You Can Just Iso my Butane

The isobutane market has a traditional self-correcting mechanism whenever the market gets oversupplied - the iso vs. normal spread declines, the merchant isomerization units shut down, and the market moves back into balance.   But there is a potential problem ahead for this orderly, self-correcting marketplace – shale.  As high-BTU, “wet” shale gas production continues to push NGL volumes from gas plants ever higher, the supply of isobutane will be increasing proportionally.  The math is simple.  The more gas plant production of isobutane, the less merchant isomerization will be needed.  Or is that really true? Could increasing demand for alkylate combined with increasing availability of propylene from dehydrogenation absorb enough isobutane to keep the merchant isomerization units running at high utilization rates?   Today in our series on isobutane and isomerization we’ll look at the major isomerization centers, the major players, increasing export patterns and likely scenarios for the disposition of surplus isobutane supplies.

Of the five natural gas liquids (NGLs), isobutane stands apart in its sources and markets.  Isobutane comes from gas processing plants and refineries, but it is also the only NGL intentionally made from another NGL – it’s cousin, normal butane.  It has a variety of exotic uses, such as aerosol propellant for everything from hair spray, to cooking sprays to shaving cream and since the early 90s as a replacement for Freon in refrigerators.  A refinery process called alkylation is the largest market for isobutane, producing a high-octane gasoline blending component called alkylate.     Even though it has robust markets, isobutane supply/demand balances are not immune to the growing volumes of high-BTU, “wet” shale gas and the resulting torrent of NGL production.   And as gas plant isobutane volumes increase, there are changes coming to isobutane balances and the demand for merchant isomerization.  Today we begin our series on isomerization by exploring what it is, why it’s valuable, and how it’s done.