Commentary: Global petrochemical companies shift to gas-based feedstocks

10 May 2013 09:38  [Source: ICB]

The realisation that the Americas natural gas-based feedstock advantage in petrochemicals is likely to persist for years to come is pushing major players to shift their feedstock slate to gas wherever possible.

Along with Switzerland-based INEOS's high profile plans to bring US ethane to one or two of its crackers in Europe and Italy-based Versalis contemplating a similar move for two crackers, Brazil-based polymers giant Braskem is seeking to pull out all the stops to get the most out of lighter feeds.

US Ethylene"We are going to a more balanced portfolio by shifting to gas-based feedstocks," said Fernando Musa, president and CEO of Braskem America, at a meeting of the Chemical Marketing & Economics Group in New York on 2 May.

This strategy comes even as Braskem's four crackers in Brazil are primarily naphtha-based, with two being able to use limited amounts of ethane and propane, along with gas condensate.

Naphtha-based petrochemical players must come up with fresh ideas to find ways to compete. Simply relying on expected higher values of co-products such as propylene and butadiene produced from a naphtha cracker is hardly a strategy.

"Competing against a US polyethylene [PE] player is a challenge. But the actions we're taking will make us more competitive," Musa said.

Braskem, through its 75:25 joint venture with Mexico's Grupo Idesa - called Braskem Idesa - is building the gas-based Ethylene XXI project in Mexico, which will include a 1.05m tonne/year ethane cracker along with equivalent PE capacity. The project, located in Coatzacoalcos in Veracruz state, is expected to start-up in mid-2015.

PROPYLENE FROM GAS

On the polypropylene (PP) front, in August 2012 Braskem secured long-term propylene supply contracts with Enterprise Products, one of which involves its planned new 750,000 tonne/year propane dehydrogenation (PDH) plant in Texas, expected to start operations in 2015.

Under the arrangement, Enterprise will supply about 65% of the propylene needed by Braskem's three PP plants on the US Gulf coast in Texas. Braskem acquired the Freeport and Seadrift plants from Dow Chemical and the La Porte plant from Sunoco.

"Even on the propylene side, we are trying to be more gas-based. As more PDH plants are built, we'll use more gas-based feeds," said Musa.

Braskem had been contemplating the construction of its own PDH plant to produce propylene, but instead locked up a favourable supply agreement with Enterprise, Musa noted.

The vast majority of the propylene produced in the US comes as a co-product in the naphtha cracking process and as a by-product from refineries - which both use oil as a feedstock.

US CRACKER OPTION

Braskem also continues to evaluate the construction of a gas-based cracker and PE facilities in the US.

"Ethylene and PE is where the money is being made in the US, and here we are looking into what we might do. A PE plant and cracker is one alternative," said Musa. "However, we have not made a definite decision on this. If we do build in the US, having a partner is probable, as we are doing in Mexico."

Meanwhile, Braskem continues to study a potential complex in Rio de Janeiro, Brazil, as part of the Comperj project by state-run oil and gas company Petrobras. Originally envisioned as being naphtha-based, if the project is given the go-ahead, it will be based on gas.

However, some in the industry think the US shale gas boom will have a limited impact globally. Wim Roels, CEO of Borouge Pte, last week said: "There will be some global impact but a limited one. The capacity additions in the Middle East and Asia - in terms of speed and feedstock - are much more significant." He was speaking on the sidelines of the Asia Petrochemicals Industry Conference (APIC) in Taiwan.


By: Joseph Chang
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