For additional information please contact:

Bob Burdett
Corporate Communications Manager
Nexant, Inc.

+1 415 369 1114
bburdett@nexant.com


      



NEXANT SEES PROMISE IN NEW PROPYLENE PRODUCTION TECHNOLOGIES

January 16, 2004---White Plains, NY---New process technologies for the production of propylene show great economic promise, as detailed in a new topical report, "Technology Developments in Propylene and Propylene Derivatives," released today by Nexant, Inc.

Propylene demand is expected to grow faster than supply. Globally, more than 25 percent of the new crackers currently planned for start up in the 2003-2006 timeframe are based on ethane, and therefore will produce little propylene. Commercial propylene is produced utilizing on-purpose propane dehydrogenation (PDH) technology, but this route generally requires favorable feedstock pricing to be competitive and the amount of propylene produced is small compared to other sources. New routes to propylene or propylene "add-on" processes to existing technologies will be necessary to satisfy the shortfall in demand from existing plants and process routes.

Propylene production processes include those that can be considered coproduct technologies and on-purpose technologies. Coproduct processes include conventional processes and feedstocks practiced today: conventional steam cracking. As a means of increasing propylene production, new process technologies-including olefin metathesis and olefin interconversion-have emerged that are designed to increase propylene yields from this conventional source.

In addition, catalytic pyrolysis is another coproduct process alternate to conventional steam cracking that has a significantly higher selectivity to propylene than traditional cracking of naphtha.

An evaluation of the technologies, operating conditions, capital and operating costs for each of the foregoing technologies indicates that those processes that increase propylene production from an existing steam cracker by converting coproducts (e.g., ethylene for metathesis, and C4's and C5's for olefin interconversion) are cost-effective when considered at a typical U.S. Gulf Coast location. The alternative catalytic pyrolysis exhibits even better returns than conventional steam cracking even with the capital expenditure associated with a grassroots plant. It should be noted that catalytic pyrolysis technology is in an earlier stage of development.

Conventional and developing on-purpose or standalone technologies include the following:

  • Upgrading refinery grade propylene
  • Deep catalytic cracking (DCC)
  • Propane dehydrogenation (PDH)
  • Methanol-to-propylene (MTP)
In addition, metathesis is also viable with transferred ethylene as a standalone unit, such as integrated with an FCC unit.

These technology options will likely be linked to large-scale steam crackers whose primary product is ethylene. The economics are complicated by the fact that the secondary propylene technologies cost/revenue contribution to the entire olefin production process tends to be overwhelmed by standard steam cracking investment elements and operational costs. Nevertheless, it can be demonstrated that propylene-enhancing technologies such as metathesis and olefin interconversion reduce the cost of producing ethylene because of the increase in propylene production over the base medium severity naphtha cracker with propylene to ethylene (P/E) ratio of 0.50. A case can be made that though the decrease in ethylene production cost is small for the two add-on technologies, both technologies enable the production of additional higher-value propylene. For the catalytic pyrolysis process, the improved economics is a result of a higher value combined product slate.

For these technologies, current economics in the U.S. Gulf Coast (USGC) show that upgrading refinery propylene to polymer grade propylene remains the lowest cost method of producing propylene. The next lowest cost method would be the metathesis process of converting ethylene and butenes to propylene. The high cost of the DCC process can be attributed to greater capital requirements when compared to other on-purpose technologies. One scenario that avoids this high capital expenditure is the conversion of an existing FCC unit to a DCC unit. The investment cost for most of the equipment and off sites can be considered a "sunk cost;" therefore there is only an incremental cost for increasing propylene production. The MTP process is by far the most costly due to the high cost of natural gas in the USGC driving up the cash cost of USGC methanol production.

During 2003, however, only refinery propylene upgrade and PDH processes showed a positive return on capital employed on a fully costed basis (including depreciation and return on capital employed).

If the export implications of the various on-purpose propylene processes are compared, the Middle East and Southeast Asia have a competitive advantage in providing low-cost propylene to Northeast Asia, which is forecast to be a major importer. In the Middle East, even though the technology is not commercialized, the MTP process could be very competitive, based on the availability of low-cost natural gas. Additionally, PDH is also competitive in that region. SEA also holds a good position to provide low cost propylene to importing regions. The current and projected ethylene-to-propylene price ratios favor the metathesis technology in Southeast Asia. The cost structures in Western Europe and the USGC are too high on a fully costed basis to support steady export into Northeast Asia.

An assessment of propylene derivative technology developments suggests that even though there are interesting and cost saving technology improvements and alternatives, these will have little effect on propylene demand. The following alternate process routes or feedstocks to conventional commercial technology were reviewed and analyzed:

  • Direct conversion of propylene to propylene oxide
  • Non-phosgene routes to polycarbonate
  • Propane ammoxidation to acrylonitrile
  • Catalytic distillation to cumene/phenol
  • Developments in acrylic acid technology
  • Developments in oxo alcohol technology
Though lower cost options are available, the only process technology that is expected to affect propylene consumption is the propane ammoxidation route to acrylonitrile. Depending on the price difference of propane and propylene, the propane route is a lower cost alternative and should gain capacity share as new plants are built. Several other derivative processes also show great economic promise and are expected to gain market share in the future.

For more information on this topical report, please contact: Ed Glatzer +1 914 609 0325 (e-mail: eglatzer@nexant.com)



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