By Ben DuBose
North American petrochemical
producers have had
lofty margins in recent years, given ample ethane feedstock
s derived from the
regional shale boom.
Those margins, in turn, are leading to plans for new
capacity, which could eventually give those producers more petrochemical
products than the
North American market can handle and put key companies in a
position to need exports.
Could that threaten producers elsewhere -- most notably, in
the Middle East, which historically has exported products to
Asia and Europe? According to a recent industry poll at
HydrocarbonProcessing.com, it very well
With hundreds of votes cast,
44% said that Middle East petrochemical
ultimately lose market share in Asia and Europe due to North
American exports, while another 28% said it was too early to
tell. Only 28% of respondents said that Middle East producers
would not lose market share.
In North America, producers including Dow Chemical, Chevron
Phillips Chemical, Equistar, Formosa, INEOS, LyondellBasell,
Sasol, Shell, Westlake and Williams have all expressed plans
to build new capacity. Some, like Dow, are planning to build
entirely new crackers, while other firms like LyondellBasell
are debottlenecking current units.
Shale sparks North American activity.
plans are sparked by continuing shale gas and oil discoveries
throughout North America, leading to an ample and affordable
supply of natural gas
liquids (NGLs) such as
ethane to be used as ethylene cracker feedstock
Foreign companies are also beginning to target the lucrative
US market as well. In a deal announced in early November,
Mexicos Mexichem formed a joint venture with US-based
Occidental Chemical (OxyChem) to build a 1.2 billion lb/year
ethylene cracker at Oxychems existing site in
Ingleside, Texas (Fig. 1).
The Mexichem venture would start up operations in 2017,
putting it on a similar timetable to several other
announcements. That means that Middle Eastern producers
should have at least a few more years of strong export
Even in a few years, the Middle East will still hold the
geographic advantage of closer proximity to Asia and Europe,
potentially giving them lower logistics costs relative to
producers in North America. But the newfound threat of
overseas competition appears very real.
To see more details on this poll as well as access prior
Hydrocarbon Processing poll results, click here
(Editors note: Polls are where we
gather industry sentiment on significant issues of the day.
Visit the HP home page to weigh in on our latest poll on Mexico's plan to overhaul its energy sector.)