the potential for the siting of an ethane cracker in the state john houston senior vice president,...
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The Potential for the Siting of an Ethane Cracker in the StateJohn HoustonSenior Vice President, Bayer Corporation
North America – Business Structure
Breakdown of Total Sales by Subgroup 2010
As of December 31, 2010
EUR8.2 billion
HealthCare
56 %25 %MaterialScience
19 %CropScience
•Employees in United States: ~15,100•Employees in West Virginia: ~1,000•Employees in Pittsburgh: ~2,700
Pittsburgh/West Virginia = 24.5% of all U.S. Employees
Page 2 • The Potential for the Siting of an Ethane Cracker in the State • June 21, 2011
bo·nan·za [buh-nan-zuh]
–noun
1: rich mass of ore, as found in mining.
2: a source of great and sudden wealth or luck; a spectacular windfall
–noun
1: an exceptionally large and rich mineral deposit (as of an ore, precious metal, or petroleum)
2: a something that is very valuable, profitable, or rewarding
: a very large amount
: extravaganza
Page 4 • The Potential for the Siting of an Ethane Cracker in the State • June 21, 2011
Ethylene Demand Driven By What We Consume
PVC
Source: Chemical Market Associates, Inc.
Ethylene
Polyethylene
Polystyrene/ABS
PET/Ethylene Glycol
LDPELLDPE
HDPE
U.S. Ethane Supply/Cracker Capacity
Page 5 • The Potential for the Siting of an Ethane Cracker in the State • June 21, 2011
Source: Bentek
U.S. PE Converters 2010
Page 6 • The Potential for the Siting of an Ethane Cracker in the State • June 21, 2011
6 to 10 companies6 to 10 companies1 to 5 companies1 to 5 companies
11 to 20 companies11 to 20 companies21 to 40 companies21 to 40 companies41 to 70 companies41 to 70 companies
71 to 105 companies71 to 105 companies
Source: CMAI
Page 7 • The Potential for the Siting of an Ethane Cracker in the State • June 21, 2011
Statistics
According to the WVONGA-commissioned study by WVU, Marcellus shale development by 2015 could mean 6,600 and 19,600 additional jobs for the Mountain State $890 million in employee payrolls (in 2015)
20% growth rate each year
According to the American Chemistry Council, a 25% increase in ethane supply could mean 17,000 new knowledge intensive, high paying chemical industry jobs 395,000 jobs outside the chemical industry More than $4 billion in federal, state and local tax revenue annually
over 10 years Nearly $33 billion increase in American chemical production About $16 billion in chemical industry capital investment to build new capacity More than $132 billion in U.S. economic output
Page 8 • The Potential for the Siting of an Ethane Cracker in the State • June 21, 2011
Bayer’s Potential Scenario
Photo: Ras Laffan Olefin Cracker in Qatar
Why West Virginia? Why Bayer?
Well positioned for both feedstocks and consumers
Direct access to major highways, waterways, railroads, pipeline
Available Land
Ethylene producers likely to build where they have an anchor
Long term security of feedstock supply is a key
Project needs a champion
Page 9 • The Potential for the Siting of an Ethane Cracker in the State • June 21, 2011
Liquids from Wet Shale Gas Seeking a Home
Page 10 • The Potential for the Siting of an Ethane Cracker in the State • June 21, 2011
Steam Crackers
Source: EIA
Page 11 • The Potential for the Siting of an Ethane Cracker in the State • June 21, 2011
Tug of War
Questions
Ethylene – The Ethane / Ethylene Family Tree
Page 13 • The Potential for the Siting of an Ethane Cracker in the State • June 21, 2011
Acetic Acid (CH3COOH)Annual Global Production: 6.5M tons
Vinyl Acetate Monomer (VAM)40-45% of Global Acetic Acid
Polyvinyl AcetateWood glue, Paints, Adhesives
Synthetic fibers & fabrics
Ester of Acetic AcidInks, paints, coatings
Polyethylene terephthalateSoft drink bottles
Ethylene (C2H4)World’s Highest Vol. Organic Compound
Annual Global Production: 113M tons
Unsaturated Hydrocarbon
Cellulose AcetateSynthetic textile, photographic film
Food Additive (E260)Acidity regulator, condiment (vinegar)
Polar Protic Solvent
Acetic Anhydride25-30% of Global Acetic Acid
Polyvinyl Chloride (PVC)Annual Global Production: 30+M tons
Clothing, upholstery, hoses, tubing, flooring
Polyethylene~50% of Global Ethylene
World’s most widely used plastic
Vinyl Chloride (CH2=CHCl)31.1M Tons in 2000
Ethylene Oxide (C2H4O)Annual Global Production: 20M tons
EthanolaminesAdhesives, Agro, Cleaners,
Pharma, Printing, Surfactants
EthyleneaminesCorrosion Inhibitors, Coatings, Detergents
Fungicides, Lubes, Surfactants
Glycol EthersBrake Fluids, Detergents, Paints/Inks,
Pharma, Plasticizers, Solvents
Alpha OlefinsPrecursors, Detergents, Plasticizers,
Lubricants, Additives
EthylbenzenePrecursor to styrene
(packaging and rubber)
Alkyl AlkanolaminesAbsorbents, Coatings, DetergentsFlocculants, Metalworking, Textiles
Glycol Ester AcetatesAdhesives, Coatings, Heat Transfer,
Inks, Paints, Polyester, HI&I
Ethylene GlycolAntifreeze/Deicing, Dye/printing,
Hydraulics, Latex, PET
PolyurethanesRigid & Flexible Polyols, Coatings, Adhesives, Sealants, Elastomers
SolventsAdhesives, Agro, Dry Cleaning, HI&I, InksPaints, Coatings, Rubber & Polymer Mfg.
Polymerization
Halogenation &
Polymerization
Polymerization
Oligomerization
Alkylation
Acetaldehyde (CH3CHO)Annual Global Production: 1M tons
OR
Ethane(C2H6)
Heavy Feeds & Polyethylene Dominate Global Ethylene Market
Page 14 • The Potential for the Siting of an Ethane Cracker in the State • June 21, 2011
Polyethylene
61%
Styrene7%
EDC/VCM/PVC
11%
Ethylene Oxide/Glycol
13%Other
8%
2010 Ethylene Demand
Ethane
33%
Naphtha/Gas Oil
53%
Propane & Butane
12%
Other
2%
2010 Ethylene Supply
120 Million Tons Ethylene
An Ethane Primer
Page 15 • The Potential for the Siting of an Ethane Cracker in the State • June 21, 2011
Only two uses for ethane
Keep it in the NG stream or separate it out for chemicals production
Natural gas price sets the floor value
Yields only ethylene, hydrogen, and fuel gas when cracked
Ethane cracker capital costs are low
Every 10 cent move in ethane price changes cash costs by 4 cents
A cracker consumes roughly 1.29MT of ethane for 1MT of ethylene
A 1 MM MT/year cracker consumes ~ 63K BPD
Olefins Flow Diagram
Page 16 • The Potential for the Siting of an Ethane Cracker in the State • June 21, 2011
FeedstocksFeedstocksEnergyEnergy PetrochemicalsPetrochemicals
EthaneEthane
Field Condensates
Field Condensates
PropanePropaneButanesButanes
NaphthaNaphthaGas OilGas Oil
PropylenePropylene
Pygas Benzene
Toluene/Xylene Heavy Aromatics
C5/C6 Non Aromatics
Pygas Benzene
Toluene/Xylene Heavy Aromatics
C5/C6 Non Aromatics
Crude C4
Butadiene Mixed Butylenes
Crude C4
Butadiene Mixed Butylenes
Fuel OilFuel Oil
Crude OilCrude Oil
Refinery
EthyleneEthylene
Methane/HydrogenMethane/Hydrogen
Natural GasNatural Gas
GasSeparation
Unit
Ethylene Unit
Ethylene Unit
U.S. Ethylene Expansion “Talk” In The Press ~ 4.0 Million Tons By 2017
Page 17 • The Potential for the Siting of an Ethane Cracker in the State • June 21, 2011
* Dow and ChevronPhillips capacity additions shown are CMAI estimates
** 1 MM metric tons Braskem/Idesa JV in Mexico expected to start-up in 2015/16