LatAm petchems business lags; ExxonMobil cuts steam-cracking costs

Petrochemicals news you need to know.

ExxonMobil develops cheaper steam-cracking

A new steam-cracking process developed by ExxonMobil that converts crude oil directly to light olefins could potentially save refiners as much as $200 per metric ton of ethylene produced compared to traditional naphtha cracking, IHS Chemical Week reported on July 6, citing IHS Chemical's recent Process Economics Report: 'Steam Cracking of Crude Oil' study.

The process was used at a world-scale facility ExxonMobil commissioned in Singapore in 2014 that produces 1 mtpa of ethylene directly from crude oil.

The process completely skips the refinery and feeds crude oil to the cracking furnaces, which have been modified to include a flash pot between the convective and radiant sections of the furnaces. The crude oil is then pre-heated and flashed, effectively ‘topping’ the lighter components from the crude, according to IHS.

Next, the extracted vapor is moved back to the furnaces' radiant coils and cracked the conventional way. The heavier liquid that forms at the bottom of the flash pot is either transferred to the nearby ExxonMobil refinery or sold into the merchant market, IHS said.

The process cuts costs by taking advantage of the premium that naphtha commands over crude oil in Southeast Asia. The IHS analysis was conducted at a $50/barrel cost for crude oil.

ExxonMobil is not the only company looking to convert crude oil directly to light olefins. In June, Saudi Aramco announced a joint venture with SABIC to study a potential crude-oil-to-chemicals complex in Saudi Arabia, IHS reported.

Under the agreement, the companies will conduct a comprehensive joint feasibility study of the proposed complex.

However, the Saudi Aramco concept differs significantly from ExxonMobil's crude-to-olefins process. Aramco's process begins by feeding the whole barrel of crude to a hydrocracking unit, which removes the sulfur and shifts the boiling point curve significantly toward lighter compounds.

The gas-oil and lighter products are then transferred to a traditional steam cracker, while the heavier products are sent to a deep-fluid catalytic cracking unit (FCC) that maximizes olefin output, according to IHS.

IHS Chemical estimates the cash-cost for this Aramco crude-to-olefins process would be $200/metric ton cheaper than for a naphtha cracker. However, the hydrocracker and deep-FCC would come at a significant capital cost, so at 15% pre-tax return on investment, the Aramco process would come at roughly the same costs as naphtha cracking in Saudi Arabia, IHS said.

Latin America's petchems investment lags

Despite the start-up of Braskem Idesa’s Etileno XXI petrochemical complex in Mexico on June 22, Latin America is struggling with a lack of petrochemical investment amid low oil prices and financial difficulties, Platts reported on June 29.

Since the drop in oil prices in mid-2014, state-owned energy companies in the region - including Brazil’s Petrobras, Colombia’s Ecopetrol and Mexico’s Pemex - have all considered divestitures of their petrochemical assets as one option to offset oil revenue losses.

Major olefins and polymer projects in Brazil and Venezuela have been effectively put on hold, while others in Peru and Bolivia are also being reconsidered. Meanwhile, polyethylene production in Chile ended in May 2014, according to Platts.

In 2015, Latin America was more than 1.5 million metric tons of polyethylene short, and the deficit is expected to increase to more than 2 million metric tons by 2025, according to S&P Global Platts Analytics.

However, the lack of local investment in the sector in the region suggests Latin America could be an export opportunity for North American resin producers in the coming years.