PENN STATE SHALE WEBINAR
June 20, 2013
Jim Cutler
President – Macle, Inc.
Webinar Discussion Points
 Selected Definitions
 Historical Background
 Basic Ethylene Chemistry
 Ethylene Production
 Ethane & Natural Gas
 Ethylene Economics
 Ethylene Production Economies Of Scale
 World Scale vs. Regional Ethylene Plants
 Supply Chain Resiliency
Selected Industry Definitions
 Inside Battery Limits (ISBL) – process units excluding
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support equipment
World Scale Ethylene Plant – plants over 1.5 Billion
lbs./yr.
Mont Belvieu – a major NGL storage, processing and
trading hub located 30 miles East of Houston, TX
Barrel – 42 gallons
NGL – natural gas liquid (ethane, propane, butane,
natural gasoline)
Fractionator – A processing plant that separates NGL’s
into its components via distillation (heat)
Olefin – A unstable (double bond) straight chain
hydrocarbon
US ETHYLENE CRACKERS
DEVELOPMENTAL BACKGROUND
 IN THE 1960’S ETHYLENE PLANTS VIEWED TO BE
A REFINERY OPERATION
 ETHYLENE PLANTS CONSIDERED TO BE GARBAGE
DISPOSAL UNITS
 QUESTION OF PLANT SITE LOCATION
• FEEDSTOCK
• DOWNSTREAM MARKETS
• EXPORT OPPORTUNITIES
Marcellus PE Freight Positioning
Rail
Cost
$.04/lb
Location-Location - Location
Appalachian Basin
Appalachian Resins, Inc.
Major Polymer Resin Consumers
6
Ethylene
Chemical Compound
Ethylene is a hydrocarbon with the
formula C2H4 or H2C=CH2.
Ethylene is a colorless flammable gas
with a faint sweet odor pure. It is the
simplest olefin.
What’s In A Name
THE NAME CHANGES - NOT THE PLANT
 Ethylene Plant
 Ethylene Cracker
 Steam Cracker
 Ethane Cracker
 Light Olefins Unit (LOU)
Ethane Cracking Reaction
It’s the unstable double bond that
makes ethylene reactive and a
valuable petrochemical
intermediate.
quench
Hydrogen Gas
NGL Fractionator
“Y”
Grade
Natural
Gasoline
Regional Ethane Cracker - - 500 MM Lbs/Yr
Natural Gas Support
MACLE, INC.
Ethylene Yields
Ethylene Cracker Feed Yields
EHANE
Ethylene
 Heavier feedstocks require
more back end units.
Propylene
C4's
 Heavier feedstocks reflect
higher capital costs.
 Heavy feed ethylene crackers
resemble small refineries.
 Ethane crackers not as
sensitive to capital
economies of scale.
Ful Gas
Pyrolysis
Gasoline
NAPHTHA
Ethylene
Propylene
C4's
Ful Gas
Appalachian Resins, Inc.
13
Steam Cracker Costs
Ethane Cracker Reflects Lowest Capital Cost
$ CAPITAL COST
HIGHER
NAPHTHA
ETHANE
HEAVIER
FEEDSTOCK MOLECULAR WEIGHT
Appalachian Resins, Inc.
14
ETHYLENE PLANT – SIMPLIFIED SCHEMATIC
Ethane Recycle
STEAM
Ethane
Ethylene
1450 –
1600°F
FURNACES
WATER
QUENCH
RECOVERY
Typical Ethane Cracker
Distillation Columns – Recovery Section
3 Columns
de-methanizer
 32 feet high
 10 feet diameter
de-ethylenizer
 55 feet high
 10 feet diameter
de-ethanizer
 88 feet high
 10 feet diameter
A MISUNDERSTOOD FACT
ALL ETHYLENE PLANTS ARE CREATED EQUAL
REGIONAL PLANTS HAVE
THE SAME VARIABLE
COSTS AS “WORLDSCALE”
PLANTS
PLANT SIZE MAKES NO
DIFFERENCE
ETHYLENE PRODUCTION
YIELD - POUND PER POUND ETHANE FEED
PLANT SIZE (MM LBS)
500
1,000
2,000
PRODUCT PRODUCED
YIELD
YIELD
YIELD
0.80
0.03
0.02
0.01
0.13
0.01
0.00
0.80
0.03
0.02
0.01
0.13
0.01
0.00
0.80
0.03
0.02
0.01
0.13
0.01
0.00
1.00
1.00
1.00
Ethylene
Propylene
Butylene
Butadiene
Fuel Gas
Gasoline
Pitch
TOTAL
Appalachian Resins, Inc.
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Regional Ethylene Plant
Appalachian Resins Configuration
ETHYLENE
500 Million lbs/yr
500 MM lbs/yr
POLYETHYLENE
500 Million lbs/yrlbs/yr
World Scale Ethylene Plant
Typical Configuration
POLYETHYLENE
1.0 Billion lbs/yr
ETHYLENE
2.0 Billion lbs/yr
ETHYLENE
OXIDE
ETHYLENE
GLYCOL
840 Million lbs/yr
600 million lbs/yr
World Scale Ethylene Plant
Typical Configuration
MORE OF EVERYTHING
•
•
•
•
•
MORE ENVIRONMENTAL
EMISSIONS
MORE LAND
MORE TRAFFIC
MORE COST OVERRUN
POTENTIAL
MORE PRODUCTION
BALANCING
POLYETHYLENE
1.0 Billion lbs/yr
ETHYLENE
2.0 Billion lbs/yr
ETHYLENE
OXIDE
ETHYLENE
GLYCOL
840 Million lbs/yr
600 million lbs/yr
WORLDSCALE vs REGIONAL ETHYLENE CRACKERS
Per Pound Capital Cost
REGIONAL ETHANE CRACKERS CAN BE COST
COMPETITIVE WITH “WORLDSCALE” PLANT
• Same yield structure
• Less rail staging area
requirements
• Environmental
Considerations
• Regional crackers can
be integrated with
existing operations
(brownfield)
Regional Plants
Piggy-Back (Brownfield) Capability
 Barge Dock
 Rail Car Capability
 Truck Capability
 Warehouses
 Water
 Electricity
 Natural Gas
 Support Services
 Office Space
 Nitrogen Blanketing
WORLD SCALE ETHYLENE PLANTS
 A world scale ethylene plant is over 1.5 Billion lbs.
 Largest ethylene plant is 3.7 Billion lbs (India).
 A world scale ethylene plant has to support
downstream production facilities, such as:
Polyethylene
Ethylene Oxide
Vinyl Chloride Monomer (VCM)
 A world scale ethylene plant is actually a
large petrochemical complex.
CLIMATE CHANGE RECOGNITION
A COMPETITIVE EDGE
Evidence that Earth’s climate is changing
Some Impacts of Climate Change
Extreme weather events—droughts, wildfires, storms,
floods—increasing
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Electricity outages
Rail bed damage
Bridge failures
Manufacturing facility
damage
 Workforce disruption
THE BOTTOM LINE – HIGHER COSTS
SOURCE: American Chemical
Society
For Commodity
Petrochemical
Manufacturing, Integrated
Site Operations, Not
Facility Size, Is Key to Cost
Competitiveness
Planned Regional Development
Can Duplicate Or Exceed
Benefits Associated With World
Scale Ethylene Plants