May 2015

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HP Editorial Comment: Change is redefining the petrochemical industry

The petrochemical industry is embracing more “change” that is largely due to the recent drop in crude oil prices.

Romanow, Stephany, Hydrocarbon Processing Staff

At a recent downstream conference, a speaker urged attendees to embrace the volatility of the hydrocarbon processing industry (HPI). This is odd advice, considering that most HPI companies labor very hard to minimize volatility from their business plans and plant operations. Another way to view this advice would be: “Expect change (good or bad) and run with it.” The petrochemical industry is embracing more “change” that is largely due to the recent drop in crude oil prices.

Bellwether chemical

Global demand for ethylene is expected to grow slightly above the GDP, according to Steve Lewandowski, global business director at IHS Chemical. Much of the new demand will be consumed through polyethylene. On a global annual average, ethylene capacity increases are barely keeping up with demand growth.

Change is a constant

The ethylene industry is changing, and forecasting the next demand/supply cycle is becoming more complex.

“Naphtha remains the No. 1 steam cracker feedstock, accounting for more than 50% of the global demand. Ethane and other NGLs make up about 30%,” said ExxonMobil Chemical Senior Vice President Matt Aguiar at the 2015 IHS World Petrochemical Conference.

Changes are unfolding due to abundant supplies of shale oil and gas and associated NGLs, especially in North America (NA). “Rising production of NGLs is driving a global shift toward NGLs as a chemical feedstock,” Aguiar said. “ExxonMobil sees demand for NGL feedstocks rising by about 125% through 2014, compared to 70% for naphtha. We expect NGLs to surpass naphtha as the top feedstock in the chemical sector by around 2015.”

Cost is everything

Feedstocks are as much as 70% of the manufacturing cost for ethylene. At higher crude oil prices, other feedstocks and ethylene technologies—coal-to-olefins and methanol-to-olefins—offer processing advantages.

“With the volatility in crude pricing, the other ethylene production feed sources will see tremendous changes in their pricing relationships to crude,” Lewandowski said.

Investment drivers

New construction activity for NA petrochemical projects is driven by abundant low-cost natural gas. These investments are focused on ethylene, propylene and methanol-based derivatives. Much of the new NA petrochemical capacity will be competitive in export markets due to price-advantaged feedstocks.

Capitalizing on innovation

Other changes are unfolding in the production of ethylene. For example, Siluria and Braskem America have successfully launched a large-scale demonstration plant of the first gas-to-ethylene process using the oxidative coupling of methane (OCM). This process directly converts natural gas (methane) to ethylene. The demonstration unit is located at Braskem America’s La Porte, Texas, facility.

OCM is not a new technology. For over 30 years, several companies have researched how to efficiently convert methane into ethylene. Past difficulties encountered in earlier OCM processes included too high reaction temperatures. With six years of R&D, Siluria has achieved a breakthrough in the OCM process catalyst that allows lower reaction and process temperatures.

Siluria is working with the Linde Group to develop ethylene technologies for both world-scale and revamp projects based on the OCM technology. The La Porte demonstration unit is providing process data to support the scale-up of a world-scale ethylene plant. For NA ethylene producers, the OCM process can provide more feedstock flexibility that can be applied to creep expansion or possible grassroots projects capitalizing on plentiful shale gas supplies.

“This breakthrough has the potential to shift the foundation of the hydrocarbon economy by using abundant natural gas to produce high-value chemicals and fuels,” said Ed Dineen, Siluria’s CEO. Several revamp projects using OCM are under development, according to Dineen, and a commercial unit is planned for 2017–2018. HP

 
  Fig. 1. The OCM
  demonstration unit at
  Braskem America’s La
  Porte, Texas, complex
  features two packed-bed reactors. 

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