GTL ’14: US ethane wave boosts financial outlook for ammonia sector

By Ben DuBose
Online Editor

HOUSTON -- If the trend of petrochemical producers cracking ethane continues, the financial outlook for ammonia production from off-gases will be significantly improved, an executive with Kinetics Process Improvements (KPI) said on Thursday.

V.K. Arora, director of process and operations at KPI, said the dynamics of current feedstock trends have opened up large volumes of hydrogen-rich streams, which in turn could drive future development within the ammonia industry.

“It provides ample opportunities to exploit low-cost ammonia production,” said Arora, who spoke in Thursday morning’s opening session at the GTL Technology Forum.

“With current and expected future ammonia pricing, the returns are attractive in the US,” he added. “Several big projects are being seriously considered.”

Today, those producers cracking ethane are “really enjoying the wave” with huge profits, Arora said, noting that producers are making almost $900/ton on a gross basis.

Further down the chain, ammonia prices are currently above $500/ton, and are expected to remain around that level for the foreseeable future, he noted. From an economic standpoint, that would make ammonia projects attractive.

But it doesn’t come without risk, he warned.

“If ethane is the driver for cracking today, tomorrow if there is better pricing for propylene or C4, they might want to switch feed into that,” Arora said. “And that would definitely impact the hydrogen production and ammonia production.”

Other challenges for ammonia leaders include sourcing off gases, an inherent interdependence with a source plant, and the availability of pipeline nitrogen or oxygen at a competitive price, Arora said.

“Viability depends on factors including location, volume and long-term availability, and pricing trends,” he said. “But in the US today, it definitely looks pretty good.”

The annual GTL Technology Forum continues through Thursday in West Houston.

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