Shell, PTT continue Northeast cracker studies; Borealis to import US ethane

Petrochemicals news you need to know.

The Navigator Aurora vessel will carry ethane from Marcus Hook to Sweden. Image credit: Navigator.

US ethylene production, inventories jump YOY

U.S. ethylene production in the first quarter of 2016 jumped 10% year on year (YOY), from 13.7 billion pounds (about 6.2 million tonnes) in Q1 2015 to 15.1 billion pounds (6.8 million tonnes) in Q1 2016, IHS Chemical Week reported, citing data released in late April by the American Fuel and Petrochemical Manufacturers (AFPM).

Ethylene inventories totaled 1.8 billion pounds (about 816,000 tonnes) in Q1 2016, up 125% year on year and 14% from the fourth quarter of 2015.

Producers and consumers ramped up production and inventories at the start of this year ahead of a slate of planned turnarounds that will run through Q3 2016.

First-quarter ethylene production was the second-highest quarterly production level on record, after Q4 2015, which was 20,000 pounds higher.

Feedstock ethane consumption was also up 10% year on year, reaching 13.5 billion pounds (6.1 million tonnes). Propane and butane usage also increased compared to the same period last year, while naphtha feeds were down YOY but up from Q4 2015, according to AFPM.

Shell, PTT continue studying Northeast crackers

Royal Dutch Shell said during an earnings call on May 4 that it is still deciding whether to proceed with its proposed 1.5 million tonnes per annum (mtpa) ethane cracker project in Pennsylvania.

Shell CFO Simon Henry said that the cracker is the first in a slate of four major greenfield projects that the company is considering, including an LNG export project in Lake Charles, an LNG project in Canada and the deepwater Gulf of Mexico Vito development.

Henry said Shell could make a final investment decision on the projects within the next 12 months, though it’s “highly unlikely” that more than two will actually go ahead in that timeframe.

According to Henry, the proposed cracker project has a diverse set of associated market exposures and risks and provides portfolio resilience relative to the other big and small opportunities the company is considering. However, Shell's decision whether to proceed with any of the projects will come down to finding the best way to retain and maximize value.

Shell has also reduced its 2016 capital spending by another 10% from the target set in February and said it could cut further if needed. The company trimmed spending to $30 billion by cancelling projects such as the sour gas project in Abu Dhabi and by slashing exploration expenditures.

Meanwhile, PTT expects to make a final investment decision on its proposed $5.7 billion, 1 mtpa ethane cracker in Belmont County, Ohio by 2017, Bangkok Post reported on April 26, citing PTT's Chairman Prasert Bunsumpun.

According to him, completion of the petrochemical complex would take two years, by which time low crude oil prices should help reduce feedstock, energy and development costs. 

The complex will use shale gas from the Marcellus region and will be located near off-taker facilities to boost the project's logistical efficiency.

Dow, Mexichem on track with cracker build-outs

Dow Chemical’s 1.5 mtpa Texas 9 ethane cracker is 50% complete, with more than 80% of its equipment installed, the company said during its quarterly earnings call on April 28. The Freeport cracker is scheduled to come on stream in mid-2017.

In the meantime, the construction of Dow’s $250-million ethane flexibility project at Plaquemine, Louisiana, is 95% complete and expected to finish by Q4 2016. The project will increase ethylene capacity at the facility by 250,000 metric tons per year.

Dow also said it will begin ramping up production at its 750,000-metric-ton propane dehydrogenation (PDH) unit at Freeport, Texas, during the week of May 2. The PDH unit, which began production in December 2015, was shut down for planned maintenance in late March and had previously been briefly idled following a process upset on January 9.

Meanwhile, Mexichem have completed almost 80% of the capital investment in their 50:50 ethylene cracker joint venture with OxyChem in Texas, which is scheduled to begin operations by the end of 2016, the company reported in its Q1 2016 quarterly earnings statement on April 27. The facility is expected to reach full production in 2017.

As of March 31, Mexichem’s equity investment in the ethylene cracker had reached $569 million, the company reported.

Borealis to start US ethane imports in late 2016

Austrian petrochemicals producer Borealis will import 240,000 metric tons a year of U.S. shale-based ethane for its crackers in Europe, the company's CEO Mark Garrett said on May 4, Platts reported.

Borealis had previously said it expects to receive its first U.S. ethane shipment into Europe by the end of 2016.

In August 2014, Borealis signed a 10-year deal to buy shale-based ethane from Antero Resources for cracking in its European facilities, which are designed to use mixed feedstock. The gas will be sourced from the Marcellus and Utica shale formations.

Borealis has already signed a long-term shipping agreement with Navigator Holdings, a liquefied gas logistics company, to transport ethane from the Marcus Hook terminal in Pennsylvania to Stenungsund, Sweden.

The 35,000-cubic-meter-capacity ethane vessel is expected to be commissioned and begin commercial operations in the fourth quarter of 2016.

Motiva, Shell begin unplanned maintenance

Motiva started unplanned maintenance on a fluid catalytic cracker on April 28 at its 603,500 b/d refinery in Port Arthur, Texas, Platts reported. The 88,000 b/d unit is expected to be down seven to 10 days, according to traders.

The shutdown was the third unexpected Gulf Coast refinery outage in as many weeks, according to Platts. Shell shuttered a FCC at its 340,000 refinery in Deer Park, Texas, in late April, and Houston Refining's 263,776 b/d plant is expected to operate at just 75% of capacity through the second quarter after a fire broke out in April.