Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
Ethylene is one of the most important links in the hydrocarbon
value chain. It is used in the production of myriad chemicals,
fibers, and plastics, most importantly polyethylene. As a large -
and growing petrochemical hub - China is a major consumer of
ethylene. It is also one of the world's largest producers of
ethylene, but is still a net importer of this critical
feedstock.
China's fast-rising ethylene demand has unsurprisingly spurred a
corresponding boom in domestic ethylene production capacity. Thus
far, the vast majority of this capacity has relied on naphtha (a
heavier liquid hydrocarbon), gasoil, or coal as a feedstock. This
contrasts with the ethylene industries in North America and the
Middle East, which overwhelmingly rely on ethane as a feedstock.
Utilizing ethane as a feedstock for ethylene production has
numerous advantages, both in terms of initial investment cost per
unit as well as ethylene yield fraction. The issue in China has
been securing adequate supply of ethane.
Unlike North America and the Middle East, China does not have a
significant, local supply of ethane. Nor is purity ethane easily
traded internationally; doing so requires specialized import and
export facilities, as well as purpose-built ethane tankers.
Long-term (10+ year) supply contracts are thus a necessity to make
any up-front investment worthwhile. Moreover, the United States is
currently the world's primary source of exportable purity ethane,
which is potentially problematic from a security of supply
perspective.
Nevertheless, investment in Chinese ethylene plants supplied by
US-sourced ethane has accelerated in recent years. SP Chemicals'
facility streamed in late-2019, Zhejiang Satellite Petrochemical's
Phase I project should begin operations in early 2021, and several
others are planned.
An alternative option for Chinese ethylene producers could be
extracting ethane from imported liquified natural gas (LNG).
China's LNG industry has developed rapidly in recent years, growing
import capacity from nothing in 2005 to about 74 million tons per
annum (MMtpa) by the end of 2019. That year, China's LNG imports
totaled 60.2 MMt, with volumes being sourced from no fewer than 18
different countries.
Not all LNG streams have the same ethane, however. For example,
Nigerian LNG is relatively rich in NGLs, yielding approximately 3.2
gallons of ethane per thousand cubic feet of natural gas. Based on
this and other data (e.g. recovery rates), IHS Markit estimates
that approximately 55,200 b/d of ethane could be extracted from
China's current Nigerian import volume, equivalent to 60% of what
is consumed by a large-scale ethane cracker. Overall, China's
imported LNG could hypothetically yield as much 586,000 b/d, enough
to supply six large-scale crackers.
Recovering and making ethane available as a feedstock from
imported LNG is complicated and economically and commercially
challenging. To reach the full potential, there needs to be full
collaboration and an overarching business model with participation
across the entire chain. Time will tell.
Posted 21 September 2020 by Darryl Rogers, Vice President, IHS Markit and
Sen Yang, Director, Asia Pacific/Middle East NGL Service, IHS Markit and
Yanyu He, Ph.D, Executive Director, Natural Gas Liquids (NGL) Research and Consulting, IHS Markit
