Global demand for propylene is rising, but lighter crude slates at U.S. refineries and the use of more ethane at U.S. (and overseas) steam crackers has reduced propylene production from these plants. That has led to the development of more “on-purpose” propylene production facilities — especially propane dehydrogenation (PDH) plants — in both the U.S. and Canada. More than 2 million metric tons/year of new PDH capacity has come online in North America since 2010, another 1.6 MMtpa is under development, and propane/propylene economics may well support still more capacity being built by the mid-2020s, maintaining the U.S. and Canada’s position as propylene and propylene-derivative exporters. Today, we begin a series looking at “on-purpose” production of propylene by PDH plants and what the development of these facilities will mean for U.S., Canadian and overseas markets.
Propylene — a particularly useful chemical building block — is used in downstream petrochemical processes to make a number of important materials, including polypropylene; acrylonitrile (used for acrylic fibers and coatings); propylene oxide (used for polyurethanes and other chemicals); oxo alcohols (used in PVC plasticizers and coatings); cumene (used to make epoxy resins and polycarbonate); and isopropyl alcohol (used as a solvent). About two-thirds of the propylene produced is used to make polypropylene — one of the best-selling plastics, second only to polyethylene. Polypropylene (or PP) is used extensively in automobiles and in the manufacture of packaging films, bottle caps, fiber ropes, as well as bicycle helmets and diapers. Global demand for propylene has been increasing at an average of about 5.2 MMtpa — a 3.6% compound annual growth rate (CAGR) — while North American demand is growing at a more modest average of 390,000 metric tons per year, for a CAGR of 2.2%. However, as we’ll get to in a moment, the traditional “co-product” sources of propylene supply have not kept up with demand — a situation that has led to the development of on-purpose propylene capacity on both sides of the U.S.-Canada border.
Until a few years ago, propylene was mostly produced as a co-product of petroleum refining or the steam cracking of propane and naphtha. However, as we discussed in Oh Propylene – Why Can’t You Be True?, propylene output from North American refineries has been falling due to lighter crude slates, and since the advent of the Shale Era in the U.S., steam cracking has become more focused on lighter feedstocks (especially ethane), thereby reducing propylene co-product production. Further, as we described in Send It to Me, investments in U.S. NGL export capacity (specialized terminals and ships for transporting refrigerated ethane and LPG overseas) have enabled the conversion to lighter steam-cracker feedstocks in other parts of the world (notably in India, Europe, South America and China), further limiting global propylene production. The result has been a focus on increasing propylene stocks with on-purpose production, and, as shown in Figure 1, on-purpose propylene technologies such as propane dehydrogenation (PDH; green bar segments), methanol-to-olefins (MTO, also known as methanol conversion; light-blue bar segments), and — to a much lesser extent — metathesis (orange bar segments) have dominated global propylene capacity additions over the past 10 years.
To access the remainder of On Purpose - What's Driving New Propane Dehydrogenation Projects in North America? you must be logged as a RBN Backstage Pass™ subscriber.
Full access to the RBN Energy blog archive which includes any posting more than 5 days old is available only to RBN Backstage Pass™ subscribers. In addition to blog archive access, RBN Backstage Pass™ resources include Drill-Down Reports, Spotlight Reports, Spotcheck Indicators, Market Fundamentals Webcasts, Get-Togethers and more. If you have already purchased a subscription, be sure you are logged in For additional help or information, contact us at [email protected] or 888-613-8874.