Report evaluates emerging 'on-purpose' propylene production techniques

The shift to ethane feedstocks, especially in North America, has benefited producers, but it is also precipitating a shortfall in the supply of propylene, which is essential for plastics production. Ethane feedstocks, derived from natural gas, produce very low yields of propylene compared with crude-oil-based naphtha feedstocks. As demand for so-called “on-purpose” propylene continues to escalate, new production techniques have been developed that are emerging as the market cornerstone and global price setter for the propylene market. Business analyst IHS Markit (London) has published a report that assesses the technical and economic merits and challenges of these on-purpose technologies.

With the decline of steam crackers and oil refineries, which used to be the traditional sources of propylene as a derivative or co-product of crude oil processing, chemical producers have turned to chemical engineers and chemists to develop and commercialize on-purpose propylene production technologies.

“The market is hungry for adequate sources of propylene supply and is investing in technologies that will deliver that supply,” said Don Bari, Vice President of IHS Markit and lead author of “Competitive Processes and Cost Tracker (CPCT)—On-Purpose Propylene Production.”

“Our IHS Markit research sought to examine the strengths and benefits, from a technical and regional economic perspective, of the six on-purpose propylene production technologies currently gaining traction in the commercial marketplace,” Bari said.

The six principal technologies include propane dehydrogenation (PDH); coal-to-olefins/coal-to-propylene (CTO/CTP); methanol-to-olefins/methanol-to-propylene (MTO/MTP); gas-to-olefins (GTO); metathesis; and high-severity fluidized catalytic cracking (HS-FCC). Each of these processes uses a different feedstock and has specific advantages and challenges.

PDH units dominate the global market, Bari said, with about 40% of global on-purpose propylene capacity today. Stakeholders for those facilities expect they will remain competitive because of attractive propane feedstock cost and abundant supply in and from the United States.

”Nevertheless, the challenge is that when companies invest in process technologies, they are making multi-billion dollar investments, which must be sustainable for a 30-year period,” Bari said. “During that time, market conditions, feedstock prices and availability will vary, often significantly, so companies really want to be able to interrogate the cost data against a host of variables over time, to minimize investment risk.”

With that in mind, Bari and his fellow researchers used the company’s CPCT analytical model to assess the multiple on-purpose technologies over nearly a 20-year period, which accounted for a large fluctuation in feedstock prices. “When we assessed the various technologies over time and at many different feedstock prices represented during the past 16 years, we found that the PDH process would have been the most economically competitive in the U.S.,” Bari said. “For example, since the year 2000, we estimate that PDH would have had an average production cost (including depreciation) of production advantage over naphtha cracking of $405 per metric ton (with feedstock and co-products taken at market price). By contrast, a metathesis-based plant would have had an average $47 per metric ton disadvantage over naphtha-cracker-based propylene.”

Moreover, the IHS Markit report said, a hypothetical GTP facility also would have been at an advantage over a naphtha-based technology by $202 per metric ton, on average. An interesting aspect

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