Asia Petrochemical Industry Conference (APIC) 2017
Linear Alpha Olefins
Chommanad Thammanayakatip
Managing Consultant
19 May 2017
Linear Alpha
Olefins
Asia Petrochemical Industry
Conference (APIC) 2017
Chommanad Thammanayakatip
19 May 2017
Nexant’s sole consulting focus is integrated across
the Energy and Chemicals value chain
Energy
POWER & RENEWABLES

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

Grid Management
Distribution Software
Energy Efficiency
Demand Side
Management
 Renewables
• Solar
• Biomass
• Municipal Waste
• Wind
• Clean Coal
Chemicals
GAS
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
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Gas Monetization
LNG
Gas Pipelines
Regulatory
Frameworks
C1 CHEMICALS &
FERTILIZERS
DOWNSTREAM OIL
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
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
Petroleum Refining
Storage & Distribution
Biofuels
Oxygenates
Coal to Liquids
Gas to Liquids
Base Oils
Lubricants
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
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
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Ammonia
Urea
Melamine
Ammonium Nitrates
Phosphate & NPK
Fertilizers
Methanol
Formaldehyde
Acetyls
Other syngas
derivatives
BASE PETROCHEMICALS
& POLYMERS









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Olefins
Aromatics
Polyolefins
Vinyls
Styrenics
Polyesters
Polyamides
Acrylates
Rubbers
Other olefin and
aromatic derivatives
INTERMEDIATE &
SPECIALITY CHEMICALS
 Surfactants
 Oleochemicals
 Engineering &
Speciality Polymers
 Coatings, Adhesives,
Sealants &
Elastomers (CASE)
 Polyurethanes
 Resins
 Biochemicals
 Speciality & Fine
Chemicals
Nexant Capability
Linear Alpha Olefins_APIC 2017
May 2017
2
Agenda
1. Introduction
Chommanad Thammanayakatip
Managing Consultant
Energy & Chemicals Advisory
2. Production
T:
M.
E
+66 2 793 4606
+66 81 829 6450
[email protected]
22nd Floor, Rasa Tower I
555 Phahonyothin Road
Kwaeng Chatuchak, Khet Chatuchak
Bangkok 10900 Thailand
3. Demand
Linear Alpha Olefins_APIC 2017
May 2017
3
Introduction
Linear Alpha Olefins (LAOs) have a range of end-uses with
major producers serving a broad range on industry segments
LAO Value Chain
NGLs (Ethane, Propane) & Naphtha
Propylene
Ethylene
Feedstocks
LAO
Mixed C4
Other
Steam Cracker
Full-Range Linear Alpha Olefins
C4
C6
C8
C10
C12
C14
C16 C18 C20+
Co-Monomers for Polyolefins
Major Markets
Synthetic Lubricants (PAO)
Oil Field: Drilling Fluids
Plasticizer Alcohols
Detergent Alcohols
Other Applications: lube additives, amines, synthetic fatty acids, ASA, etc.
Linear Alpha Olefins_APIC 2017
May 2017
5
LAO demand is focused on LLDPE and HDPE production
Linear Alpha Olefin Demand
by End Use, 2016-e
Global LLDPE and HDPE Demand
Oil Field Others
Chemicals
140
120
Fine Chem
100
LLDPE
Lubricants
Detergent
Alcohols
HDPE
Million tons
Plasticisers
%AAGR
16-30
4.3%
3.5%
Polyolefin Type
LLDPE
HDPE
80
60
40
20
0
2005
2010
2015
LLDPE
Linear Alpha Olefins_APIC 2017
2020
2025
2030
HDPE
May 2017
6
Butene-1 accounted for 36 percent of total LAO demand in 2016
Linear Alpha Olefin Demand by
Fraction, 2016-e
Million tons per year
6
 Butene-1 PE grades are made in all
parts of the world. Production from
the large-scale plants in the Middle
East is dominated by butene-1 resins
 Hexene-1 and octene-1 PE polymers,
4
in general, show higher performance
than butene-1 grades, but at a higher
price
2
0
Butene-1 Hexene-1 Octene-1
LLDPE
Linear Alpha Olefins_APIC 2017
HDPE
Others
Linear
Alpha
Olefins
(C8+)
May 2017
7
Demand in Asia Pacific is focused on commodity grade polyethylene
using Butene-1 comonomer
North America vs. Asia Pacific Alpha
Olefin Demand by end-use, 2015-e
Asia Pacific average annual growth by
end-use (Percent)
Thousand tons per year
Butene-1
Hexene-1
Octene-1
Asia Pacific
LLDPE
Linear Alpha Olefins_APIC 2017
North America
HDPE
C8+
Octene-1
Hexene-1
Butene-1
C8+
Octene-1
Hexene-1
Butene-1
C8+
0
5
2000-2015
10
15
2015-2030
Others
May 2017
8
New capacity in the US and Middle East is focused on specialty
grades of polyethylene
Regional LAO demand trends
North America
 ExxonMobil - LLDPE focused on
specialty grades using UNIPOL
technology
 Formosa to produce LLDPE,
gas-phase LL using B1 and H1
co-monomers
 Dow using DOWLEX technology
for octene-1 LL grades and
building separate elastomers unit
 Sasol, building LLDPE/HDPE
swing plants
Linear Alpha Olefins_APIC 2017
Middle East
 All Borouge III capacity
(>1m tons per year) using
HDPE/LLDPE swing BORSTAR
technology
 Iran capacity will include more
commodity grades using gas
phase technology
 Sadara - first solution plant in
KSA will focus on Octene-1
grades
China
 Focus on butene-1 LLDPE
via UNIPOL Technology
 HDPE plants include some
Hostalen and
INNOVENE S bimodal
technology
May 2017
9
LAO demand growth will be led by comonomers
Butene-1, Hexene-1 and Octene-1
Global Linear Alpha Olefin Demand
(Thousand tons per year and AAGR%)
Butene-1
Global Linear Alpha Olefin Demand
(Percentage Share)
4%
2030
Hexene-1
Octene-1
C8+
3%
2020
4%
2015
1%
2015
Linear Alpha Olefins_APIC 2017
2020
0%
2030
Butene
Hexene
Octene
C8+
100%
Growth will be led by lighter LAO
May 2017
10
Production
The technology to produce LAO can be split into two categories:
Full Range and On-Purpose process technology
Full Range Technology
 Process based on ethylene
oligomerization to produce LAO from C4
(butene-1) through to C30+.
 Technology has limited flexibility to pivot
the LAO distribution determined by
operating specifications.
25%
20%
15%
10%
5%
0%
Extractive Distillation:
 Butene-1 is produced by extraction and
distillation from C4 streams.
C4
C6
C8
C10
C12
C14
C16
C18
C20
C22
C24
C26
C28
C30
C30+
Carbon Distribution
Full Range Olefin Distribution
(weight percentage)
On Purpose Technology
Di/tri/tetra-merisation Technology:
 Selective oligomerization of ethylene into
comonomers namely, butene-1
(dimerisation), hexene-1 (trimerisation)
and octene-1 (tetramerisation).
 Three step process – initiation,
propagation and termination. Similar
process for making polymers such as
polyethylene and polypropylene.
"Long Distribution"
Linear Alpha Olefins_APIC 2017
Fischer-Tropsch Production:
 Fischer-Tropsch process is used to
convert syngas produced by gasification
into light LAOs.
"Short Distribution"
May 2017
12
C4 to C8 demand is growing faster than the demand for C12-C20+,
so “on-purpose” alpha olefin units are making up the difference
Global Production of LAO from Full-Range and On-Purpose Units
3500
Thousand tons per year
3000
2500
“on-purpose”
units can only
make up to C8.
Higher carbon
alpha olefins
need to be
produced in fullrange plants
2000
1500
1000
500
0
C4
C6
C8 C10 C12 C14 C16 C18 C20+ C4
Full-Range Production
2000
2010
2015
C6
C8
On-Purpose
2020
2030
In 2015, full-range LAO units supply only 15% of C4, 45% of C6, and 59% of C8
Linear Alpha Olefins_APIC 2017
May 2017
13
Investments into new full range technology
will be concentrated in North America
Global LAO Capacity Additions
Thousand tons
400
200
0
2014
2015
North America
Eastern Europe
Linear Alpha Olefins_APIC 2017
2016
South America
Middle East
2017
2018
Western Europe
Africa
2019
2020
Central Europe
Asia Pacific
May 2017
14
A number of On Purpose LAO plants have come online
despite the impact of low oil prices
Regional Capacity Trends
US
 INEOS announced plans for a
full range complex
 Shell announced a plan for a
new full range unit
 Chevron Phillips Co, start-up of
on purpose Hexene-1
production
 Sasol start-up of on purpose
octene-1
Linear Alpha Olefins_APIC 2017
Middle East
Middle East capacity additions let
by ethylene di/tri-merization
process:
 JAM petrochemical company
started 100 000 tons per year
butene-1
 National Chevron Philips started
100 000 tons per year on
purpose hexene-1 facility
Asia Pacific
Near term capacity additions
production through extractive
distillation and petrochemical
sources.
 The RAPID project
developed by Malaysian oil
and PETRONAS intends to
produce 110 000 of butene-1
May 2017
15
By 2020, ROW and North America will continue to have excess
capacity
LAO Capacity by Region and Cut
(2020)
LAO Demand by Region and Cut
(2020)
3.0
3.0
2.0
2.0
1.0
1.0
0.0
0.0
North
America
Europe
C4
Linear Alpha Olefins_APIC 2017
C6
Asia
C8
Others
ROW
North
America
C4
Europe
C6
Asia
C8
ROW
Others
May 2017
16
ROW is the key supplier of C6, C8
Net Exports for LAO by
Region and Cut, 2016
Net Exports for LAO by
Region and Cut, 2020
600
600
300
300
0
0
-300
-300
-600
-600
C4
North America
C6
Europe
C8
Asia
ROW
C4
North America
C6
Europe
C8
Asia
ROW
Asia has little full range capacity and will remain a major importer
while Europe will remain largely balanced.
Linear Alpha Olefins_APIC 2017
May 2017
17
LAO Summary
Summary of LAO Market Developments
Supply Developments :
 The three largest producers of LAOs via ethylene oligermization are Shell, INEOS and
Chevron Phillips. These companies have a major presence in North America, Western
Europe and Middle East.
 Investment in North America and Middle East has been geared towards heavier linear
alpha olefin (C6+) and it is expected that these regions will target speciality grades of
polyethylene focusing production on C6-LLDPE and C8-LLDPE.
 Western Europe will continue to have limited supply of ethylene and continue to
produce LAO through full range process or extractive distillation with minimal
capacity additions .
Demand Outlook:
 In North America a number of ethylene cracker plants are coming online with their
integrated polythene plant focusing on speciality grades.
 Middle East demand for Octene-1 is expected to increase with the start-up of its first
solution polyethylene plant in Saudi Arabia using Dowlex Technology.
 Butene-1 grades of polyethylene will continue to dominate demand in Asia Pacific.
Hexene-1 and Octene-1 grades of polyethylene have started to penetrate the market in
the region.
Linear Alpha Olefins_APIC 2017
May 2017
19
NexantThinking Reports
Petrochemical Market
and Profitability
PPE
Olefins
Polyolefins
Vinyls
Propylene Derivatives
LDPE/LLDPE/HDPE/PP
2016 Reports
Global Commercial Analysis
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Nitrobenzene/Aniline/MDI
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Unconventional Natural Gas
Quarterly Business Updates
Supplement reports
Butadiene Derivatives
 LDPE EVA Copolymer
Aromatics
 Metalloocene LLDPE
Styrenics
 Biomodal HDPE
Polyester & Intermediates
 Copolymer PP
Feedstocks
 Linear Alpha Olefins
 North American Reshoring
 Western Europe Production
 Middle East Review
Linear Alpha Olefins_APIC 2017
Special Reports
Process Evaluation/ Research
Planning
Polyolefins Planning Services
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Special Sectors and
Topical Studies
PERP
POPS
Petroleum & Petrochemical
Economic
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Process Technology
and Costs
Polyolefins
Vinyl Acetate
Phthalic Anhydride
Nylon 6 and Nylon 6,6
Specialty LDPE Copolymers
Hydrocarbon Resins
Isoprene Derivatives
Acrylic Latex Resins for
Coatings
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China's Shale Gas
Methanol to Aromatics
Coal to Chemicals
US Ethane Utilization
On-purpose Propylene
C5 Chemicals Industry
Green Solvents
Plastics Recycling
Iranian Petrochemical
Industry
LNG Receiving Terminals
Phosphate and NPK
Fertilizers
20
Nexant, Inc.
22nd Floor, Rasa Tower I,
555 Phahonyothin Road,
Kwaeng Chatuchak,
Khet Chatuchak,
Bangkok 10900 Thailand
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