petrochemical

The new 650-Mb/d Dangote refinery in Nigeria instantly became Africa’s largest and the world’s seventh-largest by capacity when it finally began processing crude into diesel and aviation fuels in January after years of delays and cost overruns. Long touted as Nigeria’s ticket to ending refined fuels imports by supplying its own markets — with plenty to spare for exports — the Dangote facility could substantially impact trade flows and global supply if it lives up to years of homegrown ballyhoo. In today’s RBN blog, we will examine Dangote’s long road to production, and why we see a slow ramp-up to full capacity through 2026. 

It’s been over a month since the Deep Freeze swept across Texas, shutting down the power grid, curtailing natural gas supplies, and generally wreaking havoc on the state’s population and infrastructure. The petrochemical industry was hit particularly hard, with every ethylene-producing steam cracker in the state and many in nearby Louisiana forced into hard shutdowns — that is, production coming to a screeching halt with little or no preparation. The result was unit damage well beyond what typically happens with other weather-related events like hurricanes, where there is usually some ability to manage an orderly shutdown. Consequently, at least half of the industry’s capacity to produce ethylene and its by-products remains offline, a development that is ricocheting through supply chains across the economy. Today, we examine the magnitude of the damage, consider what is happening in ethylene markets — the epicenter of the turmoil — and contemplate the longer-term implications of the outages. 

In their second-quarter earnings presentation last week, Energy Transfer said that they and their joint venture (JV) partners, Satellite Petrochemical, expect the first commissioning cargoes from their new 180-Mb/d ethane export facility in Nederland, TX — formally known as Orbit Gulf Coast NGL Exports LLC — to begin in November, only three months from now. This new outlet for U.S.-sourced ethane comes at a time when production of oil, gas, and NGLs faces near-term declines due to reduced drilling activity resulting from low crude prices. With those declines, will there be enough ethane supply to meet the capacity of the new Orbit export dock and other upcoming ethane-related projects? The short answer is, yes … for the right price. Today, we examine the latest supply and demand dynamics shaping the U.S. ethane market.   

COVID-19 has created a number of challenges across the energy value chain, including lower demand for motor gasoline and jet fuel and, subsequently, surplus crude oil. However, even with diminished demand, the facilities that produce and process these fuels have to keep operating at some level, as do petrochemical plants. Workers in the energy industry are considered essential due to the importance of having fuel available to power vehicles and manufacturing facilities, natural gas to enable continued operation of power industries, and logistical infrastructure to ensure that feedstock supply can make it to processing facilities and eventually consumers. Given the need for round-the-clock operations, COVID-related social distancing measures have presented a unique challenge for refinery and petrochemical facilities. To maintain adequate staffing while protecting personnel from the coronavirus, these facilities have been making major adjustments. If, as we all hope, things begin moving back toward “normal” in the coming months and refinery and petchem utilization ramps up, these efforts to keep workers safe will only gain in significance. Today, we discuss staffing issues in these key industry sectors during the pandemic.

Midstream giant Enterprise Products Partners (EPD) has attracted significant investor interest because of its simplified structure, 51 consecutive quarters of dividend growth and strong coverage — $2.7 billion in retained cash in the past three years. The company, with a market capitalization of $58 billion, has also quietly continued to build out its large integrated midstream network despite the plunge in commodity prices, investing almost $18 billion in organic growth projects and acquisitions in 2014-16. The end result is impressive: Enterprise is now connected to every major U.S. shale basin, every U.S. ethylene cracker and 90% of the refineries east of the Rocky Mountains. As a result, the company is well positioned to benefit from the recovery in oil and gas production, especially in the Permian Basin and Eagle Ford Shale; the surge in hydrocarbon exports; and the rapid growth of the U.S. petrochemical industry. Today we discuss highlights from the second part of our new Spotlight analysis of EPD, which focuses on the company’s Crude Oil Pipelines & Services, Natural Gas Pipelines & Services and Petrochemical & Refined Products Services segments.

Several new propane dehydrogenation (PDH) plants are coming online along the U.S. Gulf Coast. Now developers in Alberta are making plans for the province to become the next hot spot for PDH plant development. Final Investment Decisions (FIDs) are due over the next year or so on two projects aimed at taking advantage of the increasing volumes of propane being produced in western Canada—propane so plentiful, in fact, that they are paying to have it hauled off.  But what if propane prices rise due to increasing U.S. demand, more exports and lower U.S. production?  What might such developments do to PDH economics?   What could make Alberta different? Today, we consider the drivers behind two (maybe three) prospective PDH projects in Alberta, and look at how they may affect the propane market on both sides of the 49th parallel.

Times are tough in the methanol market. Posted and spot prices for methanol have continued falling (to levels not seen since 2010). New methanol capacity, planned during the good ol’ days, has been coming online, further depressing prices. And while more methanol-to-olefins (MTO) plants are starting up in China—the product’s biggest market—they are running at far less than full speed. But one bright spot for U.S. methanol producers is dirt-cheap natural gas, providing U.S. plants a competitive advantage versus those in the rest of the world. Today, we examine recent developments in the methanol market and consider what may be coming next.

The U.S. has a surplus of light hydrocarbon liquids – much of it in the form of field condensate produced at the wellhead and plant condensate extracted from natural gas at processing plants. Declining domestic demand leaves both field and plant condensate increasingly reliant on export markets. Trouble is those export markets are far from secure and the oil price crash isn’t making things any easier. Today we preview RBN’s latest Drill Down report – a deep dive into the supply and demand balance for field and plant condensate.

US natural gas liquids (NGL) production is growing fast, and surplus volumes are moving to export markets.  NGL production from natural gas processors increased from 1.7 MMb/d in early 2009 to 3.0 MMb/d this year (2014), and it is expected to continue growing to 4.5 MMb/d by 2019. Despite the important role of NGLs, these markets are not well understood, both due to their complexity and the unique aspects of their production, transportation, storage and use.  One of the most misunderstood aspects of NGL markets – the extraction of NGLs from natural gas, is the subject of RBN’s latest Drill-Down Report.  In today’s blog we’ll look at highlights of the report which reviews the basics of natural gas processing, current NGL markets, an outlook for NGL production, the health of NGL processing as measured by the Frac Spread, and a detailed review of RBN’s gas processing economics model.

NGL volumes continue to climb because of all the surging “wet” shale gas production.  These days about 7% of gas plant NGL production is “isobutane”, (also known as IC4, I Grade, methylpropane, R600a, iso and “izo” to our friends in Canada).  Over the past two years gas plant production of iso is up about 25%, and that volume is expected to increase another 30% over the next two years.  Most isobutane is used by refineries to make high-octane alkylate, but what about the rest?  Today we take a closer look at this lesser known natural gas liquid (NGL) and the sometimes exotic uses it is put to.