It’s a buyers market for petrochemical producers as the relatively low cost of refinery naphtha and shale based NGLs are providing a new lease on life for ethylene producing steam crackers in developed regions, including Europe and North America. The global naphtha market is projected to remain oversupplied until at least 2020 despite projected annual demand growth demand of 1.7%, according to new research by market analyst firm IHS Markit.
On February 16, the senior director at IHS Markit, Nick Rados noted that surging production of NGLs, particularly ethane and propane, is why naphtha is no longer the dominant petrochemical feedstock. The IHS Markit report noted that global demand for naphtha was 1,180 million metric tons (MMT) at the start of 2017 and is expected to grow to 1,260 MMT by 2020.
It’s also safe to assume that the reason new steam cracker projects are not dependent on nearby clusters of refinery operations (where naphtha can be sourced) are because of abundant supplies of ethane and propane, such as with the two new ethylene plants in the U.S. Northeast (Appalachian) PADD I region. In fact, most refining capacity on the U.S. East Coast (PADD I) already has naphtha export commitments to European steam crackers.
Shell became the first company to approve a major petrochemical complex in the Northeast in June 2016, even though the cost of building an ethylene plant on the East Coast is typically about $250 to $275 million more expensive than a similar ethylene plant on the U.S. Gulf Coast. Shell announced it would begin construction of the 1.25 MMT ethylene cracker with a polyethylene derivatives unit in Potter Township, Beaver County, about 30 miles northwest of Pittsburgh, by the fourth quarter of 2017. Site preparation has already begun, and start-up is scheduled for 2022.
PTT Global Chemical is expected to make a final investment decision on Ohio’s first 1.25 MMT ethane cracker by the end of March 2017. Site preparation for the planned cracker in Belmont County, Ohio (located on the other side of the Ohio River from Wheeling, West Virginia) is nearly complete. The project cleared a significant hurdle in the first week of January when the Ohio Environmental Protection Agency agreed to let the company discharge wastewater into the Ohio River. The Ohio EPA is still reviewing the air permit for the project, according to an agency spokesperson. Recent exploitation of abundant shale gas reserves in the Northeast ensures a long term ethane feedstock supply to these two 1.25 MMT crackers.
Leave a Reply
You must be logged in to post a comment.