Chemical industry split over future supply balance, Northeast boosts share of gas output
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Petrochemical Industry split on second wave demand outlook
Steady oil prices, low natural gas costs and steady downstream demand globally is fueling another round of major petrochemical project announcements in the U.S., but some companies are questioning if market demand is strong enough to justify additional investments, according to an article published by The Financial Times.
Four crackers totaling more than 5 million tonne/year of ethylene capacity are slated to start operations this year along the U.S. Gulf Coast. Five more are under construction and expected to begin operations before the end of 2019.
Some 10.3 million tonnes of ethylene capacity will enter the U.S. market before the end of 2019, according to global petrochemical market information provider ICIS.
Added capacity is expected to be exported, but some analysts are concerned that too much production will drive down prices. Other analysts say there will only be a modest knock to export prices given a mix of high costs in Asia and strong demand.
Northeast states increased natural gas production more than other states in 2016
U.S. natural gas roduction in Pennsylvania and Ohio has accounted for an increasing share of total U.S. natural gas production in recent years, growing from less than 2% in 2006 to 24% in 2016, the U.S. Energy Information Administration (EIA) announced in its Natural Gas Monthly Report.
After reaching a record high of 79 billion cubic feet per day (Bcf/d) in 2015, U.S. marketed natural gas production fell to 77 Bcf/d in 2016, the first annual decline since 2005, Texas, the state with the most natural gas production, fell by 2.5 Bcf/d, while Ohio and Pennsylvania each increased by about 1.2 Bcf/d, the EIA announced.
Pennsylvania and Ohio had the two largest annual natural gas production increases from 2015 to 2016, reflecting higher production from the Utica and Marcellus shale plays, which have accounted for 85% of the U.S. shale gas production growth since 2012.
Phillips 66 turns to chemicals for growth
Chemicals hold more potential for Phillips 66 than gasoline, CEO Greg Garland and President Tim Taylor said in Q1 earnings calls. "The Middle East and U.S. Gulf Coast are going to be the two best places in the world to make petrochemicals, long-term," Garland said.
The company believes its best strategic investments lie in petrochemcials and pipelines rather than in gasoline, which is facing decling demand.
Not only does the company have access to cheap natural gas as feedstock to produce chemicals, but demand for plastic resins is on the rise globally.
Phillips 66 opened a plant at its Old Ocean complex, southwest of Houston, to separate natural gas liquids (NGLs) into components such as ethane, butane and propane in 2015. It also built an ethane cracker at its Cedar Bayou plant in Baytown, Texas.
In December, Phillips said its new liquefied petroleum gas (LPG) export terminal in Freeport, Texas was shipping cargoes. In March, the company announced plans to build a 450,000 bbl/day pipeline from the Permian's Delaware Basin north to facilities in Odessa, Texas.
Frontier Logistics considers $30 million project in Charleston
Frontier Logistics, one of the world’s largest exporters of plastic resins, plans to add a $30 million distribution center to transport resins through the Port of Charleston in South Carolina.
The site would be strategically adjacent to a planned rail yard to be built by Palmetto Railways, a division of the state Commerce Department. Palmetto Railways wants to sell a 25.3-acre parcel for $6 million to Frontier. If the deal is approved, Frontier would begin building the distribution center to receive shipments on existing rail lines.
Frontier would eventually ship about 1,000 containers of plastic resins through the port each month, according to published reports.