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Natural Gas Liquids

Bye–Bye Crude? Natural Gas Succeeds Oil as Premier Petro–Feedstock

| Editor: Dominik Stephan

(Picture: WEG Wirtschaftsverband Erdöl- und Erdgasgewinnung e.V.)

For more than half a century, basic chemicals and polymers were largely crude based. Were. For know, natural gas liquids, driven by cheap US shale gas, replace oil as the feedstock for petrochemicals in North America. As steam cracker feedslates trend lighter, propylene production not able to keep pace with demand growth.

The increasing use of cost-advantaged natural gas liquids as a feedstock by North American petrochemical producers means that less propylene is being produced as a co-product by the region’s steam crackers. This trend is driving greater global need for on-purpose production of propylene, which is a key chemical building block second in demand only to ethylene, according to new research from IHS, a global information and insight company.

“The increasing need for on-purpose production of propylene is primarily being driven by two factors: first, the changing feedslates in North American petrochemical production, which are getting lighter due to more ethane being used versus naphtha; and second, the decline in North American gasoline demand as automobile CAFÉ standards are implemented,” said Chuck Carr, senior director, global olefins at IHS Chemical and principal author of the IHS study.

“Ethane is a cheaper feedstock than naphtha, but it produces minimal amounts of propylene as a co-product,” Carr said. “Since global demand for propylene is increasing, on-purpose production of propylene has become increasingly significant in the last 10 years, and this trend will continue through 2023.”

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An Outlook on What is to Come

In 2003, less than 3 percent of global propylene production — just 2 million metric tons (MMT), was considered on-purpose production, but according to the IHS Chemical North American Propylene Supply Study, in 2013, that number had increased to nearly 12 MMT or 12 percent of global production. By 2023, IHS says, nearly 30 percent, or approximately 38 MMT of global propylene supply, will be on-purpose production.

In 2013, North America produced slightly more than 20 MMT of propylene (including fuels). By 2023, IHS expects North American demand for propylene into chemicals to exceed 20 MMT, and the region is expected to produce approximately 15 percent of global supply. Of that production, Carr expects 5 MMT will be on-purpose production from North America. Just 4 percent of the region’s current propylene production, he said, is on-purpose production derived from technologies such as metathesis and propane dehydration.

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