More than $225 Billion in Planned Ethylene Cracker Projects
Ethylene is the father of the chemical processing industry and feeds much of the industry as well as other chemical commodities. Industrial Info's Chemical Processing database is tracking $225 billion billion in active petrochemical companies creating ethylene cracker projects that are planned worldwide, including about $36 billion currently under construction.
New Ethylene Capacity
In East Asia there is a tremendous amount of ethylene capacity being planned with the origin based on new methanol technology.
The Middle East has a significant amount of ethylene capacity proposed as projects have been slow to develop as the ability to process a heavy to light feed. IIR can predict that the projects in the middle east will likely move forward but approvals have slowed the process down significantly.
In North America we saw the first construction of new capacity in 2014-2015 make its way to market and we expect a billion pounds of new ethylene capacity to come online in the second half of 2018 and the beginning of 2019 with ethane as its main petrochemical feedstock. The opening of two U.S. ethane export terminals in 2016 and large petrochemical plants in 2017 have increased demand. Like a lot of industries, construction starts in the Chemical Processing Industry is a good news-bad news story. The good news is there's a large pipeline of work. The bad news is that a lot of that will likely get pushed out to later years.
The U.S. chemical building boom took off in 2014 and has maintained consistently high ever since.
"Even with 25-26 billion pounds of ethylene coming to the market in such an incredibly short period of time, there's another 15-16 billion pounds of ethylene capacity still to come," Hamblet said.
Such project development points to the confidence in the ethylene market, he said, and to expectations that ethane feedstock costs will remain stable.
However, in the third quarter this year, ethane prices spiked in the 50-cent-per-gallon range as new ethylene capacity came online, but even that hasn't slowed interest in U.S. petrochemical project development, Hamblet said.
"I say that because we did have a series of very large ethylene crackers start construction, commissioning phases, and start operations, with a couple of more to come. I think the industry somewhat calculated [the ethane price spike] and knew this was going to come for some period of time, and it was calculated into those projects," Hamblet said. A "significant wave" of NGL logistics and processing projects over the next couple of years will help to stabilize ethane costs, he added.
Cheap ethylene means cheap polymers such as polyethylene, so the U.S. continues to enjoy a price advantage in the global marketplace.
"As long as the rest of the world sees this huge appetite and demand for ethylene and we can be the cheapest producer, that spells very well for us getting some additional ethylene capacity moving forward," Hamblet said.
In 2019, the U.S. is likely to see $16.5 billion to $17 billion in chemical industry project construction starts, Hamblet said. He added that new ethylene capacity depends greatly on global demand, and U.S. ethylene and polyethylene still have a big price advantage in places like China, despite the recent imposition of import tariffs there.
Texas & Louisiana
About $46 billion worth of the active ethylene cracker projects are in Texas and Louisiana, including:
- Sasol Limited's $4 billion ethylene unit addition at its Lake Charles Petrochemical Complex in Westlake, Louisiana, which is a major component of the $11 billion Lake Charles Chemical Project. The 1.5 million-metric-ton-per-year unit will use ethane as the primary petrochemical products to feed additional downstream units planned for the site.
- Exxon Mobil Corporation's $2.5 billion ethylene unit addition at its olefins facility in Baytown, Texas. Also intended to support its company's downstream units, the 3 billion-pound-per-year unit's construction will include tie-ins to an outside battery limits (OSBL) project.
Still in the permitting stage, Phase I of the St. James Parish complex would kick off construction in the second quarter of 2019, with completion in late 2022. Phase I comprises a 2.5 billion-pound-per-year ethylene unit and downstream derivative units, including an 882,000-pound-per-year linear low density polyethylene (LLDPE) unit, an 882,000-pound-per-year high density polyethylene unit and a 1.3 billion-pound-per-year propane dehydrogenation unit, among others. Permitting is expected to continue through August this year.
INEOS recently awarded the design engineering to Technip Stone & Webster Process Technology. The project would be for construction of a ethylene unit at its petrochemical complex in Chocolate Bayou, Texas. The project is expected to come online in July 2020, with a production capacity of 250M Lbs/yr.
Petrochemical Maintenance Activity
Heavy maintenance activity counts for 750 million in planned maintenance project kickoffs from July through December. This includes a maintenance turnaround at Chevron Phillips Chemical Company's (The Woodlands, Texas) Olefins Plant Unit 1544 in Port Arthur, Texas. The work on the 1.825 billion-pound-per-year unit and supporting equipment and area utilities is aimed at maintaining production efficiency.
In Canada , NOVA Chemicals Corporation (Calgary, Alberta) is planning a 30-day maintenance turnaround at its 2.8 billion-pound-per-year E3 Ethylene Unit in Joffre, Alberta. The turnaround will take place in May.
Back in Texas, Huntsman Corporation (NYSE: HUN) (The Woodlands, Texas) is planning a 45-day turnaround at its 400 million-pound-per-year Port Neches A3 Ethylene Unit, to be completed in June.
Also, BASF SE's ethylene unit turnaround at its petrochemical plant, in Port Arthur, Texas. The project is expected to kick off in January. The unit produces roughly 2.4 billion pounds per year of ethylene.
In all, Industrial Info is tracking more than $729 million in project activity by Westlake, including maintenance turnarounds. In addition, Industrial Info is tracking a 1 million-metric-ton-per-year ethane cracker addition in Louisiana, which is a joint venture between Axiall (owned by Westlake Chemical) and Lotte Chemical (Seoul, South Korea). The project is expected to wrap up in early 2019.
Westlake buys at least 1.8 billion pounds of ethylene per year, making it the second-largest ethylene buyer in the U.S., and as such, its Vinyls segment has enjoyed lower ethylene prices that have resulted from the recent start-up of a number of ethylene facilities on the U.S. Gulf Coast. Ethylene supplies are expected to remain plentiful as more natural gas liquids come out of the Permian Basin.
Ethylene is leadier in project spending with exxon leading the day. A very big chunk of the total value of the petrochemicals-related projects that are currently planned to start construction in the second half of 2018 is tied to the Gulf Coast petrochemical complex in San Patricio County, Texas, a joint venture by Exxon Mobil Corporation (NYSE:XOM) (ExxonMobil) (Irving, Texas) and Saudi Basic Industries Corporation (SABIC) (Riyadh, Saudi Arabia).
The Portland, Texas, complex will include a 1.8 million-metric-ton-per-year ethane cracker, a monoethylene glycol unit and two polyethylene units. A joint venture between Chiyoda International Corporation (part of the Chiyoda Group) (Yokohama, Japan) and Kiewit Corporation (Omaha, Nebraska) is handling the general engineering, procurement and construction (EPC) chores on the ethane cracker project, which would be completed in 2021.
Fluor Daniel an EPC provider has benefited from large scale petrochemical projects such as Lake Charles Chemical Project (LCCP) in Westlake, Louisiana: a $4 billion ethylene unit, which is designed to produce 1.5 million metric tons per year for the complex's downstream units, and a $3.35 billion pet coke-to-methanol plant, which would process petroleum coke into 1 million metric tons per year of methanol and 400,000 metric tons per year of sulfuric acid. The Marcellus Shale is fueling ethylene growth farther north, and Fluor is part of a consortium of contractors involved in PTT Global Chemical Public Company Limited's (Bangkok, Thailand) proposed, $7.3 billion Belmont County ethylene plant in Shadyside, Ohio.
Bayport Polymers & Nova Chemicals
Bayport Polymers and Nova/Borealis have made a final decision regarding the 625,000 ton-per-year polyethylene unit at its bayport plant.
The unit will more than double the plant's existing polyethylene production capacity to 1.1 million tons per year. Construction is expected to kick off this year, with the plant entering service in 2021. McDermott International Incorporated has been selected to provide engineering, procurement and construction (EPC). For more information, see Industrial Info's project report.
The plant will receive feedstock from Bayport Polymers' under-construction grassroot ethane cracker in Port Arthur, Texas, which will produce approximately 1 million metric tons per year of ethylene. Construction of the ethylene unit began in summer 2017 and is expected to be completed in late 2020. McDermott also is providing EPC on the project.
Bayport and Port Arthur are home to other high-value Chemical Processing projects. In Bayport, LyondellBasell Industries NV is in the final stages of engineering for a planned oxyfuels unit addition. The facility will produce methyl tertiary-butyl ether (MTBE) and ethyl tert-butyl ether (ETBE). Construction is expected to begin in the fourth quarter of this year and be completed in the summer of 2021. Fluor Corporation is the engineer.
About $18.1 billion worth of the active petrochemical projects are in the Middle East, including:
- Oman Oil Company's new, $1.5 billion ethylene plant and $800 million addition of a high-density polyethylene (HDPE) unit at its petrochemical plant in Shoar, Oman. The ethylene plant is expected to produce about 1.92 billion pounds per year of ethylene, using natural gas as feedstock; the unit addition is expected to result in about 926 million pounds per year of HDPE.
- Saudi Aramco's Addition of a paraxylene unit at its petrochemical complex in Rabigh, Saudi Arabia. It is expected to produce about 850,000 metric tons per year of paraxylene.
Other key projects in the Middle East include:
• Kiran Petrochemical - $800 Billion Ethylene Plant
• Dehloran Sepehr Petrochemicals - $550 Million Ethylene Plant
• Qatar Petrochemical - $2 Billion Ethylene Plant
• Pucheng Clean Energy - $600 Billion Ethylene & Propylene Unit
• Shandong Chemicals - $900 Billion Ethylene & Propylene Plant
• Lianyungang Petrochemicals - $1 Billion Ethylene Plant
According to the IEA, the world is expected to add 1.4 million BBL/d in new petrochemical-producing steam crackers over the next five years.
Demand for ethane will expand at the fastest pace in the next five years, rising by 885,000 BBL/d, followed by naphtha with growth of 495,000 BBL/d and liquefied petroleum gas with growth of 40,000 BBL/d, the agency forecast.
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