By Malini Hariharan
The shale gas based ethane rush in the US continues with Westlake Chemical the latest to announce big expansions at its two crackers in Lake Charles, Louisiana.
Each of Westlake’s two light feedstock crackers will be expanded to provide ethylene for existing internal derivatives units and the merchant market, said the producer.
Westlake currently buys ethylene, estimated at around 135,000 tonnes, to support its styrene and vinyls production.
The first cracker expansion will increase capacity by approximately 230m-240m lbs/year (104,000-109,000 tonnes/year), while also increasing feedstock flexibility, Westlake said.
Current capacities of the crackers are 590,000 tonnes/year and 544,000 tonnes/year, according to ICIS. Westlake did not specify which cracker will be expanded first but said that the first expansion will be completed by late 2012 and the second by end-2014.
Westlake is also evaluating conversion of its Calvert City cracker (current capacity of 195,000 tonnes/year ethylene) from propane to ethane. Additionally, expansion options are being evaluated for the site and engineering and design studies are underway, said the company.
Westlake joins a number of other US producers looking to boost ethane-based cracking capacity despite the concerns surrounding the long-term future of shale gas.
The other risk is market related as the most of the ethylene derivative capacity will have to be exported, mainly to Asia.
But the risks are worth taking especially if a company is able to tie up with a gas operator to secure ethane at a cost plus pricing; the other option is to set up a fractionator, points out an industry player.
The opportunity is immense as gas is projected to remain at around $5/mmbtu while crude oil is unlikely to fall below $70/tonne, he points out.
His only worry is whether predictions will go wrong.
“Four years ago this place was dead; North America was written off. Now it has changed, but what is the guarantee that it will not change again?”