New research from IHS has said that the increasing use of cost advantaged NGLs over oil as a feedstock by North American petrochemical producers means that they are using less oil and propylene is being produced as an on purpose co product by steam crackers. The research has also said that this is pushing a global trend for on purpose propylene production, a key chemical building block second in demand only to ethylene.
Chuck Carr, senior director of global olefins, IHS Chemical and principal author of the study said, ‘the increasing need for on purpose production of propylene is primarily being driven by two factors: first, the changing feedslates in North America petrochemical production, which are getting lighter due to more ethane being use versus naphtha; and second, the decline in North American gasoline demand as automobile CAFÉ standards are implemented. Ethane is a cheaper feedstock than naphtha, but it produces minimal amounts of propylene as a co product. Since global demand for propylene is increasing, on purpose production of propylene has become increasingly significant in the last 10 years, and this trend will continue through 2023.’
2003 – 2023
The report ‘IHS Chemical North American Propylene Supply Study’ has shown that in 2003 less than 3% of global propylene production was considered to have been produced on purpose. In 2013, the study has revealed that the number had increase to 12% and by 2023, IHS predict that nearly 30% of propylene production will in fact be on purpose.
Last year, North America produced just over 20 million t of propylene, by 2023, IHS believe this will rise and North America is expected to produce approximately 15% of total global supply. Carr has said that 5 million t will be on purpose propylene, which is only 4% of the region’s propylene production.
The report goes on to say that current global propylene demand is at 90 million t and is expected to increase to 130 million t by 2023. Propylene is produced from naphtha, NGLs in refinery liquids and t a smaller extent coal. The product is essential for the production of polypropylene plastics such as films and packaging, and a wide variety of other products.
Carr commented, ‘the source of propylene supply varies significantly by region, and North America is unique compared to the rest of the world. 48% of the world’s production comes from steam crackers, but in North America, the majority of propylene, or 70% of production, is produced by refineries. Just 26% of North American production is derived from steam crackers because of their shale based NGL feedstocks.’
When it comes to propylene production in North America, 5 million t is used for fuel and the remaining 16 million t is used to produce chemical derivatives. Over 60% of the region’s production comes from and is used in the Texas Gulf Coast. Other Gulf Coast regions, including East Texas, Louisiana and Mississippi, account for approximately 20% of the region’s additional propylene production.
Carr has commented that steam crackers amount to 67% of propylene supply in Western Europe, 56% of supply in Northeast Asia, 49% of Middle East production and 45% of propylene production for the remainder of the world. Other regions do have some on purpose production but it is the Middle East that he considers to be the most significant. The technologies employed for on purpose propylene in the region are propane dehydrogenation, metathesis and high severity fluid catalytic cracking.
Carr said, ‘looking forward, propane dehydration is expected to be the most significant source of increasing global on purpose propylene production, and will be the process most likely employed in the US, the Middle East and Asia for this production. Currently there is one propane dehydrogenation unit operating in the region, but plans are under way for six more to be built by late 2018. In response to this new dehydrogenation capacity, pipeline service changes and expansions are expected in North America. We are going to see significant investments being made in terms of pipeline capacity and storage.’
It has been said by IHS that US and Middle East additions will be local, low cost propane, while Chine will use imported propane which competes with the fuels market. Carr commented, ‘coal to olefins technologies in China are also expected to be a significant source of on purpose supply growth. However, this technology faces water and environmental challenges, and has very high capital costs as well.’ However, Carr did conclude, ‘China will add significant on purpose capacity, which will result in global oversupply, leading to the weakening of Asian (and therefore, global) propylene prices, which will increase the cash costs of ethylene from naphtha crackers around the world.’
Edited from press release by Claira Lloyd
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/28082014/ngl-v-oil-production-ihs/