The shale gas revolution in the United States caused a rapid increase in ethane production. While fully satisfying the domestic market, it also made it possible for ethane in the United States to export to China. The ethane-based ethylene industry has thus entered the vision of the Chinese petrochemical community.
China has advantages in industrial development
The ethylene industry is the core of the petrochemical industry. It is called the mother of petrochemicals and occupies an important position in the national economy. Ethylene production has become an important indicator of the development level of a country's petrochemical industry. In recent years, with the rapid economic development, China's ethylene industry has developed rapidly and its production capacity has grown rapidly. It has become the world’s second largest ethylene producer after the United States. However, currently China’s ethylene production is dominated by naphtha and coal-based routes, and there are large project investments. Long, low product yield and other shortcomings.
Under the impetus of the shale gas revolution, the United States changed from an oil importing country to an oil exporting country from 2011 to 2012. At present, the excess supply of ethane in the United States has become increasingly prominent, which has aroused the attention and interest of Chinese chemical companies.
Recently, in the voice of the petrochemical industry, Ethylene Ethylene was needed for rational thinking, the Ethylene Project for Ethylene of the Yuantai Petroleum gradually surfaced. As the first petrochemical enterprise to deeply study and actively plan the ethane ethylene industry in China, Yuantai Petroleum Co., Ltd. has included ethane ethylene project in the company's overall business layout and strategic plan in 2014. After 4 years of preparation time, ethane-based ethylene project has now been used as the two resources of Yuantai Petroleum to open up domestic and international resources. The key layout of the two markets will enter the final stage of planning and will soon be implemented. In the early stage of the project, Yuantai Petroleum cooperated with an internationally renowned consulting company to elaborate on the rationality and feasibility of the development of the ethane ethylene industry. Comprehensive thinking.
U.S. shale gas well
China has made ethane from ethane a useful complement to traditional ethylene routes, and has broad market prospects and room for development. The '12th Five-Year' development plan for olefin industry proposes to insist on the diversification of raw materials and actively use both domestic and international resources. Market, broaden the route of raw materials, guarantee the supply of olefinic raw materials. The introduction of ethane route to produce ethylene is a beneficial supplement to the existing naphtha route and coal-based route, and can optimize the product structure.
Currently, Ethylene cracking and ethylene production shows economic advantages over the traditional route in terms of project investment and operating costs. The US shale gas revolution resulted in a relatively low ethane price and a certain export volume. China's ethylene 70% The above is cracked by naphtha. According to the raw material price in the current low oil price situation, the ethene route ethylene cost price is still 20%~30% lower than the naphtha based ethylene comprehensive cost price. Therefore, the imported ethane is used in China to produce Ethylene and ethylene downstream products can be profitable. For the production companies that need ethylene and its downstream products as raw materials, it is a significant cost savings, product price advantage is greater.
In 2017, the average price of international Brent crude oil was 54.7 US dollars per barrel, the average annual price of ethane in the United States was about 183.8 US dollars per ton, and the average annual methanol price in East China was about 2,776 yuan per ton. Based on this, the stone was measured. The total cost of ton olefins (excluding tax) for the three routes of naphtha cracking, ethane cracking, and methanol to olefins are respectively 4743 yuan/ton, 3511 yuan/ton and 6994 yuan/ton. So according to the current Mont Belvieu ethane price At the level of sea freight, importing ethane for ethylene cracking has a strong cost advantage. As international crude oil prices gradually rise, the cost advantage of the alkane route will become more prominent.
Compared with the traditional route of naphtha cracking to ethylene, the Ethylene Cracking to Ethylene process project not only has a low investment, but also has a low raw material cost, high product yield, high purity, and a single route. The research organization analyzes that before 2025 The price of ethane in the United States will increase by a certain extent, but this increase will be within the acceptable range for China's ethane-based ethylene projects. Moreover, in the coming years, China's demand gap for ethylene will increase.
Statistics show that in 2017, China’s apparent consumption of ethylene was about 20.37 million tons, a year-on-year increase of 4.8%; ethylene equivalent consumption was about 39 million tons, and the gap was 20 million tons. In the domestic ethylene consumption structure, LLDPE accounts for the total consumption. 27% of the volume, HDPE about 26%, LDPE about 11%, ethylene glycol about 11%, ethylene oxide about 8%, styrene about 8%. Among them, ethylene glycol, LDPE and HDPE The self-sufficiency ratio was the lowest, which was 42%, 48% and 49%, respectively. The contradiction between supply and demand was outstanding.
In 2017, China's polyethylene imports amounted to 11.794 million tons, an increase of 18.6% year-on-year; ethylene glycol imports exceeded 8 million; China’s ethylene imports amounted to 2.16 million tons, a year-on-year increase of 30%. At present, domestic self-sufficiency in ethylene equivalent is only 52.5%. The equivalent gap is as high as 19.65 million tons, and it is estimated that the domestic equivalent gap will still be more than 16 million tons by 2025. This provides a huge market development space for the ethane ethylene industry.
Establish a stable and reliable raw material supply chain
After clarifying the market prospect of ethane ethylene, the first issue to consider is site selection. The ethane raw material comes from the United States, and the largest ethylene market is in China, so the first thing to assess is whether it is more appropriate to build a plant in the United States or whether it should be China builds a factory.
After a detailed comparison scheme was engaged by an international engineering consulting engineering firm, the basic conclusion is that the only advantage of building a plant in the United States is raw materials, including raw material prices and availability of raw materials. In construction costs, project preparation and construction In terms of cycle and product market, the disadvantages of establishing plants in the United States are very obvious. It is foreseeable that with the construction of ethane export terminals in the United States and the continuous maturation of transportation technologies, the raw materials ethane will be shipped back to China to build ethylene plants in the economy. It is more feasible.
Ethylene ethylene supply chain includes natural gas processing, NGL collection, pipeline transmission, ethane separation, ethane storage, export berth, ship transportation, ethane unloading, ethane storage, ethane cracking several steps.
One of the key points for domestic enterprises in the operation of ethane cracking projects is stable material supply. The first important issue to consider is how to obtain stable ethane resources. The United States is currently the largest and only exporter of ethane, but its export capacity Limited investment. For Chinese investment companies, it is necessary to lock down ethane export terminal facilities, including liquefaction facilities for ethane, storage tanks and berths. Pipelines must be connected to the ethane resources, matching their liquefaction and export capacity. Therefore, Chinese enterprises must Find reliable suppliers, or through strong middlemen, sign long-term contracts with suppliers to ensure the reliability of the investment.
In this respect, Chinese companies may consider various forms of cooperation, including directly purchasing ethane from resource suppliers (gas extractors), entrusting pipeline operators to export ethane through the terminals they construct, or operating with pipelines. Merchants and terminal operator cooperation, through them to find resources and so on.
Considering the large annual demand of ethane for the project, it is recommended that Chinese companies choose to cooperate with reliable midstream integrated suppliers to ensure the supply of sufficient ethane resources through the mature ethane delivery terminal built by the supplier.
In terms of trade, it is recommended that Chinese companies choose to cooperate with large-scale petrochemical professional international trading companies to ensure that they can obtain price competitiveness and long-term stable supply of raw materials. In addition, the benefits of cooperation with large-scale petrochemical professional trading companies can be through some trade finance. Hedging controls the fluctuation of ethane prices within a certain range. For example, in addition to using Mont Belvieu's own ethane pricing mechanism, ethane prices are linked to US Henry Hub natural gas prices and northeast Asian naphtha prices to reduce raw material prices. Volatility risk.
Second, the supply of ethane has higher requirements for warehousing and logistics, and the infrastructure investment is larger. Ethane transportation is mainly transported by pipelines and ships, and it is transported from the US Gulf Coast to China’s Yangtze River Port. Large-scale cryogenic vessels are needed. Warehousing needs supporting frozen tanks.
Currently, the VLEC (very large ethane carrier) with a capacity of 80,000 cubic meters has just emerged, and the number of ships that have been put into use is very limited, and there are more international VLEC orders. As there are no ready-made vessels for new projects, 1 million tons The ethane cracking project requires more than 6 vessels. The long-term chartering contract that needs to be established for the new VLEC has certain uncertainties. In addition, in the current shipping market environment, US ethane is transported to the east coast of China for approximately US$90 to US$120. / Ton, but in the future there is also a risk of price increase. It is necessary to lock freight by a reasonable business model to reduce risk.
World's First VLEC Loads Ethane in Port of Texas, USA
For Chinese enterprises, the Ethylene Ethylene Project must be established to establish a stable and reliable raw material supply chain. Through the upstream participation in shares, capital contribution, etc., the supply chain, pipeline logistics, port and ship transportation parties and other supply chains can establish organic communities. The establishment of raw material purchase agreements, raw material production, storage and transportation and port construction, ethane ocean-going ships, domestic port terminal storage and construction, ethane cracking project companies must have a certain ability to control all aspects of the raw material supply chain. The pricing mechanism is the CFR CIF price. It may be considered that the company is jointly funded by the trading company and assigned to the ship, and it is assigned to the overall operation and coordination of the trading company, which effectively reduces the risk in the transportation sector.
Domestic device location is crucial
Obtaining a stable supply of ethane is only one of the prerequisites for ensuring the sustainable development of the industry. Another key factor is the location of domestic installations.
After a long period of investigation and research, there are several important factors in the selection of domestic installations. The first is to select a suitable park, and its maturity and industrial planning must be consistent with the national positioning, and it is also suitable for the Ethane ethylene project. Chemical industry park development , It can effectively promote industrial agglomeration, optimize industrial layout, realize comprehensive utilization of various types of energy and reduce consumption, and establish a unified safety and environmental protection supervision system and treatment facilities to effectively improve the overall safety and environmental protection level of enterprises entering the park.
The second is the proximity to the appropriate port. VLEC has special requirements for ports and terminals, and its entry into the harbour has special requirements for the navigation channel and adjacent terminals. Therefore, the park is best able to dock large liquid chemical terminals, and there are conditions for the construction of deep-water terminals. , or has been equipped with other chemical related facilities, so that after a relatively simple transformation, the port can be connected to VELC. In addition, because the device receives ethane imported from the United States, the port must also have a national class one open port. condition.
The third is to consider the project's construction cost and construction environment, including land, taxation, construction period, park facilities, financing environment, environmental protection, and government service concepts and efficiency, the overall business environment and other soft environment. On the one hand, the appropriate supporting environment and Policies can help shorten the construction period and shorten the investment costs. The park can provide necessary support for the project as it advances. On the other hand, it can also prevent the project from being stagnated or delayed due to unnecessary factors. In addition, the project location If the chemical industry is concentrated and there is a mature talent base, recruitment of project personnel will have advantages.
The fourth is to consider the downstream market sales of ethylene products. The ethane-based ethylene project has a single product. Therefore, the location of the project must consider the proximity to the downstream market to create an industrial chain for the comprehensive utilization of petrochemicals. In addition, railways, highways, and waterways must be considered for location transportation. Whether it is convenient. You can choose some of the existing large-scale chemical industrial bases, especially near the ethylene demand markets of East China and South China, or digest on the spot. Because the industrial chain of the chemical industry park is relatively complete, it can be achieved through the mutual supply of raw materials and internal recycling. Chain development, to accept the production of ethylene and hydrogen products and other products, in order to obtain a higher cost advantage.
China Coastal Chemical Industry Park Deepwater Terminal
According to the data provided by the China Petroleum Economic Research Institute, the “Thirteenth Five-Year Plan” period will be the peak period for the production of ethylene capacity. By 2020, several million-ton ethylene plants with naphtha as the main raw material will be put into production. Including Hengli Petrochemical 1.5 million tons/year, Yunnan Petrochemical 1 million tons/year, Shenghong Petrochemical 1.1 million tons/year, China Branch Dalian Oil 800,000 tons/year, Zhejiang Petrochemical Phase I 1.4 million tons/year, Quanzhou Petrochemical 100 10,000 tons/year and other devices. In addition, several ethane cracking and ethylene production projects are under planning. According to incomplete statistics, from 2017 to 2021, China plans to put more than 40 new ethylene projects into operation, involving at least 24 million tons of new production capacity. In the year, Shandong local enterprises plan to put into operation ethylene production capacity exceeding 6 million tons/year, Zhejiang Petrochemical, Gulei Petrochemical and Sinochem Quanzhou and other large 1 million tons/year ethylene projects are also under construction. By 2020, The total domestic ethylene production capacity will reach 35.16 million tons per year.
It can be foreseen that the entry of ethane into China will bring great changes to the domestic ethylene industry. No matter whether it is to tap and renovate existing ethylene plants or to build new ethane-based ethylene plants, it is necessary to improve industrial competitiveness and risk resistance. Optimize the allocation of good resources, through differentiation, high-end design of downstream industrial chain solutions, increase product added value, achieve dislocation development with imported products, increase the use value of by-products, and enhance industrial competitiveness and risk resistance.
Accord with petrochemical industry development trend
Promoting supply-side structural reforms is a major decision made by the Party Central Committee in comprehensively judging the world economic development trend and the new normal of China's economic development. China's petrochemical industry must promote the supply-side reform as the main line, promote the transfer of structural adjustments, and improve the quality of development and internal Health power.
Structural adjustment is one of the main lines of structural reform on the supply side, and it is also the key to the competitiveness of the petrochemical industry. The “Petrochemical and Chemical Industry Development Plan (2016-2020)” clearly stated that it is necessary to strengthen the guarantee capabilities of basic products such as olefins and aromatics; The transformation of ethylene raw materials is lightweight. The development of the ethane-based ethylene industry in China not only meets the direction of encouraging and encouraging the ethylene industry's industrial policy, but also is an important measure to enhance the supply and guarantee capability of petrochemical raw materials and promote the diversified development of the industry.
At present, China's petrochemical products, such as high-end polyolefins, are still dependent on imports of various chemical new materials and fine chemicals. The ethane-based ethylene industry has achieved agglomeration, chain development, and recycling, while also helping to promote the ethylene industry. Value-added routes, development of downstream high-end resins, new materials and other products.
The ethane ethylene project also provides new ideas for the green development of the petrochemical industry. The petrochemical industry, as a resource-based industry, consumes a lot of energy from the “three wastes”, and it urgently needs a new industrialization path that is environmentally friendly, resource-saving, and intrinsically safe. The ethane cracking process for the ethylene industry has obvious advantages over traditional routes in terms of process routes, reaction conditions, by-products, and pollution emissions, and is in line with the green development direction of low carbon and environmental protection.
In terms of the global economic structure, the future increase in the consumption of chemical products in the world will be mainly concentrated in China, India and other countries with stable and rapid economic development, a large population, and large Asian countries with large economic bases. The development of the ethane-based ethylene industry, It also helps China to build a new international capacity cooperation platform and interest community in the petrochemical industry, including offshore investment, project contracting, technical cooperation, and logistics and transportation, so as to enhance the influence and discourse of Chinese companies in the international arena and promote China’s petrochemical industry. Global coordinated development of the industry.
At present, most of the ethane ethylene projects in China are private enterprises. Currently, private enterprises have become an important force to promote development, and are also a source of vitality to help supply-side structural reforms. With the right to import crude oil and the right to import crude oil The gradual liberalization of private-owned petrochemical enterprises has given them a good opportunity for development. Participating in ethane-based ethylene projects not only can fully stimulate the development of private enterprises, but also help China to cultivate large-scale private petrochemical enterprises and enterprise groups with international competitive advantages.
From the perspective of Sino-U.S. energy cooperation, the ethane-based ethylene industry is also of great significance. After President Trump took office, he strongly promoted the U.S. energy priority strategy. The development of the U.S. traditional fossil energy industry has entered the fast lane. Despite the current trade friction between China and the U.S. , But I believe this is just an interlude before the two sides expand their exchanges and deepen cooperation.
At present, there is no independent tax code for ethane in China and there is no precedent for large-scale import. If the project construction is fully started now, it will take at least 2 years for the resources, ships, ports, and crackers to be put into place. U.S. trade relations must have been moving in a more positive direction. Moreover, the import of ethane in the United States is in line with China’s energy diversification strategy, which can reduce the dependence on crude oil imports, and can also balance the trade deficit between China and the United States to some extent. a good thing.