Posts Tagged → ethane
A new report from BENTEK Energy and Turner, Mason & Co. says that because of shale, we should expect a 40% increase in natural gas liquids production in five years. The increase amounts to 950,000 barrels per day of new natural gas liquids by 2016.
That is an extraordinary amount of new feedstocks for the chemical industry. I ran my own estimates of how much ethylene production all these NGLs can support. I assumed 75% ethane content in the NGLs. I came up with 11 million metric tons of ethylene per year. These NGLs would also yield about 3.7 million metric tons of propylene (assuming propane from the NGLs is dehydrogenated) and other stuff.
If the report, and the Chemical Notebook’s estimates, are correct, or nearly correct, then all the announcements we’ve been hearing about new ethylene capacity aren’t nearly tapping out shale’s potential for petrochemicals. John Stekla, CMAI’s director of ethylene, gave a recent presentation where he forecast about 6 million metric tons of new ethylene capacity by 2016. (see slide 29).
If not feedstocks, there is a factor that would limit the amount of new ethylene capacity that can be built. That is markets. Can the world really swallow more than 11 million metric tons of polyethylene, vinyl chloride monomer, ethylene oxide, and other derivatives from the U.S.? The world ethylene market today, Stekla points out, is around 120 million metric tons.
My own thoughts are that we probably will see more capacity announcements in the U.S., though not to the tune of another 5 million metric tons.
Out of bankruptcy for about a year, LyondellBasell is starting to find its stride. It is calling itself “the busiest chemical company in the world”. (This reminds me of “the hardest working man in show business”.) And to hammer that theme home, the cover of its annual report is covered in bees. This strikes me as a good idea for a broader corporate branding initiative.
Indeed, the company has been busy. This week, executives rang the opening bell at NYSE, shareholders elected a few independent directors to its board (it calls it a “supervisory board”, how very European), and they also approved a dividend.
LyondellBasell also had its Q1 earnings conference call, presided over by King Bee Jim Gallogly. The most interesting topic, and the one that got the most questions from analysts, was about how it would take advantage of the shale gas boom. Here are highlights:
1) The company has an 18-month plan to shift to lighter feedstocks at its Channelview, Texas, site. (It has already doubled ethane cracking capacity at Channelview and Corpus Christi.) This project will yield about 500 million lb more ethylene from ethane per year.
2) The company is conducting engineering for debottlenecks at La Porte and Channelview. These projects will yield more than 500 million lb of new ethylene capacity.
3) Gallogly said he was open to investing in a cracker joint venture, specifically to a “condo cracker”. This is an idea that Lyondell has been bouncing around for a very long time, since not long after it formed Equistar. It would involve two or more partners with offtake agreements in a cracker. However, Gallogly said that expansions of existing crackers are a higher priority because such projects get better returns.
4) LyondellBasell’s crackers in Morris, Ill., and Clinton, Iowa, are setting production records. They enjoy a cost advantage over ethane crackers on the USGC because they are tied into a different grid. (I’m curious about what the influence of reduced border flows from Canada might have been on these crackers. But seems like there is plenty of feedstock in the neighborhood.)
5) Small capital projects has increased HDPE production in Victoria, Texas, by 10%. It is also getting a 10% increase in
production rates from ethylene oxide, a strong market right now.
6) “Newer projects in the Middle East may not be as competitive as some of the new projects in the U.S., depending on the availability of ethane,” Gallogly said. This speaks volumes. While he was the head of Chevron Phillips, Gallogly built many petrochemical plants in the Middle East as part of the last wave of new capacity there.
I was completely wrong about who would build a new cracker in the U.S. It wasn’t a “foreign” firm at all. Chevron Phillips–based in the Woodlands, Texas–announced it is studying a new ethane cracker at one of its Gulf Coast facilities. The company already makes ethylene at Sweeny, Port Arthur, and Cedar Bayou, Texas. It also makes styrene in Louisiana and has an aromatics plant in Mississippi.
Let me illustrate how surprised I was by this announcement. While sitting in a ballroom at the Hilton last week waiting for the conference to begin, I actually made a list of every ethylene maker in North America and the pro’s and con’s of each building a cracker. (I was preparing a post on this blog, though I do that kind of thing for fun as well) Chevron Phillips was dismissed out of hand (I’m using the passive voice to make this less embarrassing to me.) My reasoning was that they just restarted an idle unit in Sweeny. (I’m really glad I didn’t publish that list.) Also, I seemed to have overlooked CP Chem’s announcement last year that it was building a 200 ktpa hexene plant in Cedar Bayou.
I suppose there might be room for another cracker, especially somewhere in the Northeast, that would sip ethane from the Marcellus shale. And of course, there will likely be some incremental expansions and other investments related to ethylene. (Silver lining.)
Scary Publishing News:
Modern Plastics’ will publish its last print edition in April. I got an e-mail today from its publisher about folding everything into its website:
As part of the restructuring, the last print editions of Injection Molding Magazine and Modern Plastics Worldwide will be published in April. Injection Molding and Modern Plastics Worldwide will continue to deliver content via branded e-newsletters and the PlasticsToday.com website.
Modern Plastics isn’t just some trade paper. It is an institution in the plastics industry. The magazine has 33,078 audited print subscribers and 10,462 qualified digital subscribers. The current print issue has 40 pages. This is down from a few years ago, which were perfect bound and 60+ pages. There seems to still be a decent amount of paying advertisers. I really do hope that the transition works out well. It looks like the odds are in its favor.
I’m in Houston for the DeWitt and CMAI petrochemical conferences. According to modern journalist practice, I should have had a live Twitter feed from the conferences. I don’t do that. I’m not particularly ashamed. Feel free to cut and paste these observations into your own Tweets.
1) DeWitt was held at the Hotel ZaZa in the Museum district, an artsy hotel with giant booking photos of Frank Sinatra on the walls and stuff. There were about 40 attendees, not including speakers and journalists.
2) CMAI had about 950 or so, by my reckoning, if you don’t include the petrochemical workshop they put on the day before the actual conference. Overall figures were more than 1,000, and I think, a record. They held it at the Hilton Americas, a perfectly normal hotel near the convention center.