North American olefin producers riding the shale gas wave
With the prospect of abundant low-cost ethane, several producers have announced intentions to build new ethylene capacity.
Feedstock prices are a major determinant factor in ethylene
production costs. Feedstocks for steam cracking are
derived from natural gas (ethane, propane and butane) or crude
oilnaphtha and gasoil (GO). Steam crackers in Western Europe and Asia are mostly based on
naphtha feedstock, while crackers in the
Middle East, North America and parts of Southeast Asia are
mostly based on gas feeds. Development of shale gas in North
America has led to a significant drop in natural gas prices
relative to crude oil prices. Fig. 1 shows the
near-term trends for energy prices, especially for crude oil
and natural gas (US), and the resultant ratio.
Fig. 1. Energy pricing
trends for crude oil
and natural gas, 20002012.
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