Methyl tertiary butyl ether (MTBE) is used as an octane booster and as an oxygenate in gasoline.
One of its major advantages is its good properties for blending and for increasing the octane levels of lead-free gasoline.
Effectively, all US-produced MTBE is sold into the export market and destined for the Latin America market. MTBE was outlawed as a gasoline additive in the US years ago, but markets remain overseas. There are five MTBE plants remaining in the US.
The US MTBE market continues to be balanced with 94.4% of all production going overseas, mostly to Mexico.
According to the latest statistics from the US Energy Information Administration, US production totalled 3.115m bbl through the first quarter of 2014, while exports were at 2.940m bbl.
MTBE production has fallen to its lowest level since 2012 through the first three months of the year, due to some unscheduled plant maintenance.
Accordingly, exports to Mexico fell to 1.529m bbl for the same period, the lowest level since 2011, when exports were at 1.464m bbl through the first three months of the year.
Exports to Mexico accounted for 51.3% of all US production. Venezuela accounted for another 32.4% of US production.
Exports to Venezuela have fallen by 27.5% year on year in the first quarter.
The use of MTBE as a feedstock for isobutylene has gained momentum in recent months, but market impact would be very minimal.
US Gulf MTBE spot prices have rebounded above the $3.00/gal mark, after weak demand pushed prices lower in May 2014.
Prices began to gain strength at the end of 2013, rising to a 2014 average high of $3.33/gal in early March.
Prices have almost rebounded to that level, following stronger energy prices, including crude oil, as a result of violence in Iraq that may threaten global oil supplies.
The reaction of isobutene with methanol over a catalyst bed produces MTBE. The reaction can take place in either a liquid-phase reactor or a mixed gas-liquid-phase reactor that contains an acidic ion exchange resin. Alternatively, sulfuric acid can be used as a catalyst.
The use of MTBE as a gasoline additive has been under threat, leading to the development of processes that convert existing units to produce high-octane alkylate products.
Italian engineering group Snamprogetti developed the SP-Isoether process, allowing conversion of an MTBE plant to produce iso-octane using highly selective isobutylene dimerization without the need for acid alkylation.
US engineering and construction major Kellogg Brown & Root (KBR) joined forces with Finland’s Fortum Oil and Gas to offer a process called Nexoctane for producing iso-octane from existing MTBE facilities. US-based Honeywell’s UOP, a process technology firm, offers the indirect alkylation InAlk process, which can revamp MTBE plants to produce a high-octane paraffinic gasoline blendstock.
The popularity of MTBE is what led to its downfall in the US. As a result of its increased use as a fuel additive, MTBE was found to contaminate some water supplies in the US, primarily from underground gasoline storage tanks that leaked.
Following the ban issued in 2005, the internal US market ceased.
Yet some environmental lawsuits continue today.
In June 2014, the US state of Vermont filed a lawsuit alleging that more than two dozen gasoline refiners caused widespread groundwater pollution with MTBE.
The state is seeking damages so it can clean up the alleged contamination. Refiners listed in the lawsuit include BP, Chevron, Citgo, ConocoPhillips, ExxonMobil, Shell, Total and Valero.
Vermont’s attorney general’s office said state agencies continue to deal with past releases of MTBE and continue to discover more contaminated wells.
With the US ban in effect, MTBE produced in the US is exported, mostly to Latin America – especially Venezuela, Mexico and Chile.
As more than 90% of MTBE is used for gasoline production, major petrol producers in each of the countries are the principal buyers of MTBE produced both domestically in Latin America and in the US.
Latin America markets do not have a local price benchmark and use Europe MTBE prices and US Gulf gasoline prices as their price reference.
While the trade is not very intensive, the market situation is characterised as stable.