Ethylene Production cost

Feed and By-Product Pricing Basis. Table V shows the feed and by-product price basis used in our economic calculations. Separate price structures are shown for the United States and Europe. For each case the by-product prices are assigned two values (a) fuel value and (b) premium or chemical value. Pricing the by-products on each basis yields two values of ethylene production costs for each case considered. These... 

Effect of Feed and Value of By-Products on Production Costs. The ethylene production costs for the six feedstocks considered and the relevant by-product dispositions are shown in Tables VII and VIII. 

At current price levels, heavier feeds in the United States are not competitive with light hydrocarbon feeds. With U.S. naphtha at 1.6 /lb (10 /gal), the ethylene production costs from this feed ranges about 40-70% higher than costs associated with lighter feeds, assuming premium by-product values. The differences are even greater with fuel byproduct values prevailing. 

The current unattractiveness of heavier feeds in the United States notwithstanding, ethylene can be made more cheaply from 1.1 /lb heavy gas oil than from 1.6 /lb naphtha even though a gas oil plant is more expensive and requires more feed. This applies for both premium and fuel by-product cases. Even so, ethylene production costs with gas oil feed are about 25-50% higher than costs with light hydrocarbon feeds. 

In Europe. With either premium or fuel by-product prices prevailing, naphtha is very marginally the preferred feedstock. Heavy gas oil appears to be an interesting feed possibility at current price levels. Although the ethylene production cost with this feed is slightly higher than with naphtha, the difference is so small that it could be wiped out by a naphtha price increase of less than 0.1 /lb. 

Table X shows the effect of capacity on ethylene production costs for a European naphtha plant. Note that investment-based items such as return on investment and depreciation and others included in operating cost decrease, per unit of ethylene produced, as plant size gets larger.

The ethylene production cost for a 1000 MM lb/yr plant is 2.5 /lb (this figure also appears in the European naphtha column of Table VIII). For a 20% increase in capacity to 1200 MM lb/yr, the ethylene production cost drops to about 2.4 /lb. For a decrease in capacity of 60% from 1000 to 400 MM lb/yr, the production cost increases by almost 30% to 3.2 /lb. Table X shows that the advantages of scale diminish drastically as capacity is increased. By way of example, the decrease in production cost going from 400 to 700 MM lb/yr is about 0.5 /lb C2 the next 300 MM lb/yr increment (to a 1000 MM lb/yr) brings only a 0.2 /lb. reduction in production costs. 

Let us look at changes in cracking severity and how they affect feed requirements, by-product production, and ethylene production costs. We have selected the once-through yield of ethylene as a convenient means of representing severity. 

Production Costs. The effect of varying severity on ethylene production costs is given in Figure 2. Both premium and fuel by-product situations are covered. The curves apply to a billion lb/yr European naphtha pyrolysis plant. 

Figure 2. Effect of severity on European ethylene production costs (1000 MM Ibs/yr ethylene production from naphtha feed)...

Figure 3 presents the effect of feed price on ethylene production costs in a billion lb/yr European plant for naphtha, light gas oil, and heavy gas oil feedstocks based on premium by-product valuations. 

From this display it can be seen that a 0.1 /lb increase in naphtha price from 1.0 to 1.1 / lb would raise the ethylene production cost from 2.5 to 2.8 /lb. If such a movement did occur, heavy gas oil at current 0.75 /lb levels (based on equivalent heavy fuel oil adjusted for viscosity considerations and vacuum distillation costs) would become competitive with naphtha. 

The breakeven price defines the unit price one could afford to pay for the gas oil to realize the same ethylene production cost as for a naphtha feed. If for a given naphtha price, the gas oil can be obtained at a price below the indicated gas oil breakeven price, gas oil would be the more attractive feed. If the gas oil can only be obtained at a price above the breakeven, naphtha would be the desired feed. Thus, with naphtha at, say, 1 /lb, the heavy gas oil would have to be priced below 0.7 /lb to be more profitable than naphtha as a cracking feed, assuming premium by-products prevail. Valuing the by-products as fuel has only a slight effect on the breakeven levels. The curves cross as nonaromatics in the pyrolysis gasoline have been valued the same as naphtha feed. 

In view of the above, various sources predict price increases for natural gas liquids for petrochemical use (5, 6). Let us look at the predicted magnitudes of these possible price increases and their effect on ethylene production costs. 

Figure 6 indicates the ethylene production costs from various feedstocks in a U.S. billion lbs/yr ethylene plant based on premium valued by-products. If the predicted ethane and propane increases did in fact... 

Predictions for n-butane prices are not readily available. The picture for n-butane is more complicated since large amounts of this material are also used as a blending stock in gasoline. Future trends in refinery uses of n-butane will certainly affect price levels. The current price for n-butane on the Gulf Coast is about 1 /lb (ca. 5 /gal). If the price goes to, say, 1.2 /lb (ca. 6 /gal), the ethylene production cost associated with n-butane cracking will rise to about 2.5 /lb vs. 2.05 /lb at the lower level. 

With these types of increases in production costs arising from higher NGL prices, the heavier feedstocks would become much more competitive at the existing price valuations for U.S. naphtha, heavy gas oil, and by-products. Note from Figure 6 that if propane goes to 1.4 /lb the ethylene production cost would go to 3.3 /lb, whereas the cost from 1.1 /lb heavy gas oil will be slightly less at 3-3.1 /lb, and the cost from 1.6 /lb naphtha would be about 3.4 /lb. 

Figure 6. Effect of feedstock price on U.S. ethylene production costs (1000 MM Ibs/yr ethylene production premium value by-products). Note by-proauct prices as given in Table V. However, for n-butane feed9 the butanes contained in the Ch by-product are valued the same as n-butane feed.

Figure 7 shows the effect on ethylene production cost from naphtha cracking with BTX aromatics value increases as a parameter. (The basis we have used for determining the effect of aromatics price increases is given in Table XII). Figure 7 indicates that a 5 /gal increase in BTX... 

In Europe, cracking of either light vacuum gas oil or naphtha give very comparable ethylene production costs at current price levels. This holds for either premium or fuel value by-products. 

Consumers can also negotiate with feedstock suppliers on upfront payments or payment terms under which they pay a higher price than the lowest market price at the trough, but pay lower prices when product prices spike. An interesting application of this is the potential for an ethane cracker operator to convert the economics of its cracker to those of a virtual naphtha cracker, by paying an integrated gas producer-processor a price for ethane indexed to naphtha-based ethylene production costs. 

Setting the ethane price to 7.19/GJ (which corresponds to a gas plant price with gas available at 6.37/GJ) gives the ethylene production cost of 726/tonne for the OPEN system and 869/toime for the CLOSED system. The cash flows are detailed in Table 7.3. 

Figure 7.3 Breakdown of ethylene production costs -ethane feed - OPEN system...

The primary impact of rising oil price is on the cost of fuel oil for cracking and on the value of by-products. This particularly affects the OPEN system where by-products are on-sold or transferred to other downstream operations at world parity prices. The sensitivity of ethylene production cost to oil price in the range 30 to 230 bl is illustrated in Figure 7.5, which shows the cost of increasing oil price on the OPEN system. At 70/bbl the base production cost is about 726/t and falls to about 666/t with oil at 50 bl and rises to 964/t with oil at 150/bbl. 

Figure 7.8 Ethylene production cost - impact of scale of operation...

If the cost of carbon emission is 35/tonne , then the additional cost is 75.55 million which lifts the ethylene production cost from 726/t to 801/t. 

As is demonstrated by this figure, the use of hydrogen as a fuel can close the relative gap between the OPEN and CLOSED system, but this requires a carbon cost in excess of 80/tonne when the ethylene production cost is forced over 900/tonne. 

Figure 8.3 Sensitivity of ethylene production cost by propane cracking to oil price...

The impact of the price of butane is shown in Figures 8.7, which shows how the ethylene production cost are influenced by a change in the butane price. 

Figure 8.8 Sensitivity of ethylene production cost to carbon emission cost...

---