18 January 2013 21:38 [Source: ICIS news]
By Al Greenwood
HOUSTON (ICIS)--Plans to build up to seven propane dehydrogenation (PDH) plants in ?xml:namespace>
US producers are seeking to increase propylene capacity to make up for lost production.
The company already plans to build a 1.65bn lb/year (750,000 tonne/year) PDH plant in
Producers are considering PDH plants because the
As a result, the
FCCs produce blendstock for gasoline, with propylene being a by-product.
"The biggest reason why cat crackers exist is to produce gasoline," said Peter Fasullo, principal at En*Vantage.
Because of declining US demand for gasoline, refineries are running their FCCs at lower rates. If gasoline continues to fall slowly over time, FCC operating rates could drop even further.
Neivert estimates that the
The loss of propylene capacity has been partially offset by the 2010 start-up of PetroLogistics’ 544,000 tonne/year PDH plant.
"You would have a flood of propylene," Neivert said.
He said out of the seven possible PDH plants, at least three or four could be built.
Dan Lippe, president of Petral Consulting, said five PDH plants could make up the propylene production lost in the
Fasullo said one of the seven plants may not be built. In one scenario, two companies may abandon their individual PDH plans and instead opt to build one through a joint venture.
If US producers do overshoot domestic demand, they would then need to rely on foreign markets to sell propylene derivatives.
Lippe said that could pose its own challenge.
In China, six PDH plants with a combined capacity of 3.35m tonnes/year are under construction, with start-up scheduled for 2013-2014. At least six more PDH projects are in the planning stage.
"Something has to give," Lippe said, "unless demand for propylene derivatives is growing like gangbusters."
With that much propylene, the market could revert to its older pricing formula, in which propylene is sold at an 80% discount to ethylene, Lippe said.
On the other hand, US propylene derivatives could enjoy a cost advantage in foreign markets, much like the one enjoyed by the nation's ethylene derivatives.
Because of the advent of shale gas, the
Low-cost propane is already driving another development. Both Enterprise and Targa Resources are expanding their propane export terminals.
"There is going to be an arb to export propane from the
"The bottom line is whether we believe our natural-gas story, that natural gas is going to be cheap," he said.
"If you believe that we have a vast natural-gas resource and it is still going to remain cheap," Fasullo said, "then that drives the ethylene story here. It drives the propylene story."
That ethylene story in the
As a result, Neivert said the
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