While the first US-megaplants start production, a second wave of cracker projects is rolling in — Shale gas and no end: In 2017 and 2018, the first six megaprojects of US shale based petrochemicals will go onstream on the Gulf of Mexico. But there is much more to come — Is it the advent of an American era after the Chinese decade in plant engineering?
The wave is rolling: Fueled by the shalegas boom, cracker projects spring up in the US at unprecedented speed. While first plants commenced operations in 2017, planners are already cooking up the next wave of worldscale projects. Since 2010, the industry spent a whopping $ 85 billion on new plants — but that's not the end.
The American Chemicals Council ACC estimates that the industry currently has over 300 projects in the pipeline. To ensure a total utilisation of the estimated investment potential of an incredible $ 185 billion, it is important to review the lessons learned from the first wave of cracker projects.
Currently, about half of the world's ethylene is produced from naphtha. The price advantage of ethane from shale gas production, which equates to savings of 75-50 % per barrel, makes it attractive to use ethylene steam crackers, either with a raw material base of 100 % ethane, n-butanes or a 50:50 ethane/propane mix. However, gas crackers produce less heavy by-products, such as butadienes, isobutylene, n-butene, and pyrolysis gasoline, which are needed as a raw material in petrochemistry.
When Dow-Dupont launched a 1.5 million-ton facility in Freeport, Texas — the first one in the Gulf of Mexico — in September 2017, the industry had already experienced a steep learning curve: the cost of the Sasol petrochemical complex in Lake Charles rose from $ 8.1 billion to $ 11 billion. In addition, the US project boom virtually swept the market for personnel and materials. The price of tubes — typically the largest single item in terms of material costs — increased by 5.1 % within one year.
Accordingly, the plant manufacturers want to take their time: Although the high demand for petro products leads to a second wave of projects (such as the announcement Totals, a cracker joint venture with Borealis and Nova Chemicals to enter and a 625,000 tonnes of ethylene plant from the ground stomp, shows), but this boom will be weaker, the analysts agree. The furthest is Shell: The oil multinational had begun in late 2017 with the construction of a 1.5 million-tonnes cracker and polyethylene plant in Pensylvania. Exxon Mobil and Sabic have also agreed on a joint 1.8 million-tonne project.
In addition, the "second wave" is not limited to ethane. For example, Lyondell-Basell, one of the first to rely on gas crackers, plans to build a plant for propylene oxide and tertiary butyl alcohols. Chevron Phillips intends to use the company's proprietary Aromax technology to produce benzene from light oil from shale gas and oil production. Players from the Far East are also mixing in the "Wild West": Wanhua Chemical from China intends to produce methyl-di-p-phenylene isocynate in Louisiana.
Then there is something going on in China: Almost unnoticed by the West, the Middle Kingdom launched a series of mega cracker projects, some of which are fueled by naphtha from coal, but most by a mix of naphtha and LNG. If the announced gas exports from the US actually materialize, the competitive advantage of US shale chemistry could melt away faster than anticipated. Is the cracker supercycle already over? Whether the second will be followed by a third wave remains to be seen.