FocusDow rides shale gas wave, will raise US ethane cracking

02 December 2010 18:50  [Source: ICIS news]

Dow facility on the Texas Gulf coastBy William Lemos

HOUSTON (ICIS)--Dow Chemical said on Thursday it plans to boost its ethane cracking capability in the US Gulf by up to 30% over the next three years to capitalise on the cheap natural gas supply in the region.

Dow said ethane now accounts for 55% of the feedstock it uses to produce ethylene.

“Ethane is an advantaged feedstock in the US, and we anticipate a favourable oil-to-gas ratio to continue,” said Raja Zeidan, global business vice president for Dow Hydrocarbons.

Dow said it was also reviewing joint-venture options to build a natural gas liquids (NGLs) fractionator to secure ethane supply for its crackers.

The company has five olefins plants in Texas and Louisiana with a combined ethylene capacity of around 3.5m tonnes/year.

Dow did not provide details on its joint-venture options for the fractionator.

“Potential partners have not yet been identified at this time,” a spokesperson said.

Fractionators are used to separate NGLs into products such as ethane, propane and butane.

Enterprise Products this week said it had launched operations at a new fractionator in Texas, predicting continued strong US demand for ethane as a chemical feedstock.

"The ethane factor is a hot topic," a market participant said.

US ethane production, which is now estimated at 850,000 bbl/day, is expected to surge by 30% in the next two years, as US shale gas supply continues to grow and more NGL fractionators are built.

NGLs as a whole, including ethane, propane and butane, account for around 80% of the feedstocks used at US crackers, according to an industry survey.

The same survey showed that ethane alone in October accounted for 60% of the US feedstock volumes used to make ethylene.

Dow is the third-largest US ethylene producer, after LyondellBasell and ExxonMobil, and at least the second company to have recently touted the expected long-term benefits of ethane for the US industry.

LyondellBasell in October predicted North America cracker capacity could actually increase in the coming years because of cheap ethane, but the company said it was still too soon to tell whether demand would justify such a move by the industry.

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By: William Lemos
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