Tighter propane may derail proposed N America PDH units – Gallogly

01 February 2013 21:37  [Source: ICIS news]

HOUSTON (ICIS)--Supplies of propane could tighten in the future as companies build export terminals, a trend that could cause some chemical producers to pull their plans for on-purpose propylene plants, the chief executive of LyondellBasell said on Friday.

Companies are considering building up to seven propane dehydrogenation (PDH) plants.

The units have become attractive because the US has lost millions of pounds of propylene capacity and because of the advent of shale gas, which has increased supplies of feedstock propane.  

However, propane can also be exported, and companies are already expanding their export capacity.

"I am a bit more sceptical than most on this propane advantage," said Jim Gallogly, LyondellBasell CEO. Gallogly made his comments during an earnings conference call.

Exploration and production (E&P) companies will not watch propane prices fall without doing someting, he said.

"In the US, we can export freely. The E&P guys are going to put this product on the boat," Gallogly said.

For the proposed PDH plants, "I don't think some of those projects will go forward that have been announced", he said.

LyondellBasell itself has pulled plans to expand a metathesis unit, citing the flood of on-purpose propylene plants that could be built in North America.

The metathesis unit would convert ethylene to propylene.

Earlier this month, some had questioned whether the world market could absorb all of the propylene derivatives that would result if companies built all of the proposed PDH plants.

Although the US has lost a substantial amount of propylene production, the seven PDH plants would more than offset that lost production.

So far, Enterprise Products announced that it is considering building a second on-purpose propylene plant.

The company already plans to build a 1.65bn lb/year (750,000 tonne/year) PDH plant in Texas. Operations should start in 2015.

Dow Chemical plans to start up a 750,000 tonne/year PDH plant in 2015, and it may start up a second one in 2018.

Formosa plans to build a 600,000 tonne/year PDH plant that would start operations in 2016.

Meanwhile, Williams is considering a 1bn lb/year PDH plant in Alberta, which would supply propylene to the US Gulf coast.

PetroLogistics may add six combustion units to the current five units that it has at its PDH plant in Houston.

By: Al Greenwood
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