April 2013

Special Report: Petrochemical Developments

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 oil—naphtha 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 tr

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