Flex-feed crackers favouring LPG because of higher propylene

HOUSTON (ICIS)–A number of flex-crackers are likely to continue favouring liquefied petroleum gas (LPG) as a feedstock because costs for propane and butane remain at a relatively small spread to those for ethane and because of higher co-product prices for propylene.

This is because there is not currently enough on-purpose propylene production capacity to meet demand, so the industry is dependent on the monomer being created as a co-product to other chemicals.

Thus, until the arrival of more on-purpose propylene production plants such as propane dehydrogenation (PDH) and metathesis units, heavier feedstocks will continue to see some use in ethylene production.

This sustained use of heavier feeds, even in light of ethane’s considerable cost advantage, is allowing crackers to obtain higher margins, as illustrated in the chart below.

Source: ICIS Margins Analytics

This cost advantage for ethane has encouraged ethylene producers to build steam crackers designed to crack only this type of feedstock.

As of July 2019, at least one quarter of all US cracking capacity is comprised of ethane-only crackers, according to Hodson Report data.

Due to ethane’s rise as the preferred ethylene feedstock, propane, butane and heavier feeds only account for about 25% of the ethylene feedslate, down from nearly 50% a decade ago, as shown in the figure below.

US Ethylene Feedslate, 2014-2019

Source: Hodson Report

Despite the trend toward ethane crackers, the use of propane, butane and heavier feeds is still increasing on a volumetric basis, up from 500,000 bbl/day last summer to over 600,000 bbl/day currently, according to figures from Daniel Lippe, managing partner at Petral Consulting.

Source: Daniel Lippe, Petral Consulting

Ethylene is a key petrochemical feedstock, used to make polyethylene (PE), ethylene glycol (EG) and polyvinyl chloride (PVC) among other products.

Major US ethylene producers include Chevron Phillips Chemical, DowDuPont, ExxonMobil, INEOS Olefins & Polymers, LyondellBasell and Shell Chemical.

The main outlet for propylene is as a feedstock for polypropylene (PP). Propylene is also used to produce acrylonitrile (ACN), propylene oxide (PO), a number of alcohols, cumene and acrylic acid.

Major US propylene producers include Chevron Phillips Chemical, Enterprise Products, ExxonMobil, Flint Hills Resources and Shell Chemical.

Focus article by Michael Sims