08 May 2014 17:24 [Source: ICB]
Having lightened the feed to its joint venture cracker in Port Arthur, Texas, US, BASF is shorter on propylene in North America than it would like to be. And having looked at its options, the company’s feedstock of choice is dry natural gas – methane – for the olefin molecule that it needs the most (or certainly more than ethylene) in the US.
BASF needs propylene for products like coatings, detergents and superabsorbent polymers. But propylene could become tight as petrochemical producers have geared up to produce more ethylene from ethane rather than naphtha, and as refiners have started to refine lighter crudes from shale.
Producers have been tempted to build propane dehydrogenation (PDH) units to secure propylene. They foresee advantaged propane prices and ready domestic supply. Yet methane looks as though it will be cheaper, and certainly more plentiful, over the longer term.
PDH plants are not easy to operate effectively. But currently there are eight new PDH plants planned in the US, and one PDH expansion.
BASF meanwhile is looking to make its most significant investment to date in a single plant, on a methane-to-propylene facility on the US Gulf Coast. These are early days, but the plant will cost more than the €1bn 300,000 toluene diisocyanate (TDI) plant project currently underway in the company’s hometown of Ludwigshafen in Germany. BASF said the methane-to-propylene plant in the US could be on-stream in 2019.
There is no detailed information yet on what process technology the company wants to use. Lurgi has methanol to propylene (MTP) technology and plants using this process are being built in China, using coal-based methanol as feedstock.
BASF CEO Kurt Bock told shareholders on 2 May that the company would make propylene in the US via methanol. But he added: “We are using a new technology.”
“Propylene is one of the most important basic chemicals,” he said. “We want to further process this basic product in North America and significantly expand our business.”
The company also has a 750,000 tonne/year joint venture ammonia plant planned with Yara in the US. BASF intends to strengthen its backward integration with the project which will be located at its production site in Freeport, Texas.
There is no link between the two projects, BASF said. A company spokesperson added: “We are not disclosing any further details on technology at the moment”.
BASF, though, is steeped in methanol and ammonia know-how and theoretically integrating ammonia and methanol plants could result in lower overall investment costs.
As for the comparative production for propylene, it certainly looks as though MTP running costs can trump PDH in the US.
“MTP margins are significantly more favourable than those for PDH,” noted ICIS consultant Regan Hartnell. “Essentially, it’s always going to be cheaper and easier to export propane than methane. Even if they are priced perfectly at international parity, methane will be much cheaper than propane. This will give both a margin and competitive barrier to MTP over PDH in the US.”
Propane is widely being exported from the US today, while methane would be exported as liquefied natural gas (LNG) as those export terminals come on line in 2015 and beyond.
The variable margins, historic and projected, for the two propylene processes, show the relative advantage of the C1 feed. An average oil price of $90/bbl has been assumed.
PDH plants use about 1.25 tonnes of propane to make one tonne of propylene. The methane to methanol to propylene route would use 1.93 tonnes of methane. One tonne of methane produces about 1.8 tonnes of methanol.
If BASF can get the project economics right, it looks as though it is on to a winner.
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