US gas liquids growth changes refinery, petrochemical operations

13 March 2012 02:48  [Source: ICIS news]

SAN DIEGO (ICIS)--US production of natural gas liquids from shale, such as ethane, will change the logistics and feedstocks for the refinery and petrochemical industry, an analyst said on Monday.

Growth in production has driven the price of natural gas to lows of around $2.30/MMBtu (€1.75/MMBtu), which has caused producers to shift production to liquids-rich gas over dry gas, said Praveen Gunaseelan, founder of Vantage Point, a firm that offers consulting services to the energy industry.

Liquid-rich gas contains ethane, propane, butanes and natural gasoline.

Gunaseelan made his comments during a presentation at the annual meeting of the American Fuel and Petrochemical Manufacturers in San Diego that ends on Tuesday.

Ethane prices have fallen to about 10-year lows as a result of the increase in production from shale plays, such as Eagle Ford in Texas and the Marcellus basin in the northeast.

Accordingly, ethane has a lock on the feedstock market for ethylene crackers, said Gunaseelan. Refinery-produced naphtha was mainly used as the feedstock for crackers in the past.

Using ethane feed in crackers increases the ethylene yield, but decreases the production of useful by-products such as propylene, said Gunaseelan.

However, refineries can pick up this slack by tweaking production from fluid catalytic crackers (FCCs), the main gasoline-production unit, to maximise propylene production, said Gunaseelan. Propylene is a by-product from FCCs.

Refinery-produced naphtha also needs a new home, said Gunaseelan, suggesting that naphtha can be used instead as a diluent for shipping heavy bitumen oil from Alberta in Canada.

Demand for diluents is strong as bitumen production has grown, he added.

($1 = €0.76)

By: Sheena Martin
+1 713 525 2653

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