Propylene: Historically A Stepchild of Industry Now Becoming a Favorite Child. Presented By: Prem Cholia Jacobs Consultancy Houston Texas

Transcription

1 Propylene: Historically A Stepchild of Industry Now Becoming a Favorite Child Presented By: Prem Cholia Jacobs Consultancy Houston Texas At FlexPo Conference The Woodlands, Texas October 21, worldwide

2 Disclaimer Important The material in this presentation has been prepared by Jacobs Consultancy. Copyright and other intellectual property rights in this presentation vest exclusively with Jacobs Consultancy. Apart from any use permitted under applicable copyright legislation, no part of this work may in any form or by any means (electronic, graphic, mechanical, photocopying, recording or otherwise) be reproduced, copied, stored in a retrieval system or transmitted without prior written permission. Jacobs is a trademark of Jacobs Engineering Group Inc Jacobs Consultancy Inc. All rights reserved. 2

3 Jacobs Consultancy Fully owned subsidiary of Jacobs Engineering Group Inc. Originally Pace Consultants Inc. established in acquired by Jacobs Engineering 2001 name changed to Jacobs Consultancy Professional staff of 140 located in 5 primary offices Houston Chicago Calgary London Leiden Worldwide experience Worldwide alliances in petrochemicals consulting PCI (London) and PTAI (US) 3

4 Practice Areas Refining & Production Chemicals & Petrochemicals Natural Gas Energy & Utilities Logistics & Infrastructure 4

5 What We Do Market forecasting and commercial analysis Refining, upgrading, petrochemical, carbon and other Subscription services Hodson Report (for steam crackers), Olefins Database, Petroleum Coke Quarterly, Coal Tar Pitch, Ethylene / Propylene Competitiveness Report Independent Technical & Market Consulting as Lenders/Owner s Engineers Due diligence including merger, acquisition, & divestiture analysis Strategic / capital planning support and advice Technology development support 5

6 Agenda 1. Introduction 2. Propylene 3. Propylene Production Routes 4. On-purpose Propylene Production 5. Conclusions 6

7 Propylene Historically: Produced in refineries or steam crackers as a secondary product Consume what is produced Consumption (non-fuel) governed by supply Now: Production is reducing but demand is growing fast In short supply relative to ethylene Development of new on-purpose production processes Production governed by demand Propylene an unwanted product has become product in Demand 7

8 The Global Propylene Industry Global production and consumption 85 mmtpa (2014) Global Nameplate capacity 119 mmtpa (2014) 8

9 Propylene Demand by Application in 2014 Polypropylene dominates and will continue to dominate 9

10 Propylene Production Routes Traditional Co-product Sources of Propylene: Steam Cracking Fluidized Catalytic Cracking ( FCC ) On-purpose Propylene Processes: Propane Dehydrogenation ( PDH ) Methanol to Olefins ( MTO ) and Methanol to Propylene ( MTP ) Olefin Metathesis ( OTC ) 10

11 Steam Cracking Currently most dominant production route for propylene in all regions except North America Propylene is a by-product in ethylene production process of steam cracking Propylene yield varies with feedstock used for ethylene production Feedstock Propylene Yield P/E (%) Ethane 1.9% 2.4 Propane 18.8% 36.2 Butane 17.0% 42.8 Naphtha 15.7% 47.0 Gas oil 14.7% 55.8 With increasing ethane feed in ethylene manufacture, propylene production from steam crackers has dropped 11

12 Ethane Value on $/Btu Basis Has Dropped 25 Dollars/MM Btu Natural Gas (Henry Hub) WTI Crude Oil USGC Purity Ethane 0 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Ethane at natural gas parity due to ongoing supply glut 12

13 US Ethane Consumption Continues to Climb Ongoing shale gas revolution continues to add to ethane supply in US ethane surpluses projected despite new crackers and exports In January 2014, US feed slate exceeded 65% ethane The dramatic change in US feedstock supply in the last 6 years is structural This trend will continue in the coming years, mostly due to new crackers utilizing shale gas derived ethane Over 7 million tons of new ethylene capacity is expected before 2018, but producing relatively little coproduct propylene (~200 kta) 70% 65% 60% 55% 50% 45% 40% 35% 30% 25% 20% Volume % of Ethane in USGC Steam Cracker Feedslate from January 1988 to June 2014 Monthly Ethane Percentage Annual Average Source: Hodson Report 13

14 Propylene from Refinery A major source for propylene in North America but not in Asia or Europe FCC (fluidized cat cracker) and delayed coker produce propylene as a byproduct FCC propylene yield is 8 to 9 %v (~4% wt.), but can go up to 20% v adding ZSM-5 to the catalyst or by severe cracking in FCC Propylene production often constrained by gas recovery units Delayed coker propylene yields are 2 to 3% (~1 to 2% wt.) depending on quality of crude Propylene from refineries contains around 30% propane requires separation Propane separation requires PP splitter, which is often a part of the petrochemical facilities Standalone PP splitters also exist (e.g., Enterprise splitter at Mont Belvieu) 14

15 Propylene Production in the US Billion Pounds US Propylene Production by Source Propylene from steam crackers Propylene from Refineries Propylene production has dropped in the US 15

16 US Now a Net Importer of Propylene US was net propylene exporter until refinery production started coming down after 2008 Demand still growing Increased ethane use as feedstock has reduced production after 2009 Hence US now an importer Trend may change after the new PDH plants come on stream Million Pounds US Propylene Net Export (Imports) Net Exports Net Imports 16

17 Propylene Price Now Higher than Ethylene Prices US Ethylene & Polymer Grade Propylene Price Contract Price; Cents/Pound Historically in US, ethylene prices higher than propylene Trend has reversed since 2007/2008 Trend continues '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 ' ytd Ethylene Poly-Grade Propylene 17

18 Shrinking Supply of Traditional Propylene Increased availability of shale gas in the US has increased availability of ethane from NGLs This abundant ethane availability has resulted in increased usage of ethane for ethylene production Several large steam crackers based on ethane are under construction or are being planned P/E ratio of ethane-based steam cracker is substantially lower compared to other feedstocks, resulting lower propylene production Gasoline demand is shrinking because of more fuel-efficient engines and several other reasons Propylene production from traditional sources is dropping but propylene demand is increasing, mainly driven by increasing PP demand Need for non-traditional supply source for propylene 18

19 Increasing On-Purpose Propylene Production 160 Propylene Supply (Million Tons) On-purpose Refinery Steam Cracker 5% 32% 63% 16% 29% 55% 26% 26% 48% 28% 28% 45%

20 Propane Dehydrogenation (PDH) Catalytic dehydrogenation of propane and propylene separation C2H > C2H4 + H2 More than 4 mm tonnes propylene produced globally by this route Most significant on-purpose production route Technology Licensors: o UOP Oleflex o Lummus Catofin o Uhde / Krupp Thyssen STAR UOP and Lummus dominate All new plants planned mainly in US or China 20

21 Propane Distressed in US Surge in PDH driven by US propane glut and shale gas ethane cracking created propylene shortage Surplus of shale gas derived liquids has driven down all NGLs prices US is now a significant net exporter of propane Limitations in export terminal capacity are stimulating new investment in export terminals US propane prices have fallen substantially below the discounted propane prices in Saudi Arabia for petrochemical use (Saudi domestic propane is priced relative to export naphtha) Propane Prices ($/ton) Million Barrels USGC Propane Saudi Propane (Disc.) W. Europe Propane Propane Prices Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Exports US Waterborne Propane Trade Imports -10 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q US Propane prices are distressed US Propane exports have quadrupled since 2011

22 US PDH Plants Now Cost Advantaged Propylene Cost of Production ($/Ton) Propane Dehydrogenation Economics USGC PDH Saudi Arabia Disc.Propane/PDH USGC Contract PG Propylene Prices WE PDH China PDH 22 US PDH production costs are comparable to Saudi PDH production costs using discounted feedstock price

23 US PDH Plant Locations US/Canada Existing Plant Flint Hills Resources (former Petrologistics), Houston, TX 658kta operating (Catofin) Under Construction / Planned Enterprise, Mont Belvieu, TX 750 kta in engineering (Catofin) Dow, Freeport, TX 750 kta Being started (Oleflex) Formosa, Point Comfort, TX 650 kta in engineering (STAR) Ascend (Now CH3 Technologies) 1,170 kta (Oleflex) Williams Alberta, Canada (Oleflex) KSA Existing Plants SPCo Jubail 550 kta (Catofin) APPC Jubail 550 kta (Catofin) Sipchem Jubail 500 kta (Oleflex) Natpet Yanbu 400 kta (Oleflex) Existing Plants in Asia and Europe - operate when economical 23

24 China s PDH Projects Will All Be Built? Operational Expected On-stream in Under Construction Oriental / Huanchang/ Feixiang- Zhangjiagang Yangzi River Petrochemical Co. Ltd 600/660 KTA 2014/2017 Jiangsu Haili Chemicals 500 KTA 2017 Bohai Chemical Industry Group 600 KTA 2013 Hengyuan Petrochemical 10 KTA, 2012 Yantai Wanhua 750 KTA 2014 Yangtse Petrochemical 600 KTA 2014 Changjiang Gas Chemical 660 KTA Was planned but suspended now Zhejiang Shaoxing Sanyuan Petrochemical 450 KTA 2014 Zhejiang Julong Petrochemicals 450/750 KTA 2014/2017 Haiwei Group 500 KTA 2015 (four 500 KTA plants planned) Fujian Meide 660 KTA 2015 China Ningbo Haiyue 600 Kta 2014 Haiyue New Material 600 KTA Yangzijiang Petrochemical 600 KTA Planned

25 MTO/MTP (Methanol to Olefins or Propylene) Methanol reaction in presence of zeolite type catalyst UOP process produces ethylene and propylene in fluidized bed reactors (MTO Process) Lurgi process also a similar catalytic process but with fixed bed reactors primarily for propylene production (MTP) Higher P/E ratio for MTP Both processes operational in China but not in other regions The technologies viable only if inexpensive methanol is available China utilizes its huge coal reserves to get methanol and reduces dependency on imported hydrocarbons 25

26 China s Coal to Olefin Projects ( ) Yili Meidianhua MTO: 600 KTA Q1/2016 Jiutai Energy MTO : 600KTA Q Ningxia Baofeng Energy MTO: 600KTA Q Quinghai Salt Lake Industry Co. MTO : 320 KTA Q Shenhua/Dow JV Integrated complex MTO :1220 KTA 2018 Huating Coal Group MTP: 200KTA Q Plants marked in blue are MTP plants Yulin Energy & Chemical MTO: 600 KTA Q2/2014 Shenhua Shenmu Chemical MTO : 600 KTA H Shaanxi Pucheng Clean Energy MTO: 680 KTA Q Sinochem (Zhonghua) YiYe MTO : 800 KTA 2014 Shenhua Xinjiang Ganquanbao Industrial Park MTO: 600 KTA 2016 Shenhua Ningxia Coal MTP: 500 KTA Q2/2011 2nd Phase MTP: 500 KTA Q3/2014 Shaanxi Yanchang MTO: 600 KTA Q Shenhua Baotou MTO: 600 KTA On-stream: Aug 2010 CPI/Total JV MTO: 800 KTA 2016 Sinopec Zhijin MTO: 600 KTA Q Sinopec Henan MTO: 650 KTA On-stream: Q Shanxi Coking MTO: 600 KTA End 2014 Legend Holding MTO: 400 KTA Q Sinopec Zhongyuan PC MTO: 200 KTA On-stream: Oct 2011 Datang International (Duolun) MTP: 500 KTA Q4/2011 Yankuang MTO: 600 KTA Q Operational Fude Energy Chemical MTO: 1000 KTA Q4/2013 On-stream in 2014 Under Construction Elion Resources MTO : 600 KTA Q Wison Nanjing Clean Energy MTO: 300 KTA Q Zhong an United Coal Chemical MTO: 650 KTA On-stream: Q Ningbo Fund Energy Co., Ltd. (Earlier Ningbo Heyuan Chemical) MTO: 600 KTA Q4/2012 Zhejiang Xingjiang New Energy Technology MTO : 600 KTA Q4/2013

27 Metathesis Route Catalytic Reaction of n-butylene (C4 H8) and ethylene (C2H4) to produce two molecules of propylene (C3H6) Key determinants for this process are: Adequate price differential between ethylene/n-butylene and propylene Availability of surplus ethylene and n-butylenes at one location Combined with a steam cracker (with liquid feed), this process enhances the propylene/ethylene production ratio Main licensor is Lummus (OCT), who can offer this technology with or without their steam cracking process for ethylene Lyondell Basell and BASF/Total operate metathesis plants in the US Borouge 2 (Abu Dhabi), SPCo in KSA operate metathesis units Plants in Japan, Korea and other Asian countries also have metathesis units 27

28 Conclusions Propylene historically long, now becoming short Propylene from steam cracker and refineries still dominate Steam cracker feedstocks moving toward ethane feed which produces very little propylene Refinery production of propylene is not increasing because of reducing gasoline demand On-purpose production of propylene becoming popular PDH the largest source for on-purpose propylene More popular in US with increasing propane availability MTO and metathesis are gaining some ground but have limitations 28