to make improvements to this technology," said Dineen.

"We also believe this new one-step direct PO technology offers significant economic advantages," he said. "A direct PO plant costs less to build than a POSM, PO/TBA or chlorohydrin plant. And because there is no co-product, our investment decisions will not be influenced by market conditions for the co-product."

Dineen said Lyondell has spent more than 40 years exploring PO process technologies to identify the most efficient and lowest-cost options. Since 1990, Lyondell has secured more than 130 U.S. patents in the PO area.

Peter Gaines, Lyondell's global vice president, oxygenated chemicals said the company continues to work with Sumitomo Chemical Co. Ltd. The two firms are partners in the Nihon Oxirane Co., Ltd. joint venture, which is pioneering a PO/Cumene plant in Japan scheduled to be operational in 2003.

Lyondell also is building a new POSM plant in Rotterdam, The Netherlands, scheduled for start-up in 2003. It is the 11th PO plant built by Lyondell, and will be jointly owned by Lyondell and Bayer.