[Subjectivist]

When they run Ethane over a catalyst to covert it into Ethanol how much of the original energy is lost in the process? It is a whole lot easier to store and use in ICE if it gets converted, but does that make up for the energy lost?

[ROCKMAN]

Sub - This article explains the process in detail. No direct answer but from what I read there is no "energy lost" in the process.

http://www.chemguide.co.uk/physical/equ ... hanol.html

The energy used in the process comes from steam and what energy is used to make the catalyst. But essentially one molecule of ethane is converted to ethanol.

Of course you're now comparing apples to oranges: converting ethane to ethylene has nothing to do with energy storage. It's part of the industrial process to make plastic. Which essentially means 100% of the energy content of the ethane is lost. Unless you want to take into account burning the plastic as a fuel source.

A reminder:

"Ethylene is widely used in the chemical industry, and its worldwide production (over 150 million tonnes in 2016) exceeds that of any other organic compound. Much of this production goes toward polyethylene, a widely used plastic containing polymer chains of ethylene units in various chain lengths. Ethylene is also an important natural plant hormone, and is used in agriculture to force the ripening of fruits. Ethylene's hydrate is ethanol.

[Subjectivist]

$this->bbcode_second_pass_quote('ROCKMAN', 'S')ub - This article explains the process in detail. No direct answer but from what I read there is no "energy lost" in the process.

http://www.chemguide.co.uk/physical/equ ... hanol.html

The energy used in the process comes from steam and what energy is used to make the catalyst. But essentially one molecule of ethane is converted to ethanol.

Of course you're now comparing apples to oranges: converting ethane to ethylene has nothing to do with energy storage. It's part of the industrial process to make plastic. Which essentially means 100% of the energy content of the ethane is lost. Unless you want to take into account burning the plastic as a fuel source.

A reminder:

"Ethylene is widely used in the chemical industry, and its worldwide production (over 150 million tonnes in 2016) exceeds that of any other organic compound. Much of this production goes toward polyethylene, a widely used plastic containing polymer chains of ethylene units in various chain lengths. Ethylene is also an important natural plant hormone, and is used in agriculture to force the ripening of fruits. Ethylene's hydrate is ethanol.

[ROCKMAN]

Sub - "...there seems to be a pretty large energy input to the conversion process." And probably from NG which is relatively cheap now. Same with crude refining: cheap Btu's to make expensive Btu's.

[kublikhan]

$this->bbcode_second_pass_quote('', 'T')he shale revolution in the U.S. has led to a boom in domestic natural gas production, to the point that America is expected to become a net exporter of natural gas on an average annual basis by 2018. Abundant gas at home has also led to a renaissance in the petrochemical industry in the U.S. Chemical companies in the U.S. now use the affordable ethane—a natural gas liquid derived from shale gas—as a feedstock. The U.S. chemical industry is outpacing total industrial output growth rate, and accounts for more than half of construction spending by the manufacturing sector. It’s a US$797-billion enterprise that provides more than 15 percent of the world’s chemicals and accounted for 14 percent of U.S. exports in 2015—the largest exporter in the U.S.

Taking advantage of the shale revolution, chemical companies and integrated oil supermajors are now announcing billions of investments in new petrochemicals plants and manufacturing ventures over the next few years. Dow Chemical, which had cut 5,000 full-time jobs and closed 20 plants at the height of the 2008-2009 recession, announced in May this year additional projects and investments that extend its U.S. growth investments to more than US$12 billion over a 10-year period.

“We are using new, abundant domestic energy supplies to provide products to the world at a competitive advantage resulting from lower costs and abundant raw materials. In this way, an upstream technology breakthrough has led to a downstream manufacturing renaissance,” Exxon CEO Darren Woods said.

Shell is also getting ready to begin main site construction of a petrochemicals complex in Pennsylvania in late 2017, with commercial production beginning early next decade. “The petrochemicals complex will use ethane from shale-gas producers in the Marcellus and Utica basins to produce 1.6 million tonnes of polyethylene per year,” Shell said in April. According to ACC, the Appalachian region could become a second center of U.S. petrochemical and plastic resin manufacturing, similar to the Gulf Coast. “Proximity to a world-class supply of raw materials from the Marcellus/Utica and Rogersville shale formations and to the manufacturing markets of the Midwest and East Coast has already led several companies to announce investment projects, and there is potential for a great deal more.” The chemicals industry, which directly touches more than 96 percent of all manufactured goods, is taking full advantage of the American shale revolution.

[coffeeguyzz]

That is an excellent article that touches but a part of a much bigger picture.

Look around you right now.
Just look.
Relatively few products are steel or aluminum or wood.

When people turn their noses up at the thought of plastic, images of floating, unnecessary debris clogging the landscape comes to mind.
But most every container in your house, especially bathroom or kitchen, is derived from gas.
All packaging either delivering/containing food or expediting its disposal is a derivative of gas.
There is a reason historical diseases and famine are not as prevalent as in bygone times.
Every stitch of clothing not 100% wool, cotton or leather contains gas sourced material, especially cold weather gear.
Certainly the manufacturing is influenced by hydrocarbon availability.

The device upon which you are reading these words is largely plastic.

The mere fact that the infamous Foxconn is going to place a new multibillion dollar plant in union country, USA rather than expand in China should scream the significance of what is occurring here.

[kublikhan]

$this->bbcode_second_pass_quote('kublikhan', 'M')ay 25, 2017 - Looks like all those US crackers coming online between 2017-2019 are going to suck up much of the surplus ethane in the US and drive it's price up. Good news for upstream. Bad news for the crackers.

[ROCKMAN]

Here’s the tricky part of the calculus. But be forewarned: I don’t have the answer to the questions I pose. In fact, the data required to answer them may not be publicly available.

I’ll use ExxonMobil as an example since every time I drive away from the house I see its new ethane cracker right across the highway. How much ethane (which is demanding higher prices) does a division of XOM sell? Thus a division earning higher income. OTOH how much less is the XOM division that runs the ethane crackers paying for its ethane? A division that may be selling its lowered valued ethylene the XOM division that makes plastic. Base plastic it sells at an increasing profit margin to companies that produce plastic consumer items.

I think a lot of folks see the term INTERGRATED oil company (such as XOM and the rest of Big Oil) and don’t appreciate what that compartmentation allows them to do. In fact, they might intentionally run a division at a loss for tax purposes. XOM and all the other cracker expanders knew how much new capacity was being built. They could also project future ethane production. Nothing going on with current prices and profit margins is much a surprise to them. Companies don’t invest $BILLIONS in infrastructure expansion without building models running years into the future. Also, be careful what you read into “profit margins”. Big Oil is very skilled at manipulating those numbers. As I said above: sometimes appearing to be running at a loss on their SEC fillings.

[kublikhan]

With ehtylene prices dropping from a high of 75 cents/lb to a low of 12 cents/lb, all the while ethane keeps hitting new highs, I think this is more then just them playing with the numbers. But you are right, they would have expected this to happen. And with even more capacity on the board, it seems they are not deterred by low ethylene prices. And once the transportation bottleneck eases up, they can just export the surplus to the global market and watch their margins climb back up. Of course they are not going back to their heyday of 75 cents/lb, but I have seen estimates of 18-20 cents/lb in the coming years.

$this->bbcode_second_pass_quote('', 'A')s far-fetched as it might sound, the growth in the chemicals industry has highlighted the lacunas in the United States transport infrastructure. Industry experts predict the cost of delays due to transportation to come up to $22 billion. The loopholes in the primary modes of transport like rail, sea, and roadways, will also result in high operational costs which is sure to affect the manufacturers in the chemicals industry in a negative manner.

Roadways is the primary mode of transport adopted by the chemicals industry in the US, followed by the railways and then the seaways. The major bottleneck emerges in the form of regulatory requirements which the drivers for the chemicals industry must adhere to undergo. When it comes to the sea ways, the major problem is that the gulf ports are not regarded as ideal locations by players in the chemicals industry. The non-gulf ports on the other hand often face problems due to disputes between warehouse unions and maritime associations.

The need of the hour is to address the transportation issues by bringing all the stakeholders – chemical manufacturers, shippers, as well as policy makers – on the same platform. Only when the transportation related issues are addressed will the renaissance in the chemicals industry come in full bloom.

[ROCKMAN]

k - All good points. But again just a reminder: XOM et al are not just oil producing companies. They are oil refining companies. And refinery product retailing companies. And chemical companies. And refining product exporting companies. And chemical exporting companies.

IOW multiple profit centers. Lower revenue in one division can also equate to higher profit margins in another.

[coffeeguyzz]

A second cracker in the Appalachian Basin (Shell is constructing the first one), is said to be more probable as many of the downstream customers of the propylene/ethylene are located within 500 to 700 miles from proposed sites. Reducing transportation costs is becoming a very big issue.

Thai company PTT is supposed to announce decision within weeks, with the presumption that it will be a go in Ohio on a site they have been prepping for years.

At least 2 other companies have stated interest in building crackers in the northeast, but the 6 to 10 billion dollar investment is not for the faint hearted.

Huge underground NGL storage sites are proceeding apace.

Mariner East 2 pipe could be operational in a few months with Mariner East 2X online within a year.
Combined with existing Mariner East, potentially 600,000 bbld to 800,000 bbld capacity ethane, propane, and butane could reach tidewater at Marcus Hook for handling and export.

The amount of NGLs coming out of Oklahoma, Texas, and the AB over the coming decades will be absolutely stunning.

[Tanada]

Lest we forget, Ethane is not just the source of plastic, it is also valuable as a fuel gas. As I understand it many countries in Europe and Asia leave the ethane in the Natural Gas pipeline and burn it directly for heating and GTCC electricity production. The more cheap American produced plastic dumped into the global market the less economic incentive those countries have to separate out their ethane for plastic making it more useful as fuel.

[kublikhan]

It was never very economical to extract ethane there to begin with because the ethane concentration is too low. There's not that much ethane in dry gas.

$this->bbcode_second_pass_quote('', '[')img]http://images.pennwellnet.com/ogj/images/ogj2/9623b601.gif[/img]

Requirements for ethane cracking
Two conditions must exist for ethane to be extracted from natural gas and used as cracker feedstock:
* The ethane must be available in sufficient quantity to provide enough feedstock for a world-scale cracker, which benefits from economies of scale.
* The extracted ethane must acquire greater value as a cracker feedstock than if left in the gas for sale as a fuel.
There must be an economic incentive for extraction.
Ethane is widely used as a cracker feedstock in the U.S. Gulf Coast region, Western Canada, and the Middle East. The widespread use of ethane in the U.S. Gulf Coast has resulted in a massive concentration of infrastructure for natural gas and petrochemical processing through the years.

In the Middle East, the availability of large reserves of low-cost natural gas with low alternative value has also encouraged ethane cracking. Most existing crackers in this region are supplied with ethane extracted from gas produced in association with oil, most notably in Saudi Arabia, Qatar, and Kuwait.

The presence of large reserves, such as those in the Middle East, does not guarantee that sufficient ethane will be available for feedstock. Although there may be enough ethane in the ground, the availability is dependent on the gas being produced in sufficient quantities.

The quantity of ethane available in a natural-gas stream depends on the size of the gas flow and the concentration of ethane in the gas. The higher the ethane concentration, the smaller the gas flow required to provide a given quantity of ethane feedstock (Fig. 2 [32,402 bytes]).

Unless the source gas is very rich in ethane (i.e., has a concentration greater than 15 mole %), the source gas must be produced in large volumes to provide enough ethane feedstock for today's world-scale cracker. An 800,000 metric ton/year (mty) ethylene cracker requires about 1 million mty of ethane feedstock. There are few locations in the world where this much ethane is available in one location.

[coffeeguyzz]

If you folks want to have an outstanding source to learn about much of this stuff (and recent Appalachian Basin activity), the 2017 report from Department of Energy - Natural Gas Liquids Primer - just can't be beat.

Updated a few weeks ago.

Company Lyondell Bassell might buy Brazillian petchem outfit, Odebrecht, which was planning on building a cracker in West Virginia.

Economic potential for the residents in that region is exceptionally high.

[ROCKMAN]

T - And something folks should not be confused by: some articles referring to US LNG exports, such as those to the EU, are including all gases...not just methane. From May 2017:

https://www.lngworldshipping.com/news/v ... _47541.htm

"The US ethane-export trade, a new gas-shipping phenomenon, has celebrated its first anniversary and, one year on, is on schedule to meet its targets, having exceeded expected performance standards. In that first year, six import terminals received shipments from the US’ Marcus Hook and Morgan’s Point export terminals and 17 new high-capacity gas carriers, built to deliver US ethane cargoes, have entered service under long-term time charters.

Seven additional liquefied ethylene gas carriers (LEGCs) that can also handle ethane lifted spot and commissioning cargoes at Marcus Hook and Morgan’s Point. These ships helped to overcome logistics challenges before the purpose-built tonnage was delivered. The ships built to transport US exports have introduced several design innovations that push the boundaries for gas carrier containment systems, cargo-handling plant and propulsion.

Marcus Hook in play

March 2016 opened a new era for US ethane exports when the 27,500m3 JS Ineos Intrepid lifted the first shipment from Sunoco’s Marcus Hook terminal near Philadelphia. Two weeks later, JS Ineos Intrepid discharged its cargo at Ineos Europe’s ethylene cracker in Rafnes, Norway."

And more in the full article

[Carnot]

I wish I had spotted this thread earlier, as there are number of areas that need clarification, especially on the subject of end uses for ethane.

Ethylene production.
Ethylene is produced from a umber of feedstocks (ethane, propane, butanes, naphtha, hydrowax, and more). The yield of products is different for each feedstock. Ethane produces about 70 % of the MASS flow as ethylene, propane about 40%, butane about 35% and naphtha about 32% respectively. Other co-products include propylene, C4's and pygas, all of which are used as chemical feedstocks. If all you want to make is ethylene then ethane is the best choice as the steam cracker can be slimmed down to recover one product. This is very general _ I could go into huge detail on this subject.

Ethane recovery
Ethane is present in varying concentration is natural gas (dry and wet) an associated gas (from oil production). Wet gas can contain significant NGL's and ethane concentrations of 20% vol. NGL's are sold by volume in the US - only God knows why and the conversion factors are as follows:

ethane 17. 66 bbls per mt
propane 12.4 bbls per mt
n-butane 10.8 bbls per mt
isobutane 11.2 bbls per mt
natural gasoline 9 bbls per mt

A steam cracker is not interested in volumes - only mass flow so comparing a barrel of ethane with a barrel of butane is rather stupid. Most ethane in the US is sold just above natural gas pricing , ONLY because the supply exceeded demand and that the ethane had to be recovered to meet the natural gas calorific value spec usually around 1050 BTU per SCF +/- 5%. This is the must extract volume . Sales gas (mostly methane) usually contains about 4-14% by volume of ethane. Above 14% the gas is too rich (hot) and below 4% the gas is too lean (cooler). Ethane concentration above 14% must be reduced- the must extract volumes where the seller of the gas pays. Below 14% the seller of the gas can discretionary extract the gas and sell at a premium to a buyer. This is often referred to as rejected ethane. In reality the price is too low to warrant recovery or the market too thin. With all the new cracking capacity about to come on line in the US the ethane supply is about to tighten - a lot. Moreover those ethane exports to the ROW are about to get more expensive.

LEG exports
Liquid ethane gas carriers are expensive. The gas is in a cryogenic state and will boil off as the containment vessels are only able to handle low pressures. The boil off gas is used as fuel, but ethane alone is not a good diesel fuel substitute and normally ignition is promoted by the compression ignition of a small amount of diesel fuel, which set off the ethane.
Many of us in the petchem industry are wary of the long term cost of ethane exports. Certainly for Europe, post 2015 the cost of ethane once delivered does not look very good, against other liquid feedstocks, especially butane. The same applies for India, if not worse. Most of the investment decisions were made when ethane was rock bottom and oil prices were high. The first wave of new build US crackers is about to consume much of the available ethane and the second wave will be highly dependent on deeper extraction and from volumes of Y grade mix NGL's that will have to travel considerable distances. The Mid Stream Gasco's made a good call creating the demand , and now the ethane seller is about to gain pricing power. Ethane prices as high as 50 cts/ gall are being estimated for 2019, which is about $370 pmt, to which another $150 pmt + has to be added for shipping costs. That will be bad news for importers but will allow deeper extraction of the ethane from the sales gas.

I am cautious about the future. NGL production will be highly dependent on continued NGL production and expansion. That will also add to the sales gas production which will also need a home LNG exports are an obvious outlet but the net backs to date do not look to rosy, though this may change. The real question that has been long debated is that will the US still be able to to sustain high oil and NGL production from the shale resources for decades to come. Hmm - I remain somewhat skeptical.

[coffeeguyzz]

Carnot

That is a great post and I sure hope you continue to contribute your knowledge to this site.
The few industry professionals here (aka the 2 rocks) have been carrying the load for a long time.

Quick input now regarding US supply, as I am time constrained ...

If you check out Antero's recent presentations, the scale of producible ethane may become clear. Short description, huge. (Antero is biggest US ethane producer).

The above referenced DOE Primer on NGLs also reveals vast potential along with existing and projected infrastructure development in Appalachian Baein.
Associated gas from Permian, Oklahoma, and Bakken is enormous in amount.

The online capacity of the new Mariner East pipelines will enable over 500,000 barrels/day deliveries to Marcus Hook.

On a related topic - LNG - RBN Energy is running a series online describing in detail the current and future export situation for LNG.
The modularization of components, coupled with smaller trains (.6 mt/2 mt) are providing more flexibility and speed to future LNG buildput.

The shippers are jumping in with a whole array of new vessels including Jones Act compliant articulated tug barges of varying sizes.
The widespread adoption of FSRUs will be a game changer (as will Driftwood's FSPOs off Louisiana).

Enormous change is afoot as we hurtle into The Age of Gas.

Again, thanks for contributing.

[ROCKMAN]

Great post coffee. Too bad the tech aspects are beyond most here. Including all those f*cking acronyms. LOL.

Don't mean to insult our cohorts here. But it would take a lot of secondary reading to appreciate those details. Time many here can't afford to invest. Hell, I had to look up some of your sh*t. Fortunately being crippled and trapped in a chair every waking moment I have the time. Of course, only as long as there's nothing good on TV.

[Pops]

Just a bump since I didn't find this before my posts on recycling etc.