American Fuel & Petrochemical Manufacturers

AM-13-53 Shale Gas Monetization

Action

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Annual Meeting

March 17-19, 2013

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Shale Gas Monetization – How to Get Into the

Action

Presented By:

David Myers UOP LLC, A Honeywell Company Des Plaines, IL Greg Funk UOP LLC, A Honeywell Company Des Plaines, IL Bipin Vora UOP LLC, A Honeywell Company Des Plaines, IL

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202.457.0486 fax

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How to Get Into the

This paper has been reproduced for the author or authors as a courtesy by the American Fuel & Petrochemical Manufacturers. Publication of this paper does not signify that the contents necessarily reflect the opinions of the AFPM, its officers, directors, members, or staff. Requests for authorization to quote or use the contents should be addressed directly to the author(s)

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SHALE GAS MONETIZATION –

HOW TO GET INTO THE ACTION

David Myers, Sr. Product Line Manager, Olefins, UOP LLC, A Honeywell Company

Greg Funk, Sr. Product Line Manager, Light Olefins, UOP LLC, A Honeywell Company

Bipin Vora, Consultant, UOP Fellow (Retired), UOP LLC, A Honeywell Company

�

INTRODUCTION

Shale gas in North America is reviving the petrochemical industry while at the same time

lowering energy prices and helping improve overall refinery margins for North American

refiners. Shale gas, specifically the associated cost advantaged methane and natural gas liquids

(NGLs), provides refiners with opportunities for diversification of both feedstock and product

and to capitalize on the associated financial benefits of the operating flexibility this

diversification brings through market cycles. Shale gas also introduces new potential business

models for projects such as joint-ventures between refining and petrochemical companies by

leveraging the unique skill sets of each or joint-ventures between regional independent refiners.

This paper will discuss several shale gas monetization options for the North American refiner

focusing on methane, propane and butane monetization technology solutions.

© 2013 UOP LLC. All rights reserved.

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SHALE GAS ETHANE –

ENABLES EXPANSION OF THE NORTH AMERICAN ETHYLENE INDUSTRY :

Technology innovations and the availability of lower cost raw materials have played a major part

in shaping the petrochemical industry. For example, as has been the case for most modern

petrochemical products, North America, Western Europe and Japan led in the production of

methanol from the 1960s to 1980s. However, due to the increasing discovery of large gas

reserves in places like the Middle East, Trinidad and Tobago, Chile, and Venezuela and resultant

increased natural gas production, methanol production shifted from these industrial-consuming

nations to the source of advantageously priced natural gas. The increased oil and gas production

in the Middle East provided an abundant supply of ethane from the associated gas recovery. As

a result, over the last two decades a large portion of the growth in ethylene production was in the

Middle East via ethane cracking. Because of this there had been very little growth in North

American ethylene production over the same period. In fact, several smaller crackers were shut

down. Now, with the discovery and development of shale gas and abundant cost advantaged

ethane, North America is where we see the greatest potential growth.

Estimates of known natural gas reserves are increasing as the rate of new discovery of

unconventional gas reserves increases. The U.S. in particular, during the past five years, has

increased natural gas production substantially by increasing shale gas development. This

increased production has made natural gas more affordable in the U.S. benefitting the refining,

petrochemical and mid-stream industries through low cost energy. As seen in Figure 1, from

2004 to 2008, natural gas price averaged around $7/MMBtu, with a peak of more than

$12/MMBtu during the summers of 2005 and 2008. By the end of 2008 the production of shale

gas lowered the price to $4/MMBTU, and by the end of 2012 had fallen to between $2-

$3/MMBtu.

Natural gas at $3/MMBtu is roughly equivalent to $150/MT and crude oil at $100/BBL is

roughly equivalent to $800/MT. That is, natural gas in terms of its energy content is significantly

undervalued (Figure-2) relative to crude oil. In the U.S. not only has natural gas production

increased, but the production of natural gas liquids (NGLs) has increased - namely ethane,

propane and butane.

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Figures 1 and 2: Price of Natural Gas in North America and its Comparison

Relative to Crude Oil (WTI) Price

After more than two decades of minimal activity, the availability of ethane and propane from

NGLs at a cost effective price has revived the olefins industry. A number of new ethylene

cracker projects (see Table 1) as well as propane dehydrogenation projects are moving forward.

What does all this mean for the refiners in North America? How can they take advantage of this

natural gas and NGLs boom?

Table 1: Announced Ethylene Capacity Increases – North America

Source: ICIS, June 2012

Company Potential Location

Capacity(kMTA) Est. Start-Up Status

Williams Expansion 300 2013 In Construction

Westlake Multiple Expansions 300 2013/2014 In Construction

Lyondell Basell Multiple 500 2014/15 In Construction

ExxonMobil Baytown, TX 1,500 2016 Permitting

Formosa Point Comfort, TX 800 2016 Planned

Mexichem/OxyChem Ingleside, TX 500 2016 Evaluation

CP ChemCedar Bayou –Baytown, TX

1,500 2017 FEED

Dow Freeport, TX 1,500 2017 Permitting

Sasol Lake Charles, LA 1,500 2017 Feed

0

2

4

6

8

10

12

14

16

North America, US$/MBTU

Natural Gas Price

0%

20%

40%

60%

80%

100%

120%

North America Gas to Oil (WTI) Parity

Source: IHS Chemical

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Opportunities from Shale Gas Monetization - Methane

Abundant methane and associated low natural gas prices are two key factors that make the

perfect environment for a gas-to-olefins (GTO) play in North America based on methanol

conversion to olefins - ethylene and propylene. Methanol-to-olefins, though new to the North

American market, is already a reality in China and has been since 2010. Because of high crude

oil price and high reliance on naphtha-based ethylene cracking for olefins production, China

began an aggressive program for coal-to-chemicals and coal-to-liquids several years ago. In

China four (4) coal-to-olefins (CTO) plants based on methanol for the production of light olefins,

both ethylene and propylene, have come on-stream and more than twenty (20) units are in

various stages of design and construction.

In terms of quantity, petrochemical demand in China is much smaller relative to the energy

demand for the transportation and power sectors. Therefore, the opportunity for additional

utilization of coal can be achieved by converting coal-to-liquid (CTL) for use as transportation

fuels. It is interesting to note that China has given priority to CTO over CTL. However, that is

not the case in North America where several CTL projects (and biomass to liquids, BTL,

projects) with methanol as an intermediate as well as a shale gas-based GTL project have been

announced but there are no announced CTO or GTO projects (see Table 1).

Table 2: Announced CTL, BTL and GTL Projects – North America

Although we can understand that end-products of transportation fuels versus light olefins pose

fewer logistical issues for product distribution or handling for the projects shown in Table 1, we

believe that a pathway from shale gas to olefins (or coal to olefins) provides a route with

significantly higher profitability. Over the past two years, ethylene and propylene prices have

averaged $200/MT and $400/MT higher than regular unleaded gasoline in North America,

respectively. The first step in a CTL, GTL, Methanol-to-Gasoline (MTG) or MTO process is

conversion of coal or natural gas to synthesis gas. For CTL and GTL the second step is

conversion of synthesis gas to liquids via Fischer-Tropsch (FT) technology. For MTG or MTO,

the second step is conversion of synthesis gas to methanol followed by gasoline production in the

Principle Location Process Feed

Capacity,

BPD Status

DKRW Wyoming, US ExxonMobil MTGMethanol

(Coal)10,500 Financing

NuCoalSasktachewan,

Canada

ChiaHuaneng –

XOM

Methanol

(Coal)15,000 Feasibility

TransGas

Development Systems

West Virginia,

USExxonMobil MTG

Methanol

(Coal)18,000 Feasibility

Core BioFuel,Inc. Texas, US CoreMKS BTL 1,280 Feasibility

SASOL Louisiana GTL Primus Shale Gas 94,000 Feasibility

Primus

Green Energy

Pennsylvania,

US--- BTL 230 Development

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MTG process or the production of light olefins via the MTO process. The MTG projects

mentioned in the table are relatively small. Instead of the 10,000 BPD - 25,000 BPD of gasoline

being produced by these projects, the same equivalent capacity synthesis gas project could

produce 400,000 - 1,000,000 MTA of light olefins with a product value of ~$300-330/MT

higher, on a combined olefin product basis, than the gasoline product providing better economics

than the MTG option. In case of a need for a large consumption of feedstock, such as the Sasol

plan for nearly 100,000 BPD GTL plant, one may consider an integrated GTL-GTO plant. An

equivalent portion of the synthesis gas, in the range of 10,000 - 25000 BPD GTL product, is

converted to methanol followed by MTO for high value ethylene plus propylene production in

the range of 400,000 - 1,000,000 MTA.

The average North American price of ethylene and propylene in 2012 was between $1200 and

$1300 per MT [5]. Worldwide, almost half of the ethylene and propylene production comes from

naphtha cracking, a feedstock priced between $900 to $1,000 per MT [5] in 2012. Utilization of

natural gas priced in the range of $100/MT to $300/MT ($2/MMBtu to $6/MMBtu) for the

production of polymers and plastics will be highly profitable.

Methanol-to-Olefins Technology

The conversion of methanol to olefins (MTO) is a means to produce ethylene and propylene

from feedstock derived from sources other than crude oil or condensates. Methanol is widely

produced from natural gas or coal at locations with abundant reserves. By utilizing methanol

derived from these cost advantaged raw materials, MTO enables low costs of production for

ethylene and propylene in a global market with high oil prices. MTO also helps to fill the gap

between propylene demand and supply from steam crackers and refineries by producing olefins

at high ratios of propylene to ethylene.

The conversion of methanol to olefins and other hydrocarbons products has been widely studied.

Initial work in the 1970s and early 1980s focused on conversion of methanol to gasoline range

products and employed ZSM-5 type zeolites. Selectivity of methanol to ethylene and propylene

over ZSM-5 was generally low, with selectivities favoring heavier more highly branched

hydrocarbons and aromatics. This catalyst technology was utilized in the commercial

development of the Mobil MTG Process. During the 1980’s, a group of scientists at Union

Carbide (the group later became part of UOP LLC) discovered a new class of materials,

silicoaluminumphosphates (SAPO) molecular sieves [1,2]. Of these, the discovery of SAPO-34

provided a technology breakthrough. SAPO-34’s unique pore size geometry and acidity of the

material created a more selective route for methanol conversion to ethylene and propylene with

reduced heavy byproducts.

As illustrated in Figure-3, SAPO-34 has a smaller pore size (about 4 Å) compared to that of

ZSM-5 (about 5.5 Å). The smaller pore size for SAPO-34 restricts the diffusion of heavy and

branched hydrocarbons and therefore favors high selectivity to the desired light olefins. The

optimized acidity of SAPO-34 reduces the amount of hydride transfer reactions relative to ZSM-

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5, thereby lowering the yield of paraffinic byproducts. A further advantage of SAPO-34 is that

the majority of the C4-C6 fraction produced is olefinic. As discussed later in this paper, these

olefinic compounds make the heavy byproduct suitable for upgrading by olefin cracking.

Figure 3: Comparison of SAPO – 34 and ZSM-5

Development History of UOP Advanced MTO Process

In the early 1990’s UOP and Norsk Hydro A.S. formed an alliance to develop MTO technology.

This collaboration with Norsk Hydro led to the development of the UOP/HYDRO MTO Process.

In development of the process, UOP built on its in-house FCC experience for fluidized reactor

and regenerator and known steam cracker art. Norsk Hydro’s interest in the MTO technology

alliance with UOP is now a part of INEOS.

Unrelated to MTO at the time, ATOFINA was at work in the 1990’s developing olefin cracking

technology. Shortly after, in 2000, ATOFINA (which later became part of Total Petrochemicals

and nowadays of TOTAL Refining and Chemicals) and UOP formed a joint alliance to further

develop olefin cracking technology. This collaboration led to development of the Total

Petrochemicals/UOP Olefin Cracking Process.

The Total Petrochemicals/UOP Olefin Cracking Process has been integrated with the

UOP/HYDRO MTO Process - this combination of processes is the basis for Advanced MTO.

A major milestone for MTO commercialization was the start-up in 2009 of the semi-commercial,

fully integrated MTO demonstration unit (Figure-4) in Belgium, which successfully

demonstrated the performance of the integrated UOP/Hydro MTO Process with the Total

Petrochemicals/UOP Olefin Cracking Process.

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Figure 4: Total Petrochemical MTO/OCP Demonstration Unit at Feluy, Belgium

Process Description

The UOP/HYDRO MTO Process utilizes a fluidized reactor and regenerator system to convert methanol to olefins using a proprietary, SAPO-34 type catalyst [3].

The UOP/HYDRO MTO Process can be operated on “crude” or undistilled methanol as well as with pure (Grade AA) methanol. The choice of feedstock quality generally depends on project-specific situations because there can be advantages in either case. Figure 5 illustrates a simple flow diagram for the UOPAdvanced MTO Process.

Figure 5: UOP Advanced MTO Process

Regen Gas

Air

Methanol

Water

DMERecovery

Ethylene

C4+

Propylene

By-products

MTO Process Integrated withOlefin Cracking Process (OCP)

Sep Section

OCP

MTO Light Olefin

Recovery

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The methanol feed is preheated and then introduced into the reactor. The conversion of

methanol to olefins requires a selective catalyst that operates at moderate-to-high temperatures.

The reaction is exothermic so heat can be recovered from the reaction. Carbon or coke

accumulates on the catalyst and requires removal to maintain catalyst activity. The coke is

removed by combustion with air in a catalyst regenerator system. A fluidized bed reactor and

regenerator system is ideally suited for the MTO process because it allows for heat removal and

continuous catalyst regeneration. The reactor operates in the vapor phase at temperatures

between 650 to 1000°F and pressures between 15 and 45 psig. A slipstream of catalyst is

circulated to the fluidized bed regenerator to maintain high activity. The operation of the reactor

system is characterized as stable steady-state.

The reactor effluent is cooled and quenched to separate water from the product gas stream. The

product gas is compressed and then unconverted oxygenates are recovered and returned to the

reactor. The reactor provides very high conversion so there is no need for a large recycle stream.

After the oxygenate recovery section, the effluent is further processed in the fractionation and

purification section to remove contaminants and separate the key products from the byproduct

components. Ethylene and propylene are produced as polymer grade products and sent to

storage. The C4-C6 fraction is sent to the OCP reactor where it is selectively converted to light

olefins, the majority of which is propylene. Typically the propylene to ethylene ratio in OCP

reactor effluent is about 4. The OCP product is depropanized, the C3 and lighter fraction is sent

to MTO product recovery section, and residual C4 plus fraction is taken as byproduct fuel.

As shown in Figure 6, the advanced MTO process, which is the integrated MTO-OCP processes,

can produce propylene to ethylene product ratios between 1.2 and 1.8 [4] to help meet the

growing demand for propylene and additional flexibility is achievable with the technologies, if

desired.

Figure 6: Propylene to Ethylene (P/E) ratio in UOP Advanced MTO Process

Monetization of shale gas methane via MTO technology provides North American refiners the

ability to leverage their extensive fluid catalytic cracking (FCC) operational expertise. A joint-

70

80

90

100

1.0 1.2 1.4 1.6 1.8 2.0Light Olefin C

arbon Yields, Wt-%

Propylene/Ethylene (P/E) Product Ratio, Wt.

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venture implementation with a petrochemical producer would bring the expertise associated with

light olefin recovery from the ethylene cracker industry as well as product olefin off-take or

poly-olefin or olefin derivative production expertise. Methane (or methanol) provides a

feedstock diversification play from crude oil for the refiner, and from ethane, for the

petrochemical producer. Additionally, the refiner would be able to upgrade its refinery grade

propylene (RGP) product in the MTO unit allowing the refiner or JV company to keep a margin

lift of ~200-225 $/MT [5] between RGP and chemical grade propylene (CGP) and polymer grade

propylene (PGP), respectively.

A GTO investment can be staged by first constructing and operating the MTO unit based on

purchased methanol then later constructing the gas to methanol section of the complex. At

2012 average natural gas and ethane prices of $3/MMBtu and $300/MT [5], respectively, a GTO

complex provides similar cash cost of production as an ethane based steam cracker.

UOP has licensed four (4) coal-derived methanol to olefins (MTO) units. Three (3) of these

projects have been announced and are located in China.

Opportunities from Shale Gas Monetization - Propane

In 1990 there were two primary sources of propylene world-wide: first, steam crackers for

ethylene production using propane and heavier feedstocks, second, refinery FCC units. It is

worthwhile to note that both primary propylene production sources at that time were from by-

product production and not on-purpose propylene production. With substantial ethane based

ethylene production in North America and the Middle East, the growth in propylene from steam

crackers has not kept pace with propylene demand. While some refiners have decided to operate

their FCC units in a high severity mode to increase the production of propylene, declining

gasoline demand in Europe and North America has limited the overall growth in propylene

production from refineries. These trends have

created a gap between propylene demand and the

supply from conventional sources as shown

in Figure 7.

This gap promises to further widen as steam

cracker feed stocks continue to shift to more

ethane. Recently in North America we have

seen several announcements of cracker

expansion projects based on increased

availability of NGLs. Figure 7 shows that

while demand and corresponding production

of propylene is increasing significantly,

production from conventional naphtha

cracker and refinery sources cannot keep

pace with demand growth, creating a need for

0

20

40

60

80

100

120

140

2001 2006 2011 2016 2021

Million MTA

Supply from Refinery FCCsSupply from Steam CrackersDemand (Polymer/Chemical Gr.)

“Propylene Gap”

Source: IHS Chemical

Figure 7: Propylene Supply-Demand

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technologies for on purpose propylene production, such as methanol to olefins (MTO) and

propane dehydrogenation (PDH) to fill the “propylene gap.”

In 1990 propylene coming from steam crackers represented more than 70% of the world-wide

propylene production. Since that time, it has continuously declined and by 2015 it will represent

just 50% of the world-wide propylene production. By 2015 propylene from on-purpose

propylene sources will account for 18% of the total production. Of the incremental 20 million

MTA of new production from 2010 to 2015, 42% will come from unconventional on-purpose

production, mainly via propane dehydrogenation.

Figure 8 shows the yield of propylene from different processes (steam cracking, FCC, High

Severity FCC, PDH and MTO) using different raw materials. As shown, propane

dehydrogenation (PDH) provides the highest yield of propylene. This, combined with low

capital intensity ($/MT light olefin), has led to wide market interest in PDH over the past several

years. Since 2011, a total of 18 PDH projects were awarded world-wide representing more than

8.0 million MTA (300,000 BPD) of propylene production capacity. Of the PDH projects, UOP’s

OleflexTM Process was selected for 15 of the projects. These Oleflex PDH awards include the

world’s largest single train PDH unit to be built by Dow Chemical in North America with a

propylene production capacity of 750,000 MTA (28,000 BPD).

Figure 8: Yields of Various Propylene Production Processes

0% 20% 40% 60% 80% 100%

Advanced MTO

MTO

Propane Dehydro

HS FCC

FCC

Lt. Nap. Cracking + Metath.

Gas Oil Cracking

Hvy. Nap. Cracking

Lt. Nap. Cracking

Butane Cracking

Propane Crackng

E+P Cracking (70/30)

Ethane Cracking

Wt-%

Ethylene

Propylene

Butadiene

Mixed C4's

Pygas/Gasoline

Fuel Gas

Hydrogen

Fuel Oil

Coke

P/E

0.03

0.14

0.40

0.43

0.53

0.58

0.69

0.63

---

3.76

---

1.00

1.47

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UOP Oleflex Process

The UOP Oleflex process for propane dehydrogenation (PDH) to produce on-purpose propylene

was first commercialized in 1990 [6]. The plant, located in Thailand, was the world’s first PDH

unit. UOP’s Oleflex technology was developed as a result of combining two previously

commercialized UOP technologies from the early 1970’s, UOP’s Continuous Catalyst

Regeneration (CCR) PlatformingTM Process and UOP’s PacolTM Process. UOP’s CCR

Platforming Process is widely used throughout the refining and petrochemical industry to

produce high-octane gasoline and aromatic rich reformate with more than 235 operating CCR

Platforming units in operation today. UOP’s Pacol technology utilizes platinum catalysis for

kerosene range (C10-C14) paraffin dehydrogenation for linear alkyl benzene (LAB) detergent

production. This innovative light paraffin dehydrogenation approach offered the industry a

positive pressure, continuous reaction-regeneration section CCR-based approach with low capital

cost and low energy usage compared with the sub-atmospheric, swing-bed dehydrogenation

systems invented during World War II.

Since 1990, a total of 14 PDH units have been commissioned world-wide. UOP’s Oleflex

Process accounts for nine (9) of the fourteen (14) operating PDH units world-wide today with

more than 2.4 million MTA (90,000 BPD) of propylene production world-wide.

Oleflex Technology

An Oleflex plant as shown in Figure 9 converts a propane-rich liquefied petroleum gas (C3 LPG)

feedstock into a chemical grade or polymer-grade propylene product. Pre-treated C3 LPG

feedstock is introduced to the depropanizer. Any butanes or heavier components in the C3 LPG

are rejected from the bottom of the depropanizer. The depropanizer overhead is sent to the C3

Oleflex unit which produces a propylene-rich liquid product and a hydrogen-rich gas product.

The net hydrogen can be exported directly, upgraded to PSA hydrogen or used as fuel within the

plant if hydrogen is not in demand in the vicinity of the PDH plant.

Liquid product from the Oleflex unit is sent to a selective hydrogenation unit (SHP) to eliminate

diolefins and acetylenes. The SHP unit consists of a single fixed-bed reactor and operates in the

liquid phase. The SHP product is sent to a de-ethanizer to reject any light ends produced within

the Oleflex unit or contained in the fresh C3 LPG. The de-ethanizer net bottoms product is

directed to a propane-propylene (P-P) splitter, where the propylene product is separated from

unconverted propane. The unconverted propane contained in the P-P splitter bottoms is recycled

to the Oleflex unit via the LPG feed depropanizer.

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Figure 9: UOP Oleflex Process Block Flow Diagram

The Oleflex unit box shown in Figure 9 contains the heart of the unit, the reactor-regenerator

section. Most North American refiners will be familiar with the CCR and reactor/fired heater

combination shown in Figure 10. The Oleflex unit looks very similar to a CCR Platforming unit.

One difference, however, is that the reactors are side-by-side versus stacked to maximize

propylene yield. Non-selective thermal cracking reactions are minimized by close coupling the

reactors and fired heaters.

Figure 10: UOP Oleflex Process

Heater Cells

Net Gas

To FracSection

Dryer

Cold Box

Fresh& Recycle

Feed

H2 Recycle

CCR

Rx EffluentCompressor

Regeneration Section

Reactor Section

Product Recovery Section

Catalyst Flow

OleflexUnit

C3 LPG

C4+

Net Gas C2-

Propylene

SHP

P-P Splitter

Deethanizer

Depropanizer

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Increased availability of propane in North America as a result of the NGLs found in shale gas

has created increased interest in Propane Dehydrogenation for on-purpose propylene production.

The first North American PDH unit came on-stream in late 2010 and several new projects have

been announced predominantly by mid-stream and petrochemical players.

Investment in a PDH unit can be an excellent feedstock and end-product diversification play to

increase the operating flexibility of the refinery. Cost advantaged North American propane from

NGL plants can be supplemented with propane produced within the refinery and sent to a PDH

unit. The PDH unit can also be used to upgrade lower purity refinery-grade (RGP) propylene

streams produced by the FCC unit to chemical or polymer grade propylene in the PDH unit

propane-propylene (P-P) splitter to realize an additional product value uplift of $200-225/MT [5]

to CGP or PGP from RGP, respectively (refer to Fig.11). Additionally, the hydrogen produced

within the PDH unit can be used for hydroprocessing needs within the refinery or exported for

sale. The propylene-propane price differential seen in the market supports the investment in

PDH, with the most attractive differentials in North America and the Middle East. Cost

advantaged propane in North America as well as strong propylene prices are responsible for the

high propylene to propane price differentials in the region (see Figure 12).

Figure 11: Example PDH Unit Integration with an Existing Refinery

Figure 12: Historical Propane Price and Propylene-Propane Price Spread

PGP

CGPRefinery PDH

RGP

Propane

Shale Gas Propane

H2

H2

Propane Pricing2001-2012

1200

1000

800

600

400

200

0

US$/Metric Ton

NA (non-TET), Spot Avg, FOB Mont Belvieu, TXSaudi-Arabia, Spot Avg, FOB KSA

NE Asia, Spot Avg, CIF JapanW. Europe, Spot Avg, CIF NW Europe

01 02 03 04 05 06 07 08 09 10 11 12

Source: IHS Chemical

Propylene-Propane Spread2001-2012

1,400

1,200

1,000

800

0

US$/Metric Ton

W. Europe

SE Asia

NE Asia

North America

Saudi Arabia

01 02 03 04 05 06 07 08 09 10 11 12

Source: IHS Chemical

600

400

200

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UOP was awarded the world’s first refinery integrated PDH unit in 2011. This plant will be

located in the Middle East. We believe PDH can be an excellent fit for the North American

refiner as well.

Opportunities from Shale Gas Monetization – Butane

Butanes are also coming onto the market as a result of shale gas development in North America.

Cost-advantaged butanes can provide opportunities for refiners to diversify feedstock while

making similar products to those they make today, namely gasoline blending stocks. UOP’s

Oleflex Process has been commercially practiced for isobutane dehydrogenation to isobutylene

since 1992. Six (6) plants were commissioned for MTBE production world-wide with four (4)

operating plants located in North America. A typical C4 Oleflex MTBE complex is shown in

Figure 13. With the phase-out of MTBE in North America in the late 1990’s, several of the

North American C4 Oleflex MTBE complexes have been revamped to iso-octene production

using indirect alkylation technology.

As shown in Figure 13 the Oleflex dehydrogenation unit can be easily integrated with

downstream conversion processes, such as alkylation to produce high octane alkylate,

etherification to produce MTBE or ETBE for the export market, or dimerization of isobutene

followed by hydrogenation to produce high octane isooctane. The hydrogen from the

dehydrogenation can be used to hydrogenate isooctene to isooctane, a high octane gasoline

blending component. The UOP process for this combination is the UOP InAlkTM Process.

Figure 13: UOP Oleflex MTBE Block Flow Diagram

FreshMethanol

Net Gas

MTBE

C4 LPG

C5+

DIBColumn

ButamerTM

Unit

DeC3

Column

C3-

EthermaxTM

Unit

CSP ORU

OleflexUnit

Alternate End-Product processing options:

� ETBE from Ethanol

� High Purity Isobutylene (HPIB) via MTBE Decomp

� Alkylate from Sulfuric, HF, or UOP InAlk™ Unit

� Others (MMA, Isoprene, etc.)

nC4 → iC4

iC4 → iC4=

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A renewed interest in isobutane dehydrogenation has re-surfaced, over the last two (2) years,

mainly centered in Asia. In addition to gasoline blendstock production, there has been interest in

isobutylene production for high-purity isobutylene via MTBE cracking as well as isoprene

production. UOP licensed three (3) new C4 Oleflex units in Asia in 2012.

Mixed dehydrogenation of propane and isobutane within the same reactor system has also been

of interest in the marketplace. UOP is the only licensor with commercial experience co-feeding

propane and isobutane to a dehydrogenation unit. This Oleflex processing scheme, shown in

Figure 14, can be a potential play for smaller volumes of propane and butanes that may be of

interest for regional or smaller independent refiners. UOP has one operating mixed C3/C4

Oleflex unit in Asia and has licensed two (2) new mixed C3/C4units in 2012 and 2013.

Figure 14: UOP Oleflex Complex for Mixed C3/C4 Feedstock

In 2012, UOP began to see interest in isobutane dehydrogenation again in North America.

Dehydrogenation and subsequent upgrading of stranded butanes to alkylate or ethers for

domestic use or export presents an interesting alternative for stranded butanes. It is of interest to

note the C4 Oleflex reactor effluent isobutylene to isobutane ratio of approximately 1:1 has the

exact stoichiometry needed in an alkylation unit for production of low sulfur, low vapor pressure

alkylate for gasoline blending.

EthermaxUnit

FreshMethanol

Net Gas

MTBE

LPG

DIBColumn

ButamerUnit

C3=

CSP ORU

OleflexUnit

C3/C4 Separation Section

C2-

C5+

AM-13-53

Page 16

SUMMARY

Shale gas in North America is reviving the petrochemical industry due to the abundance of low

cost NGL ethane. After almost two decades of very little activity, a number on new ethylene

projects based on ethane are moving forward.

Similarly, several projects are under consideration for conversion of shale gas methane to

gasoline and other transportation fuels via MTG and GTL. Multiple PDH projects have been

announced in North America predominantly by mid-stream and petrochemical producers.

The time for feedstock and product diversification to enable un-matched operating flexibility in

the North American refining industry is now. Tap into UOP’s 99 years of experience by

considering shale gas methane, propane and butane monetization plays for your refinery assets.

REFERENCES

1. S.W. Kaiser, US Patent 4 499 327, 1985

2. Lewis et al., US Patent 4,873,390 1989

3. B. V. Vora, T. L. Marker, P. T. Barger, H. R. Nilsen, S. Kvisle, T. Fuglerud ”Economic

Route for Natural Gas Conversion to Ethylene and Propylene” in Stud. Surf. Sci. Catal, Vol

107, p. 87-98 (1997), Elsevier, Amsterdam

4. J. H. Gregor, “Maximize Profitability and Olefin Production with UOP’s Advanced MTO

Technology” IHS World Methanol Conference, Madrid, Spain; November 27-29, 2012

5. IHS Chemical

6. J. H, Gregor et al; “Increased Opportunities for Propane Dehydrogenation’ presented at

DeWitt World Petrochemical review, March 23-25, 1999, Houston, Texas, USA

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