No.6 Naphtha Project 　http://www.fpc.com.tw/enfpc/subb10.htm

Petrochemical industry is intimately associated with our daily lives
　　Petrochemical products are around in practically every aspect of our lives; things we see and use everyday, such as toothbrush, towel, food container, clothes, building materials, decorative materials, transportation vehicles and amusement machines, have petrochemical components in them. One example can depict the importance of petrochemical industry in its application to the apparel industry. A synthetic fiber factory with an annual output of 90,000 tons only occupies an area of 5,000 square meters (roughly the size of a soccer field). But to produce an equal amount of wool requires a pastureland as big as 40,000 square kilometers (bigger than the total area of Taiwan). Based on Taiwan's output of synthetic fibers in 1995 at 2.4 million tons, we need an area 30 times as big as Taiwan in order to produce the same amount of wool. Intimately associated with our lives, petrochemical industry not only provides us with comfort and high-quality living, it is also an indispensable industry to the development of economy and technology civilization.

Petrochemical industry and economic development
　　Petrochemical industry has had a significant impact on Taiwan's economic development. Its related sectors cover a wide variety of products, ranging from chemical fertilizer, pesticide, detergent, apparel, plastics, rubber to paint. Total output of Taiwan's petrochemical industry amounts to NT$1.8 trillion, accounting for 28% of that of the manufacturing industry and topping other sectors in terms of breadth and depth of influence. In the past few years, petrochemical-related products have been widely applied to high technology in the fields of electronics and aerospace, making immense contribution to the transformation and upgrade of Taiwan's industry. Thus, petrochemical industry is regarded as the locomotive to our national economic development.

Cherishing the limited resources and maximizing their effects
　　After the world has been through two energy crises, oil is considered one of the most precious resources in the world. With known crude oil reserves in the world at approximately 1 trillion barrels, it will last only forty some years based on the current consumption rate of 65 million barrels per day. That means, the world's oil resources will be depleted in less than half a century. Therefore, almost every country is vigorously seeking alternative energy resources. It is anticipated that by the beginning of the 21st century, oil will be replaced by other forms of energy, except for aviation fuel. Even gasoline for automobiles might become obsolete. By then, petroleum will be used mainly for the production of petrochemical products and become indispensable from another perspective. The importance of petrochemical industry can be discerned from the fact that advanced nations in Europe, United States and Japan are actively expanding related facilities. Petrochemical industry is not an energy-consuming, low-efficiency industry. On the contrary, for a country like Taiwan that is scarce in land and densely populated, it is a vital industry that is essential for creating economic prosperity and elevating lining standard.

Characteristics of Taiwan's petrochemical industry and its underlying problems
　　Taiwan's petrochemical industry was developed in a reverse direction from bottom up into an integrated system with upper, middle and down streams intimately linked. Such system, having achieved considerable scale in a few decades, is unique in the world and has aided the flourishing development of the domestic economy. However, with no way to expand upstream production of basic petrochemical materials, a supply shortage developed over the long term affecting the manufacturing and sales of mid- and downstream businesses and forcing them to rely heavily on imports. When international demand for petrochemical products tightens, domestic manufacturers have been compelled to spend more on material costs and this cut into their competitive edge in the international market.
　　Many countries, be it in Europe, North America or East Asia, have been expanding their production capacity for upstream petrochemical products in recent years. Take the instance of South Korea, their ethylene capacity was only 500,000 tons in 1987, far below Taiwan's 820,000 tons. But by 2000, South Korea's ethylene capacity had expanded to 5.10 million tons, while it was only 2.535 million tons in Taiwan (actual output is 1.59 million tons). Consequently, the self-sufficiency rate of basic petrochemical materials in Taiwan is at a low 57%. If Taiwan does not move quickly to expand production, the development of the petrochemical industry will gradually shrink, dragging other related industries down along with it.

The inception of the No.6 Naphtha Cracking Project and its final settlement in Mailiao
　　In view of the chronic shortage of basic petrochemical materials in Taiwan that has damped the development of middle and downstream petrochemical industry, Formosa Plastics proposed No. 6 Naphtha Cracking Project with the intention to alleviate the problem and acquired government's approval in 1986. The first choice of project site was 280 hectares of land in Lizi, Ilan. The plan was dropped subsequently given the local opposition of overzealous environmental activists. In 1988, the project was moved to Kuanyin, Taoyuan and them abandoned for similar reasons. In 1991, with the blessings of both the local government and residents, the project settled in the off-shore industrial zones in Yunlin County, called Mailiao and Haifong. Shortly after, a massive land reclamation project went underway for the preparation of construction projects, including an oil refinery capable of processing 21 million tons of crude oil each year, two naphtha cracking plants that will produce 1.35 million tons of ethylene each year, other petrochemical plants, a heavy machinery plant, a co-generation plant and Mailiao Industrial Harbor. In addition, in light of Taiwan's serious power shortage, which has had an impact on people's lives and on businesses, a thermal power plant with the capacity of 3 million kilowatts was built; a portion of the portion of the power generated will be tied into Taiwan Power's supply system to help relieve the power shortage in the country. Total investment for the No. 6 Cracking Project (including the construction of the industrial port and power plant) amounts to NT$470 billion. From 1998 on, facilities have been completed successively and test runs started. When all work is finished, annual output value from these operations is estimated in the range of NT$480 billion.

Land reclamation
　　The Mailiao and Haifong Zones that accommodate No.6 Cracking Project are situated at the estuary of Chuoshui Creek at the northern end of Yunlin County. Approximately 8 km long from south to north, the area extends more than 4 km along the coastline out toward the sea. A great portion of the land lies below sea level most of the time and one can observe some sandy land at low tide which is totally submerged during high tide. The Cracking Project required massive land reclamation efforts to create 2,096 hactares of new land. Since the two sections have a waterway segregating them from the fish farms along the coast, geological improvement to shore up the foundation was required before the plants could be built. Land reclamation was carried out by first constructing an embankment with rock caisson and other materials that encircles the designated project site, then sand was extracted from government-sanctioned waters to level up the area inside the embankment. Mailiao is located in a region that is commonly dubbed "head of the windstorm and end of the waterflow," with the northeast monsoon blowing half of the year. Inconvenient transportation and poor weather made the reclamation work doubly formidable. It is truly a giant undertaking to turn sea into mulberry fields.

No. 6 Naphtha Cracking Project- magnitude and facilities

(2)Mailiao Port
　　Mailiao Port in the project occupies an area of 476 hectares, comparable to the size of Taichung Port (487 ha) and more spacious than Keelung Port (384). With water level 24 meters deep during mid-tide, the Port can accommodate vessels of 260,000 tonnage. It will become Taiwan's deepest port and the first privately funded industrial port. Upon completion, the Port can handle up to 60 million tons of cargo a year in the preliminary stage (as compared with 46 million tons and 24 million tons at Taichung and Keelung Ports respectively), roughly 60% of the capacity of Kaohsiung Harbor. Although Mailiao Port will be used for industrial purpose only, its operations in Yunlin County will incorporate the vast area of hinterland in the vicinity into the port zone. Consequently, the convenient marine transportation will promote the development of local industry.

(3)Independent power plant
　　The project plans to install a large thermal power plant equipped with five sets of generating units that will each generate 600,000 KW of electricity. The combined output of the three completed sets of generators is 1.8 million KW. Since they officially started production in June 1999, September 1999 and September 2000, all energy generated has been sold to Taiwan Power Company and incorporated into the national power grid (Taipower's total capacity in 2000, including that from IPPs, came to 29.63 million KW). This contribution has gone a long way to easing Taiwan's power shortage.

(4)Oil refinery
　　The oil refinery will process 21 million tons of crude oil each year at 450,000 barrels a day (Chinese Petroleum processes 770,000 barrels of oil each day in total at its refineries in Kaohsiung, Taoyuan and Ta-lin-pu after fifty years of development). Upon completion, the refinery will produce 3.84 million tons of naphtha that will be furnished exclusively to all project-related plants.

(5)Naphtha cracking plant
　　There will be two naphtha cracking plants that will generate 1.35 million tons of ethylene a year in total (Chinese Petroleum now has an annual output of 1.02 million tons).

(6)Co-generation plant
　　The plant will generate electricity, steam, water for industrial use, acid soft water, hyperpure water, nitrogen, oxygen and compressed air for use by project-related plants. The plant currently has 10 generator sets installed, with a total capacity of 1.82 million KW. The excess electricity produced, after supplying manufacturing needs, is sold to Taiwan Power Company. In an additional move to guarantee the supply of steam needed in the industrial zone, a 500 T/H boiler is being installed in the Mailiao zone. It is scheduled to start operation in July 2002.

(7)Machinery Shop and Boiler Shop
　　The machinery shop is primarily engaged in the design, manufacture, installation of petrochemical process equipment (reactor, tower, pressure containers, earth covered tank etc.). Manufacturing capability exceeds 10 meters in diameter, 100 meters in length and 1,000 tons in weight(10MOx100MLx1,000MT). The boiler shop is mainly engaged in the planning, design, manufacture, installation and construction of the 50-150 MW co-generation power plant and the 600 MW independent power plant.

(8)Wafer fabrication plant
　　This wafer plant is a joint venture of Formosa Plastics, Asia-Pacific Investment and Komatsu Electronic of Japan for the production of 8-inch wafers with an annual output of 2.4 million pcs. The investment totals NT$7.4 billion. Work was completed in March 1999. In December 1999, the plant attained ISO 9002 certification and in March 2001 the plant was awarded ISO 14001.

(9)Formosa Asahi Spandex Co. Ltd.
　　Formosa Asahi Spandex Co. is a NT$2.6 billion joint venture of Formosa Plastics and Asahi Chemical. The plant's annual production capacity is 5,000 tons per year. The Phase 1 project, with 2,500 MT capacity, was completed in the third quarter of 2000. The 2,500 MT phase 2 project was completed in March 2002. Further investment of NT$500 million will expand the plant, allowing annual production of 10,000 MT of polytetramethylene glycol (PTMG). Work was completed in August 2002.　

Environmental Protection Plan in the No.6 Naphtha Cracking Project
　　Since its establishment, Formosa Plastics Group has consistently acted in concurrence with government policies toward the common goal of creating a prosperous society. In the many years of pursuing after economic growth, we have persisted in the belief of "equal emphasis on environmental protection and the economy" and worked relentlessly in the area of pollution control and environmental preservation.
　　Prior to the initiation of the No.6 Cracking Project, we retained the services of prestigious universities in the country and engineering and propose preventive measures with the very intent to minimize the impact of the project on the environment. Based on the analyses and proposals of these experts, an environmental impact study was prepared and subjected to EPA review by scholars and experts at home and abroad before the project got underway. An environmental monitoring agency will be in charge of follow-up and post-operation review to ensure full compliance to relevant environmental requirements.
　　In this project, NT$98.0 billion or 20% of the total investment is spent on pollution prevention by adopting and procuring the most advanced industrial pollution control know-how and facilities. Based on the premises of making parallel strides in industrial development and environmental protection, the goal of Formosa Plastics Group is to create an international-caliber industrial park. With our own aspirations and experience accumulated over the years, we are confident that the task of preserving our environment in the midst of all these undertaking will be well done.

Feedback to the local community
　　Presently, all offshore industrial zones are poverty-stricken areas that lack medical, cultural or recreational facilities. In addition, Central Taiwan faces the greatest lack of medical facilities; Taiwan also lacks comprehensive planning of recreational facilities. Furthermore, the proportion of senior citizens has now risen to 7%, evidence of the gradual ageing of the population. As National Health Insurance has now been implemented, public demands for medical care have also increased, so there is a need to set up medical facilities to raise quality of life.
　　The goal of economic development is to let citizens enjoy a higher quality of life. Achieving this requires attention to non-economic aspects of life (such as health, transportation, environment, leisure, culture and welfare). In recent years, Taiwan's economic development has borne fruit and the government has invested in the basic non-economic resources of society, such as transport infrastructure construction, healthcare, and recreational and cultural facilities. In light of this, and spurred by the desire to make a contribution to society and the local community, Formosa Plastics Group is confident that it can build a model industrial park in Yunlin's offshore zones that embraces the functions of industrial operations, environmental protection, medical care, recreation and culture.
　　Formosa Plastics Group hopes to modify slightly the width of the segregating waterway. Part of the additional land created will be provided for Chang Gung Memorial Hospital to build a medical center including a 2,000-bed emergency facility (as compared with 2,377 beds, 850 beds and 3,885 beds at Chang Gung hospital in Kaohsiung, Keelung and Linkou respectively), a senior-citizen community, a nursing institute and a recreational park. The availability of these facilities will elevate the living standard of local residents and, by tying the industrial park closely with people's lives, create a fresh image for the park. These plans will be put into action once the land issue is resolved.

A new town in Mailiao
　　In anticipation that the No.6 Cracking Project will drive the local economy and advance the living standard of the residents, Yunlin County government initiated a 3,000-hectare new town development plan in Mailiao. Having won the approval of the Executive Yuan, the plan encompasses a light industrial zone, a residential area and a commercial area.
　　Formosa Plastics Group will coordinate with the plan by bringing in more downstream manufacturing industries. Linking the up-, middle- and downstream productions can best utilize the resources of the industrial park, shorten distances for material and product transport and lower the costs of packaging and storage. Also, geographic proximity that invites intimate exchange of technical know-how can achieve the goal of division of labor. Such system will reduce production costs, and ultimately, enhance international competitiveness.
　　The development of the Mailiao new town can create more jobs and draw local residents away from the trade of fish-farming that has created severe a subsidence problem due to massive extraction of underground water. The area will also be transformed from an agriculture-dependent area into a farming-industrial city.
　　This will not only raise the living standards of local residents and employees in the new town, it will drive forward the development of industry. In all, the development conforms to the objectives of government policy of "elevating personal income," "fostering industrial potential," "promoting balanced regional development" and "enhancing living quality."

Projected economic contributions
　　Total investment in the No.6 Cracking Project amounts to NT$470 billion which is translated into an annual investment of NT$80 billion during its construction phase or 9% growth rate of private investment and 1% of national economic growth.
　　When complete, the contribution of the No.6 Cracker to the country will be multiple. It will boost the confidence of the private sector, stabilize development of the petrochemical industry, promote upgrade of the petrochemical industry and balanced regional development, and shorten the gap between city and countryside. Other materialized benefits of the project include:

Outlook for the future
　　In its four decades of operations, Formosa Plastics Group, approaching everything with the attitude of "seeking perfection," has been adhering to the spirit of "diligence and simplicity" and the goal of developing manufacturing industry to make a contribution to the national economy. Taiwan is an island country characterized by scarce resources and a small domestic market. Most products must rely on export. Only by observing the traditional virtue of industriousness and persistently seeking the development of manufacturing industry can the country maintain its economic growth. That is why Formosa Plastics Group has surmounted towering obstacles to push for the No.6 Naphtha Cracking Project. Thanks to assistance and support from all sectors, we will put forth all our efforts to complete this gigantic undertaking and establish a new milestone for the economic development of the country. We beseech your continuing support and advice. Let us work together to create a better tomorrow.

The investment of FPC in the Sixth Naphtha Cracker Project