Chemical Profile Propylene

06 October 2003 00:00  [Source: ICB Americas]

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October 6, 2003

Propylene

PRODUCER CAPACITY*

Alon USA, Big Spring, Tex. (R, c)

80

Atofina Petrochemicals, Port Arthur, Tex. (R, r)

260
BASF/Fina, Port Arthur, Tex. 1,200

Baton Rouge Propylene Concentrator, Port Allen, La. (R, c)

1,500

BP Chemicals, Chocolate Bayou, Tex. (E, c, p)

1,800

BP Chemicals, Lima, Ohio (R, c)

340
BP Chemicals, Texas City, Tex. (R, c, p) 480

BP Chemicals, Whiting, Ind. (R, p)

380

Chevron Phillips Chemical, Cedar, Bayou, Tex. (E, p)

900

Chevron Phillips Chemical, Port Arthur, Tex. (E, p, r)

1,100

Chevron Phillips Chemical, Sweeny, Tex. (E, p)

1,200

ChevronTexaco, El Segundo, Calif. (R, r)

110

ChevronTexaco, Richmond, Calif. (R, r)

200

Citgo, Corpus Christi, Tex. (R, r)

300
Citgo, Lake Charles, La. (R, p) 380

ConocoPhillips, Linden, N.J. (R, r)

400
ConocoPhillips, Wood River, Ill. (R, r) 250

Dow Chemical, Freeport, Tex. (E, p)

1,000

Dow Chemical, Plaquemine, La. (E, p)

800

Dow Chemical, Taft, La. (E, c)

700

DuPont, Orange, Tex. (E, c)

110

Enterprise Products, Mont Belvieu, Tex. (R, p)

1,100

Equistar, Channelview, Tex. (E, c, p)

3,200

Equistar, Chocolate Bayou, Tex. (E, c)

730

Equistar, Clinton, Iowa (E, c)

120

Equistar, Corpus Christi, Tex. (E, p)

630

Equistar, La Porte, Tex. (E, c)

600

Equistar, Lake Charles, La. (E, p)

200

Equistar, Morris, Ill. (E, p)

200
ExxonMobil, Baton Rouge, La. (E, R, c, r) 1,700

ExxonMobil, Baytown, Tex. (E, R, c, p)

2,200

ExxonMobil, Beaumont, Tex. (E, p)

400

ExxonMobil, Houston (E, p)

260

Flint Hills Resources, Corpus Christi, Tex. (R, r)

450

Formosa, Point Comfort, Tex. (E, p)

600
Frontier Oil, El Dorado, Kan. (R, r) 60

Huntsman, Odessa, Tex. (E, c)

230

Huntsman, Port Arthur, Tex. (E, c)

650

Huntsman, Port Neches, Tex. (E, c)

400

Javelina Company, Corpus Christi, Tex. (R, r)

100

Koch Hydrocarbon Southwest, Mont Belvieu, Tex. (R, p)

3,000

Los Angeles Refining, Wilmington, Calif. (R, r)

140

Marathon Ashland, Catlettsburg, Ky. (R, r)

350

Marathon Ashland, Detroit, Mich. (R, c)

130

Marathon Ashland, Garyville, La. (R, r)

800

Marathon Ashland, Texas City, Tex. (R, c)

140

Motiva Enterprises, Delaware City, Del. (R, r)

120

Motiva Enterprises, Port Arthur, Tex. (R, c, r)

650

Murphy Oil, Meraux, La. (R, r)

200

Shell, Deer Park, Tex. (E, c)

1,100

Shell, Norco, La. (E, c)

1,600

Sunoco, Brandenburg, Ky. (E, c)

30

Sunoco, Marcus Hook, Pa. (R, p)

450

Sunoco, Philadelphia (R, r)

400

Sunoco, Toledo, Ohio (R, r)

260

Sunoco, Westville, N.J. (R, r)

60

Tesoro Petroleum, Anacortes, Wash. (R, r)

80

Texas Eastman, Longview, Tex. (E, p)

700

Valero Energy, Corpus Christi, Tex. (R, r)

100

Valero Energy, Houston (R, c)

300

Valero Energy, Krotz Springs, La. (R, r)

400

Valero Energy, Texas City, Tex. (R, c)

240

Westlake CA&O, Calvert City, Ky. (E, c)

350

Williams Olefins, Geismar, La. (E, p)

100

Williams Refining, Memphis, Tenn. (R, r)

300

Total

39,320

*Millions of pounds per year for chemical uses: E, from ethylene (steam cracker) units, total 45 percent US capacity; R, from refinery operations (FCC, fluid catalytic crackers), total 55 percent US capacity; c, chemical grade; p, polymer grade; r, refinery grade.

The BASF-Atofina unit is owned 60 percent by BASF and 40 percent by Atofina. The plant in Port Arthur, Tex., was commissioned in December 2001.

Atofina Petrochemicals, formerly Fina Oil and Chemical Company, is a subsidiary of Atofina, which was formed in 2000 by the merger of Elf Atochem with TotalFina.

Alon USA acquired ownership of the Big Spring, Tex., refinery in August 2000, when Alon Israel Oil Company Ltd. purchased Fina Oil and Chemical Company's US fuels marketing and refining assets.

Clark Refining Holdings changed its name to Premcor Inc. In October 2002, the company closed its Hartford, Ill., refinery and eliminated 100 million pounds of propylene capacity.

Earlier this year, Dow Chemical Company permanently closed its Seadrift, Tex., and Texas City, Tex., crackers, eliminating 40 million and 150 million pounds of capacity, respectively.

Los Angeles Refining Company is a spinoff of Texaco Refining and Marketing.

Equilon Enterprises sold its Wood River Refinery in Roxana, Ill., to Tosco Corp. in June 2000. The site has 250 million pounds or propylene capacity. Then in September 2001, Phillips Petroleum Company acquired Tosco, gaining both the Roxana property and a refinery in Linden, N.J., with 400 million pounds of propylene capacity. Phillips merged with Conoco in August 2002, to become ConocoPhillips.

Baton Rouge Propylene Concentrator in Port Allen, La., is owned and operated through a joint venture between ExxonMobil (70 percent) and Enterprise Products Partners (30 percent). This new unit was commissioned in 2000.

In 2002, Enterprise Products Partners purchased the equity shares (66.7 percent ownership) of D-K Diamond Koch, Diamond-Koch and Diamond-Koch III, which are jointly owned by affiliates of Valero Energy Corp. and Koch Industries, of a propylene fractionation facility in Mont Belvieu, Tex. The unit is operated by Koch Hydrocarbon Southwest.

Javelina Company is a joint venture among El Paso Corp. (40 percent ownership), Kerr-McGee (40 percent) and Valero Energy (20 percent). The company recovers propylene from refinery gas streams provided by local refineries.

El Paso Corp. purchased Coastal Corp. in 2001, gaining refineries in Westville, N.J., and Corpus Christi, Tex. In 2003, El Paso sold the Westville unit, with 60 million pounds of propylene capacity, to Sunoco, and the Corpus Christi unit, with 100 million pounds of capacity, to Valero Energy.

Flint Hills Resources is a wholly owned subsidiary of Koch Industries.

Williams Olefins, a joint venture among Williams Companies, BASF and General Electric, operates the 100 million pound capacity propylene unit in Geismar, La.

Profile last published 1/31/00; this revision 10/6/03.

GROWTH

Historical (1997-2002): 6.3 percent per year; Future: 5.0 percent per year through 2006.

PRICE

Historical (1997-2002): High, 27.5c per pound, polymer grade, del. Gulf Coast; 26.0c per pound, chemical grade, same basis; low, 12.0c per pound, polymer
 
Insert caption here
grade, same basis; 10.5c per pound, chemical grade, same basis. Current: 21.5c per pound, polymer grade, same basis; 20.0c per pound, chemical grade, same basis.

USES

Polypropylene, 50 percent; acrylonitrile, 10 percent; propylene oxide, 10 percent; cumene, 8 percent; oxo-alcohols, 7 percent; isopropanol, 3 percent; oligomers, 4
 
Insert caption here
percent; acrylic acid, 5 percent; miscellaneous, including ethylene propylene elastomers 3 percent.

The supply-side shortage has been accommodated by increased imported material. Propylene imports have grown from under 4 billion pounds in 1997, to over 10 billion pounds in 2002, representing an annual growth rate of 20 percent.

DEMAND

2001: 36,718 million pounds; 2002: 41,143 million pounds; 2006: 50,000 million pounds, projected. Demand equals production plus imports, which were 7,947 million pounds in 2001 and 10,136 million pounds in 2002, less exports, which were 275 million pounds in 2001 and 793 million pounds in 2002.

STRENGTH

The major propylene derivatives are enjoying healthy markets, in particular, polypropylene, which accounts for 50 percent of the propylene market. Polypropylene demand remains solid, fueled, in part, by substitution for high density polyethylene and acrylonitrile-butadiene-styrene resins on a cost-performance basis. Growth is particularly strong in the automotive sector, which is a huge and growing market for plastics. The drivers in the automotive sector are improved performance and reduced weight by substituting for metal. In some applications, polypropylene has been replacing polyurethane and other plastics because of its ability to be recycled. Polypropylene demand will continue to grow at about two times GDP because of favorable cost and balance of properties, compared with other materials.

WEAKNESS

On the supply side, feed-flexible steam crackers have been converting to lighter feed slates, which results in less available propylene. A strong alkylation value in relation to chemical-grade propylene means refiners are less inclined to divert propylene from the gasoline pool. Crackers with the option are switching feedstocks from heavies to lights as the effective feed costs are about break-even now, comparing oil (naptha) to natural gas costs. There is not much advantage to either feed choice, except lighter feeds are easier to run. The switch from naphtha to lighter feed slates such as ethane, however, means significantly less propylene is available.

OUTLOOK

The US olefins market continues to be in a prolonged trough, begun in 1997, where operating rates have hovered around 80 percent due to the cost of producing ethylene in this economy. Propylene is a by-product of ethylene production and also a by-product of gasoline from FCC units. Industry observers are estimating the recovery in this sector to occur in the 2006 to 2008 time frame.

Meanwhile, there is a growing gap between propylene demand, which is growing at an average 5 percent per year, and the supply from ethylene crackers and refineries. Propylene produced from steam crackers will not be able to keep pace with growth in propylene demand for petrochemicals. Since ethylene is the primary product from steam crackers, new steam crackers are only built to meet growth in ethylene demand. World propylene demand has consistently outpaced ethylene demand over the past 10 years, and this scenario is expected to continue for at least another 10 years.

Propylene from FCC units is also not able to keep pace with propylene demand from petrochemicals. Similar to ethylene, world propylene demand has consistently outpaced gasoline and distillates over the past 10 years and is expected to continue for the next 10.

Dedicated propylene units may eventually serve a significant portion of propylene requirements. Today, stand-alone production units for propylene (there are none in the US) can produce just 2,400 million pounds, or 2 percent of current world supplies. That could increase to 10,000 million pounds, or 6 percent, by 2010. Several methods of stand-alone propylene production are currently available, including deep catalytic cracking, propane dehydrogenation, metathesis, olefins cracking technologies and methanol to olefins.





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