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Is Liquids Cracking the Future of Gulf Coast Petrochemicals?. Fran Keeth Executive Vice President Shell Chemicals Limited. Petrochemical feedstock: oil and gas. Gas Cracking. Separation of natural gas and natural gas liquids (NGLs). Ethane, Propane,Butane. Raw Natural Gas. ‘Gas’ Cracker.

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Is Liquids Cracking the Future of Gulf Coast Petrochemicals?


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is liquids cracking the future of gulf coast petrochemicals

Is Liquids Cracking the Future of Gulf Coast Petrochemicals?

Fran Keeth

Executive Vice President

Shell Chemicals Limited

petrochemical feedstock oil and gas
Petrochemical feedstock: oil and gas

Gas Cracking

Separation of natural gas and natural gas liquids (NGLs)

Ethane, Propane,Butane

Raw

Natural

Gas

‘Gas’ Cracker

Ethylene

power, heat

  • USGC Ethylene Production
  • 70% from Gas
  • 30% from Liquids

Liquids Cracking

Refinery

distillation

Crude

Oil

Liquids Cracker

Naphtha,

Gas Oil

Ethylene

Co-products (Propylene,

C4s, Gasoline, Aromatics)

transportation

fuels, heat, power

slide3

Ethylene manufacture

From Liquids

From Gas (NGL)

Fixed Cost

Energy

  • Co-Product
  • Credits:
  • Propylene
  • C4s
  • Gasoline
  • Aromatics

Co-Product Credits

  • Feedstock
  • Liquids

Fixed Cost

Energy

Net

Ethylene

Cost

Net

Ethylene

Cost

  • Feedstock
  • Gas (NGL)
natural gas to crude oil ratio
Natural Gas to Crude Oil Ratio

1990 – 1997 Average = 0.60

1998 – 2004 Average = 0.88

@ 6 MMBtu/bbl

slide6

Global ethylene production costs

  • Middle East lowest cash cost
  • Ethane availability enables Middle East supply growth
  • Middle East 9% of world ethylene today 14% by 2010

Source: CMAI

slide7

9.9

2.5

1.0

1.8

-1.0

-1.0

export

import

1996 2001 2010

Shifting trade flows in polyethyleneNet trade in polyethylene 1996 – 2010 (mln t/a )

0.3

1.8

1.9

-0.4

-0.9

-1.1

-2.0

-1.0

-8.3

-0.9

-1.3

-1.1

Source: historical data - Parpinelli TECNON; Shell forecasts

co product price composite index usgc generic naphtha cracker
Co-Product Price Composite Index USGC Generic Naphtha Cracker

Percent

Basket of naphtha cracker co-product values, normalized by crude price and indexed to long-term average, includes propylene, C4s, pyrolysis gasoline components

Increasing in 2004

1985 – 2003 Average = 100%

slide9

Higher Values for “non-C2”

On-Purpose Propylene Growth

Source: CMAI

slide10

US Ethylene Market

Expected demand growth met by capacity creep/de-bottlenecks

Source: CMAI

usgc refining picture current
USGC Refining Picture - Current
  • No new grass roots US refineries in last 30 years
  • US fuels demand greater than domestic supply
  • Global demand and limited supply growth => favorable margins in recent years
  • Clean fuels regulations
  • - less sulfur
  • - less aromatics (Bz)
  • - lower vapor pressure & MTBE
  • Invested/investing in hydrotreating & coking
slide12

Western Hemisphere Crude Shifts

Source: Simmons & Co., Platts

usgc refining picture future
USGC Refining Picture – Future?
  • Refinery additions - chemicals feed?
      • Gasoline future: FCC, coking, benzene extraction
      • Distillate future: Hydrocracking & coking
      • Steam cracking as ‘conversion capacity’
      • Only integrated refining/chemical companies likely to play
relative competitiveness of usgc cracking gas vs liquids

High

Natural Gas/

Oil Ratio

Low

Relative Competitiveness of USGC Cracking – Gas vs. Liquids

Future?

X

Past

X

Co-product Values

Weak

Strong

conclusions
Conclusions
  • Liquids cracking competitiveness improves
  • Demand does not warrant new crackers (liquid or gas)
  • New liquids feedstock opportunities may be created
  • Revitalization of USGC petrochemicals based on liquids feeds unlikely

We need to make the most of what we have