The U.S. petrochemical industry is expecting growth in the first half of 2013, compared to the previous six-month period, mostly due to the increase in use of ethane as the key ethylene feedstock, according to a new analysis from Petral Consulting Company published in Oil and Gas Journal.
Over the first half of the year the petrochemical sector in the United States is predicted to complete several important expansion projects and resume operations of one production train. The completion of these projects is estimated to increase the industry production capacity by around 2.2 billion pounds per year.
The development of these projects was based on the fact that ethane-based production is economically viable and more cost-effective than production based on heavy feedstocks such as naphtha, condensate and gas oil. Last year 71 percent of the entire amount of U.S. ethylene was produced from ethane, compared with 55 percent five years ago, and this figure is expected to rise to 75 percent in 2013. This transition to more cost-advantaged ethylene production led to a hike in exports of high-density polyethylene, low-density polyethylene and linear low-density polyethylene for 2012. Exports were 2.2 percent higher than the average in 2010 and 2011, Oil and Gas Journal noted.
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Data collected from U.S. ethylene producers shows that the demand for fresh feed from the domestic ethylene industry came in at 1.62 million b/d in the third quarter of 2012 but this dipped to 1.61 million b/d in the final quarter. Demand for fresh feed in the third quarter of 2012 was 15,900 b/d, or 1 percent, less than in the same period in 2011, whereas demand in the final quarter in 2012 was 22,800 b/d, or 1.4 percent, up on the last quarter of 2011. The decline in demand for fresh feed was consistent with declines in ethylene production in the third quarter of 2012, the analysis showed.
At the same time, figures reveal that demand for LPG feeds, including ethane, propane and normal butane, was 1.42 million b/d in the third quarter but increased to 1.43 million b/d in the final quarter of 2012. Overall, LPG feeds accounted for 87.6 percent of fresh feed in the third quarter 2012 and 88.5 percent in the final quarter. The LPG feed share of total fresh feed in third and fourth quarters of 2012 was equal to record highs. By comparison, LPG feeds accounted for 70 percent of the total fresh feed in the period between 2005 and 2007.
Looking at the expected development of the industry during the first half of 2013, Petral Consulting Company predicts that ethylene plants in the United States will operate at between 88 percent and 92 percent of their capacity. Demand for fresh feed is forecast to average between 1.55 million and 1.65 million b/d over the first six months of the year. Based on this forecast, the average demand for LPG feeds will reach between 1.43 million and 1.45 million b/d during the same period.