Propy-LENE Supply! Go Green! On-Purpose Technologies for the Future


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With the demand for propylene outpacing the current supply levels, the supply assurance for propylene has become challenging. There are issues concerning the shortage of propylene and its impact on the industry. The paper discusses various feasible alternatives with emphasis on the production of GREEN propylene.

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Propy-LENE Supply! Go Green! On-Purpose Technologies for the Future

  1. 1. www.beroe-inc.comPropy-LENE Supply! Go Green!On-Purpose technologies for the future!WHITEPAPER | AUGUST | 20121Authors: Virat VenkataramanCopyright © Beroe Inc, 2012. All Rights Reserved
  2. 2. Copyright © Beroe Inc, 2012. All Rights Reserved 2IntroductionThis whitepaper focuses on the issues concerning the shortage of propylene and its impacton the industry. Various feasible alternatives are discussed with a major emphasis on theproduction of GREEN propyleneCurrent Challenges and Overview:Currently, Ethylene (C2) and Propylene (C3) are the two most important olefins in the industry, for the production ofvarious industrial chemicals and polymers. Both ethylene and propylene are co-produced in crackers and refineries;however, the ratio of the output depends on the type of feedstock used and the severity of cracking. If naphtha is usedas a feedstock for the production of ethylene, the output of propylene remains substantial, however, gas crackers thatprocess ethane gas produce more ethylene than propylene. This is becoming the current trend in the market. Mostethylene manufacturers in the US are currently moving to lighter feeds for the cracking of ethylene, due to improvedmargins and feedstock security as there is an abundant availability of shale gas reserves in the region.This is resultingin a reduced yield of C3, and consequently, the total propylene production from ethylene crackers has been droppingsignificantly.With the demand for propylene outpacing the current supply levels, the supply assurance for propylene has becomechallenging.The Propylene prices continue to rise, with the price ratio of ethylene and propylene currently at 1.2, andif the current situation continues, will reach close to 1.5 in the coming yearsMajor Impact on the US Propylene Industry:Naphtha-fed steam crackers and FCC (Fluid Catalytic Cracker) units of oil refineries continue to dominate production,accounting for nearly 90% of the global propylene production. In both the above saidcases, C3 is produced as a secondary product; furthermore, developments in thegasoline and ethylene markets complicate the propylene market to a great extent.• The supply demand gap has already started converging in the US and isexpected to further tighten during the years to come.• The propylene to ethylene price ratio has been on an increasing trend and thegap between the two is widening as propylene prices continue to rise.• The impact of propylene prices are being felt on polypropylene prices andbecause of this many end-use segments are contemplating switching to eitherHDPE or polystyrene as possible substitutes.204060801001201401601802006 2007 2008 2009 2010 2011 2012IndexEthylene: Propylene Comparison in the USEthylene PropyleneQuickFactsDemand for propylene isexpected to grow at an averageannual growth rate of around 5%until 2015, and around 3% from2015 to 2020, backed by demandfrom downstream derivatives suchas polypropylene, acrylonitrile,acrylic acid, propylene oxideetc.The gap betweenpropylene and ethyleneprices have beenwidening since thebeginning of 2006.The anticipatedsupply shortage of themonomer has been amajor cause for theprice difference, anddemand from thepolypropylene andother chemical sectorshave been quite robustduring this period.
  3. 3. Copyright © Beroe Inc, 2012. All Rights Reserved 3Possible Solutions:In the Asia-Pacific region where refineries still play amajor role in the propylene production dynamics, FCCrepresents a major, growing share of the total propylenecapacity. North American and European markets, atpresent, have a significant production of propylene fromexisting refineries, however, the lack of investment in newrefineries and crackers leave no scope for improvementfor the present scenario. In the Middle East, ethyleneis given more importance than propylene and itsdownstream derivatives. Hence, massive ethane-crackersare being built for the major expansion of ethylene andother downstream products such as polyethylene. Atpresent, about 5-10% of global propylene comes frompurposive production techniques.Since the steam cracker expansion cannot keep pacewith the growth of propylene and polypropylene demand,various other alternatives need to be looked at for thispurpose and “on-purpose” propylene technologies offera solution.One basic approach, followed by many players in theindustry, is to enhance the FCC unit operation. Bymodifying the zeolite catalyst and other operatingconditions in existing FCC units, efficiency of the unitcan be significantly improved, hence increasing the yieldof propylene. The only disadvantage of this method isthat the gasoline production is reduced significantly, nearly 40% of the previous yield. Hence, when thegasoline demand is high, refiners will not be able to pumpin the required quantities of gasoline into the market.Lummus and Honeywell are the major firms that arelicensing their proprietary enhanced FCC technologies.There are other technologies coming up in the marketthat provides a more direct solution and is relativelyindependent of the current crude oil market situation.The technologies that are currently prevalent in themarket are Propane Dehydrogenation, Olefin Metathesisand Methanol to Olefins.Propane Gas Offers a Solution:Propane dehydrogenation (PDH) uses propane gas asa major feedstock. The process employs a fixed bed ofChromia-Alumina catalyst, to convert the propane gasinto propylene.The main chemical reaction occurs duringthe gaseous phase at higher temperature levels (fromaround 500 °C up to around 820 °C) which results in anendothermic equilibrium reaction. PDH started gainingpopularity since the discovery of Shale gas reserves. Atpresent, there are more than 12 propylene plants aroundthe world using the PDH technology and a few moreprojects are underway. The major PDH licensors in themarket are UOP (Oleflex), ABB Lummus (CATOFIN)and UHDE (STAR). UOP Oleflex currently holds themaximum market share among its peers in the PDHsegment.Ethylene to Propylene: An InterestingRouteThe Metathesis process involves catalytic conversion ofEthylene and butene-2,for the manufacture of propylene.Metathesis provides an opportunity to achieve the olefininterchangeability, by the rupturing of the double bondsduring the reaction and the formation of different olefins,using parts of the reactants.Olefin metathesis process canbe included in a steam cracker to boost the productionof propylene, using the cracking exchange reaction ofEthylene and butene-2. ABB Lummus currently licensesthe maximum number of Metathesis units across theglobe.LyondellBasell and Sasol are creating great stridesand taking many more initiatives in the metathesis field.QuickFactsNearly 30% of new crackers thatwere commercialized between2003 and 2010, globally, werebased on ethane and henceproduce very little propylene.
  4. 4. Copyright © Beroe Inc, 2012. All Rights Reserved 4Coal and Natural Gas: The mosteffective substitutesMethanol-To-Olefins (MTO) and Methanol-To-Propylene(MTP) technologies have an encouraging future forproducers who can get easy access to feedstocks suchas coke, coal and natural gas. Natural gas is used forthe production of methanol, using the Mega Methanolprocess. Configuration of the process depends on thecomposition of the feedstock which may vary from lightnatural gas (100% methane) to oil-associated gasses.Coal is gasified in a gasifier for the production of syngas,which is then used in the Mega Methanol process for theproduction of methanol, which in-turn is used as a rawmaterial for the synthesis of olefins.There are a numberof coal gasifiers available in the market, the major onesbeing Mitsubishi, Shell, Lurgi, GE etc.Most Viable Solution:The most significant of the above methods is the PropaneDehydrogenation Technology, which already suppliesnearly 5 Million MT of propylene globally. However, theprice difference between propane and propylene actsas a major factor for the determination of the processeconomics, and seasonality plays a major impact, forexample, during the winter season, when the demand forpropane from the heating segment rises; it would not bethat profitable for a propylene producer to use propaneas a feedstock.A similar case exists for the olefin metathesis technology,as well, since the price difference between ethyleneand propylene would determine the profitability of anymetathesis plant.The demand for MTO/MTP is robust in areas wherethere is an abundant availability of cheap feedstocksuch as natural gas and coal. Coal reserves of Russia,China and the US would prove to be the major hubs,going forward. However, the major stumbling block of aMTP is the humungous investment cost. A gasificationunit that includes the production of syngas through coal,production of methanol through syngas and synthesis ofpropylene through methanol, together would cost closeto 2 Billion USD. A coal gasification/gas reformationunit for the production of propylene would break even inabout four years six months for an annual capacity ofaround 600,000 MT, assuming it runs at around 80%operating rate.QuickFactsSasol Technology has patented aheterogeneous auto metathesis processin which 1-butene is fed over a silica ortungsten catalyst. 2-butene is formed asa result of the isomerization of 1-butene,which further undergoes metathesis with therest of the 1-butene, to produce propeneand 2-pentene. 1-butene undergoes self-metathesis to produce 3-hexene andethylene.The ethylene formed undergoesmetathesis with the 2-butenes and2-pentenes to form more propene.
  5. 5. Copyright © Beroe Inc, 2012. All Rights Reserved 5Introduction to Green Propylene:Ever rising energy prices coupled with increased emphasison carbon emission levels is slowly, but steadily, movingthe world towards the concept of bio-based plastics.Whensustainability becomes the key factor, more emphasis isgiven on raw materials that lasts long (supply assurance)and has minimum impact on the environment, in terms ofemission. As a consequence of the growing demand levelsfrom downstream sectors, there have been difficultiesand delays in identifying potentially new sources to meetthe demand levels. Bio-based materials are being widelypromoted and marketed as a possible solution to reducedependence on crude oil, since; crude continues to be themajor feedstock for most of the petrochemicals.Depending on the region under consideration, feedstockcan play a significant role in determining the dynamicsof the supply demand of propylene. For example,synthesis of ethanol can be carried out using a varietyof feedstocks such as sugarcane, corn, sugar beet, wheatetc. The US is the largest producer of corn and has agreat potential for this route, sugarcane could be a majoroption for certain South American countries, and Europemostly uses wheat for the production of Ethanol.The development of gasifiers that uses a variety offeedstocks, especially biomass, for the production ofsyngas plays a major impact in this route. Bio-diesel andvegetable oils also come in as suitable feedstocks for theproduction of propylene.Bio-based propylene/polypropylene is not biodegradable.On the contrary, bio-based propylene and PP (onceavailable) is very similar to the one produced thetraditional way.They possess the same chemical structureand can be polymerized in the same way.The only majordifference is in the origin of the feedstock. Bio-basedpropylene consists of renewable carbon.QuickFactsSince the world might be headingto a shortage of propylene fromconventional sources, moreemphasis needs to be given totechnologies that use renewableresources such as biomass.
  6. 6. Copyright © Beroe Inc, 2012. All Rights Reserved 6Routes to Green Propylene:Major Technologies:There are two technology approaches for the production of green propylene. They are Biochemical and Thermochemical. The biochemical approach employs biomass-based sugars for the synthesis of ethanol. Depending on theavailability and the region, a variety of raw materials can be used for the fermentation process. Major commoditiesused for this purpose are corn starch, sugarcane, beet etc. Enzymes are used to convert the biomass into ethanol.Once the ethanol is obtained; they are processed and taken forward for the synthesis of olefins such as Ethylene andButene, which further undergoes metathesis for the synthesis of propylene.CH2=CH2+ CH3CH=CHCH3è 2 CH3CH=CH2Ethylene Butene PropyleneEthanol Dehydration (post the processing of corn) and Butanol Dehydration (Biomass) can be considered as twopossible solutions for the synthesis of green propylene.The thermo chemical technologies tend to use assorted materials as feedstocks that primarily include biomass(grass, agricultural wastes, and corn). These carbon rich materials undergo a gasification process in gasifiers forthe production of syngas.The obtained syngas undergoes further processing for the production of methanol (MegaMethanol is used for this purpose, to achieve better process economics) and then MTP is employed for the synthesisof propylene.Bio-diesel and vegetable oils can be used for the production of green propylene as well. Bio-diesel is produced as a by-product of vegetable oil, and propane gas is produced as a by-product of bio-diesel.This type of propane gas is calledbio-propane and the propane is sent through a Propane Dehydrogenation Unit for the production of propylene.SugarFermentationEthanolDehydrationDimerizationMethanol toPropyleneGasification EcofiningFluid CatalyticCrackingGasificationButanolDehydrationPDH Recovery Methanol SynthesisMetathesis MetathesisGreen PropyleneCorn Biomass Bio Diesel Vegetable Oil Biomass
  7. 7. Copyright © Beroe Inc, 2012. All Rights Reserved 7Technology Integration:Many companies are trying to integrate both the technologies. Combining the biochemical and thermo chemicalprocesses, would help in achieving greater efficiency in terms of raw material usage. Sugar or starch, depending onthe feedstock employed, can be fermented into ethanol and the remaining cellulosic parts like sugarcane bagasse orcorn straw can be gasified for the production of syngas. Ethanol and syngas can then be used for the synthesis ofpropanol, which can be dehydrated for the synthesis of propylene. However, this technology combination has not yetbeen commercialized and is still under development. Once commercialized, this might be the best technology around,since there would be very little raw materials that are wasted and the output of propylene would be significantlyhigher.The other advantage of this combination is that, there is always a choice for the feedstock switch whenever ashortage is witnessed in one of the kind.Major Factors to be consideredfor potential Green PropyleneProducers:• Region: Selection of the geographic region is one ofthe most important factors that need to be consideredfor a potential green propylene manufacturer.• Choice and stability of feedstock: Depending onthe region of construction of the propylene plant,feedstock needs to be short listed. A potential greenpropylene manufacturer in the US would go for cornor other sources of starch, a player in Europe would gofor wheat, a player in a tropical country would go forsugarcane etc.• Infrastructure related details:The details for storageand processing of raw materials, such as storagecapacity, moisture levels in the storage area, etc. needto be finalized.• Selection of the type of technology: Depending onthe choice of feedstock, the technology needs to beshortlisted. If biomass is used as a major feedstock,the type of gasifier needs to be chosen.High Level Process Economics:For a 200,000 MT/yr. green propylene plant, theinvestment of a biochemical based plant is around $400Million and for a thermo chemical based plant, theinvestment exceeds $1 billion. Since the gasifier for theproduction of syngas turns out to be extremely expensive,the cost of investment for a thermo chemical basedplant is accordingly high. Thermo chemical routes areless affected than the bio route with regard to the rawmaterial costs, since the cost of corn, wheat and otherforms of starch varies as per the seasonality; and canwitness a shortage if the demand witnesses an increase.There would be a higher ROI, of nearly 10-12%/yr., usingthe thermo chemical method,rather than the biochemicalmethod, which results in a ROI of around 6-7%/yr.PropylenePropanolDehydrationPropanolProductionGasificationSugarFermentationBiomassSugar / StarchEthanolSyngas Propanol
  8. 8. Copyright © Beroe Inc, 2012. All Rights Reserved 8Drivers and Constraints of the Green Propylene Method:Pros• The properties of bio-based propylene are very similarto the ones produced in the traditional ways.• It can be processed using the existing plastic processingplants.• The extreme reduction of dependency on crude oil/natural gas causing a fluctuation in the energy prices.Supply disruptions have no impact on the propyleneprices.• The process is clean, extremely powerful and safewith a great deal of reduction in the levels of carbonemission.• For the downstream application, each MT of greenpolypropylene produced captures and sequesters 2.3tons of carbon dioxide.• Bio-based propylene requires less energy for itsproduction, compared to its petroleum-basedcounterparts.Cons• The usage of sugarcane/corn/wheat etc. for theproduction of chemical products results in a decreasein the availability of the staple food in those regions.• The initial investment cost is slightly on the higher sideas new facilities need to be set up for the synthesis ofmethanol from sugarcane, corn, sugar beet etc.• The companies dealing with green propylene need tobe completely backward integrated, to achieve greaterefficiencies and reduce external dependency.• Green propylene is effective only in areas that havean abundant supply of the feedstock, for example, ifa green propylene plant is based on corn, the in-housecapacity of corn must be high so that, the plant doesnot depend on imports for their raw material supply.
  9. 9. Copyright © Beroe Inc, 2012. All Rights Reserved 9Latest Movements in the Green Field:Company Whataretheydoing? ResultsAchieved/ExpectedDOWDuring the first quarter of 2011, DowChemical announced their intentionto study and explore methods, for theproduction of their key feedstock, fromrenewable resources. Dow Chemicalis already involved in a project for theproduction of ethylene and polyethylene,by using sugarcane ethanol in Brazil. DowChemicals’ RD team is currently in theprocess of investigating various technologyroutes for the manufacture of propylene andits downstream derivatives such as acrylicacid and other acrylates. More emphasis isbeing given to propylene than on PP, sincePP is relatively more commoditized andalso since Dow has completely come out ofthe PP business.A project for the production of propylene,from renewable feed is expected to beannounced in the near future. However, theexact route has not yet been finalized and asof date, an array of raw materials is beingstudied as a possible long term feedstock.The location of the project has not yet beenclosed on and Brazil seems to be an openoption.The assignment may be based eitheron ethanol or the gasification of biomass.Dow Chemical also plans to develop secondgeneration ethanol technologies. Usage ofbagasse and sugarcane waste would be theirfirst priority.BraskemBrazilian giants,Braskem have come up withthe concept of using sugarcane ethanol forthe production of propylene.The essence ofthe project was for the production of greenpolypropylene. The green polypropylenewould be produced at one of its plants thatuse the Spheripol technology. The mainaim of the project was to develop productsusing the principles of low-carbon economy.Braskem has already demonstrated itscapabilities on the green side, by installing asugarcane ethanol based ethylene plant forthe production of green polyethylene at itssite located in Triunfo, Brazil. Many majorend-use consumers have already struckdeals with Braskem for the supply of greenPE; the most notable which include PG,Tetra Pack and Shisiedo.The basic foundation of the project hasalready been laid and the feasibility analysishas already been done. Constructionalactivities are currently underway, whichreportedly began during early 2012; andby the end of 2013 or early 2014, thecommissioning of the plant is expected.This would be a small scale plant and thecapacity is expected to be around 30,000MT/yr.The total investment for the ventureis expected to be at around $100 Million.
  10. 10. Copyright © Beroe Inc, 2012. All Rights Reserved 10ConclusionEarlier, the production economics of most alternate processes, based on sustainable and renewable materials, seemedcompletely out of scope and impossible, however, as the world might be witnessing a shortage of the most commonlyused material, these alternate processes are bound to spring into action to cater to global demand. More emphasisneeds to be given on green production techniques, so as to reduce dependence on the crude oil marketand also reduce the amount of carbon emissions. Production of green propylene can be economically viableand a suitable option for many players in the segment dealing with propylene and its other downstream derivatives.However, for someone entering into this segment, it is extremely important to have a clear understanding of themarket situation,based on a careful analysis of its limitations,by narrowing down on geographical locations and mostimportant of all, the selection of the technology; to avoid strategic and economic losses.Though the production of propylene through the green route is relatively more expensive than the conventionalmethod, green propylene provides long term advantages in terms of sustainability and emission control. In the greenMTO process, over 75% of total energy required is biomass derived and this constitutes negative emissions. In theSugarcane MTO process, in addition to utilizing biomass derived energy, the sugarcane plant co-generates electricity,and therefore it is a net energy producer resulting in negative emissions for fossil fuel.Green production techniques are for the future and by the end of 2020, the world will witness a paradigmshift that would be relatively independent of the wicked crude oil market.References: Strictly no photocopying or redistribution is allowed without prior written consent from Beroe Inc.The information containedin this publication was derived from carefully selected sources. Any opinions expressed reflect the current judgment of the author and aresubject to change without notice. Beroe Inc accepts no responsibility for any liability arising from use of this document or its contents.For more information, please contact | Senior Research Analyst