The False Promise Of US Petrochemicals?



By John Richardson

THE remarkable shift in the competitive landscape of petrochemicals resulting from shale gas was highlighted yesterday in an excellent post by our fellow blogger, Paul Hodges.

Drawing on data from the NPRA, with analysis from the ICIS data and analytics team and Bob Townsend of International e-Chem, Paul shows the steep rise in ethane versus naphtha/liquids cracking from 2006 to Q4 2010.

Switching to ethane has been a no-brainer for the US petrochemical industry, thanks to the shale gas technology break-through. The States is second only to the Middle East in competitiveness in ethylene derivatives.

Hence, the combination of the feedstock advantage and a weaker dollar has led to a sharp rise in US polyethylene (PE) and polyvinyl chloride (PVC) exports.

Our blog wonders, though, whether all the new cracker studies announced by US producers of late are a little premature, given the uncertain economic outlook.

We have also discussed the challenges to shale gas due to the environmental debate. A major incident – and/or a well-publicised study – could result in a regulatory clampdown leading to reduced availability and a further shift in the petrochemicals landscape.

The other immediate problem, as Paul also discusses, is the tightness of butadiene and propylene markets resulting from the switch to lighter feeds in the US.

The blog has heard talk of interest in making use of an old technology to produce on-purpose butadiene to meet the shortfall – n-butane dehydrogenation.

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