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1
Alberta’s Industrial
Heartland Association
Alberta’s Hydrocarbon Processing
Opportunities, Prospects and
Marketing Approaches
Part A - Product /Project Ranking Analysis
IHS Consulting, Chemical Group – New York
February, 2012
Copyright © 2011 IHS Inc. All Rights Reserved.
Warranty & Disclaimer
This service, reports and forecasts are provided for the benefit of the Client. Neither the
report, portions of the report, forecasts, nor shall access to services be provided to third
parties without the written consent of CMAI. Any third party in possession of the report or
forecasts may not rely upon their conclusions without written consent of CMAI. Possession
of the report or forecasts does not carry with it the right of publication.
CMAI conducted this analysis and prepared this report utilizing reasonable care and skill in
applying the methods of analysis consistent with normal industry practice. All results are
based on information available at the time of review. Changes in factors upon which the
review is based could affect the results. Forecasts are inherently uncertain because of
events or combinations of events that cannot reasonably be foreseen including the actions
of government, individuals, third parties and competitors. NO IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE SHALL APPLY.
Some of the information on which this report is based has been provided by others
including published data. CMAI has utilized such information without verification unless
specifically noted otherwise. CMAI accepts no liability for errors or inaccuracies in the
information provided by others.
Copyright © 2011 IHS Inc. All Rights Reserved.
Contents
Part A – Product /Project Ranking Analysis
3
Copyright © 2011 IHS Inc. All Rights Reserved.
Contents
Alberta Resources & Feedstock Overview
Regional Advantages/Disadvantages
Derivative Ranking Parameters
Company Ranking Parameters
Project Scope & Approach
Report Materials Overview
4
Next Steps
Copyright © 2011 IHS Inc. All Rights Reserved.
Project Scope & Approach
• Alberta’s Industrial Heartland Association is a not-for-profit
association comprised of five municipal partners who work closely
with government, private industry, and area residents to promote
regional development.
• One key initiative of the association is their focus on promoting industrial
development and the continued prosperity of those companies operating within
Alberta’s Industrial Heartland.
• AIHA has requested IHS provide an analysis of four existing “in-
house” studies that explored the potential that exists within the
region, and draw on our knowledge to identify the best opportunities.
• Compile and understand the regions advantages as identified in previous studies
including, feedstock analysis, delivered cash costs, and cluster feasibility.
• Rank and identify those petrochemicals presenting the greatest advantage to
owners if produced in Alberta, and those companies presenting the highest
likelihood of developing additional capacity in Alberta based on findings.
5
Copyright © 2011 IHS Inc. All Rights Reserved.
Project Scope & Approach (Cont’d.)
• This report will identify advantaged petrochemical development
opportunities in Alberta and those companies qualified and able
to take advantage of those findings.
• Marketing strategies will be discussed insuring the best companies to
approach will be allocated the greatest amount of time and resources.
• Major segments of this project include:
I. Alberta Feedstock Opportunities Overview
II. Compilation of Prospective Investor Ranking
III. Identification of Marketing Events and Venues
IV. Identification of Critical Marketing Information Components
6
Copyright © 2011 IHS Inc. All Rights Reserved.
Contents
Alberta Resources & Feedstock Overview
Regional Advantages/Disadvantages
Derivative Ranking Parameters
Company Ranking Parameters
Project Scope & Approach
Report Materials Overview
7
Next Steps
Copyright © 2011 IHS Inc. All Rights Reserved.
Report Materials
• AIHA has granted IHS access to previously completed reports to
evaluate and summarize findings therein.
• These reports will provide the basis for finalized recommendations and
executive summary regarding the most economically attractive derivatives to
be produced in Alberta, and ultimately the best companies to approach with
the conclusions found in this study.
• IHS has completed two of the four reports being evaluated in this
study.
• C1 Derivative Chain (2011) – (Compared delivered cash costs to various
regions originating from Alberta, USGC, China, and Middle East) • Acetic Acid, Methanol, Acetal Resin, Ammonium Nitrate, Dimethyl Ether, Vinyl Acetate,
Formaldehyde, Urea, Ammonia, On-purpose Olefins (MTO)
• C3 Derivative Chain (2011) – (Compared delivered cash costs to various
regions originating from Alberta, USGC, China, and Middle East) • Acrylic Acid, Acrylonitrile, Butyl Acrylate, Cumene, Isopropanol, Phenol, Polypropylene,
Propylene Glycol, Propylene Oxide
8
Copyright © 2011 IHS Inc. All Rights Reserved.
Report Materials (Cont’d.)
• Petrochemical Feedstock Summary (2011) – (Explores the availability of
petrochemical feedstocks and correlates potentially profitable petrochemical
derivatives produced in Alberta by highlighting four overarching factors, World
Economics, Crude Oil/Natural Gas price ratio, a Light/Heavy price differential,
and the accessibility or availability of Alberta’s natural resources and
reserves).
• Alberta Mid-Stream Chemical Cluster, Site Requirements Study (2009) –
(Exploration into the feasibility of potentially larger integrated sites where
economies of scale are captured in a cluster development. Resulting off
gasses from a hypothetical increase in Petcoke inventories was assumed and
determined to be the major low cost driving force.)
• The conclusions and results from the abovementioned reports
provided the basis of the study’s ultimate conclusions and are
understood to be accurate and complete.
• IHS did not conduct new research on topics outside the realm of
the content within these reports.
9
Copyright © 2011 IHS Inc. All Rights Reserved.
Contents
Regional Advantages/Disadvantages
Derivative Ranking Parameters
Company Ranking Parameters
Project Scope & Approach
Alberta Resources & Feedstock Overview
NGL’s (C3 to C5+)
Crude Oil / Crude Bitumen
Natural Gas / Ethane
10
Off-Gasses
Report Materials Overview
Copyright © 2011 IHS Inc. All Rights Reserved.
Alberta Feedstock Reserves & Production -
2010
11
Resource Reserves 2010 Production
Natural Gas*
Conventional NGLs (liquid)
- Ethane
- Propane
- Butane
- Pentanes plus
38.8 trillion cubic feet
717 million barrels
403 million barrels
223 million barrels
307 million barrels
4.1 trillion cubic feet
217 thousand barrels/day
137 thousand barrels/day
76 thousand barrels/day
128 thousand barrels/day
Conventional Oil 1.5 billion barrels 460 thousand barrels/day
Oil Sands
-Bitumen
-Petroleum Coke
-Upgrading off-gas liquids
169 billion barrels
180,000 barrels/day (potential)
1.6 million barrels/day
68 million tonnes (cumulative)
18,000 barrels/day
Coal 37 billion tons 35 million tons
*Includes both conventional and unconventional gas (CBM).
Shale Gas is in early stages of development and not included in these numbers. Sources: ERCB ST-98 Report and GoA
Copyright © 2011 IHS Inc. All Rights Reserved.
Alberta Feedstock Future Reserves &
Production
12
Sources: ERCB ST-98 Report and GoA
Copyright © 2011 IHS Inc. All Rights Reserved.
*Includes both conventional and unconventional gas (CBM).
Shale Gas is in early stages of development and not included in these numbers.
Sources:ERCB ST-98 Report and GoA
Alberta Feedstock Analysis – Overview
Summary of Alberta energy reserves ending 2010
Sources: ERCB ST-98 Report and GoA
Copyright © 2011 IHS Inc. All Rights Reserved.
Contents
Regional Advantages/Disadvantages
Derivative Ranking Parameters
Company Ranking Parameters
Project Scope & Approach
Alberta Resources & Feedstock Overview
Crude Oil / Crude Bitumen
Natural Gas / Ethane
14
Off-Gasses
Report Materials Overview
NGL’s (C3 to C5+)
Copyright © 2011 IHS Inc. All Rights Reserved.
Alberta Feedstock Analysis – Natural Gas /
Ethane
15
• At the end of 2010, Alberta’s remaining established reserves of
conventional natural gas was 1,025 billion cubic meters.
• Unconventional natural gas at the end of 2010, including remaining
established reserves of CBM (coal bed methane) in Alberta was
estimated to add an additional 67.6 billion cubic meters.
• Imported ethane supply from the Bakkenoil field in North Dakota, USA
will bring 20 to 30,000 barrels/day of ethane to Alberta in 2013 and
grow to 60,000 barrels/day thereafter.
• Bitumen upgrading off‐gases have the potential to add 40 to 60,000
barrels/day of C2+ supply.
• Currently, natural gas prices in Alberta are lower in cost relative to
Henry Hub, Louisiana which presents an attractive supply
advantage.
• The transport of natural gas, in many instances, is cheaper in the form of a bulk
finished product than the gas itself.
Copyright © 2011 IHS Inc. All Rights Reserved.
Alberta Feedstock Analysis – Natural Gas /
Ethane Contd.
16
• Ethane supply is directly related to natural gas production, which has
been well below ethane consumption capacity.
• Volumes of incremental ethane exist, and will draw new investment in
infrastructure to capture. Shown below is a possible scenario.
Copyright © 2011 IHS Inc. All Rights Reserved.
Contents
Regional Advantages/Disadvantages
Derivative Ranking Parameters
Company Ranking Parameters
Project Scope & Approach
Alberta Resources & Feedstock Overview
Crude Oil / Crude Bitumen
Natural Gas / Ethane
20
Off-Gasses
Report Materials Overview
NGL’s (C3 to C5+)
Copyright © 2011 IHS Inc. All Rights Reserved.
Alberta Feedstock Analysis – Crude Oil / Oil
Sands
21
• Total in situ and mineable remaining bitumen reserves in Alberta are
169.3 billion barrels.
• In 2010 Alberta produced 313 million barrels of crude bitumen from
mineable and 276 million barrels from in situ totaling 589 million
barrels.
• In 2010, crude bitumen was upgraded to produce 290 million barrels
of SCO.
• By 2020, SCO production is forecast to almost double to 513 million
barrels.
• The ERCB estimates the remaining established reserves of
conventional crude oil in Alberta to be 1.5 billion barrels (236.9 million
cubic meters).
Copyright © 2011 IHS Inc. All Rights Reserved.
Contents
Regional Advantages/Disadvantages
Derivative Ranking Parameters
Company Ranking Parameters
Project Scope & Approach
Alberta Resources & Feedstock Overview
Propane/Butane
Crude Oil/Oil Sands
Natural Gas / Ethane
24
Off-Gasses
Report Materials Overview
NGL’s (C3 to C5+)
Crude Oil / Crude Bitumen
Copyright © 2011 IHS Inc. All Rights Reserved.
Alberta Feedstock Analysis – Off Gasses
25
• For the most part, propylene and other gaseous products created in
bitumen upgraders are consumed as fuel with the upgrading station.
• Williams Energy currently has an agreement with Suncor to capture off-
gases from the bitumen upgrader and extract the propane and propylene
for sale in US chemical markets.
• Production of propylene by Williams energy is estimated at 200 million lb/yr.
• Additional off-gas production from existing Syncrude and CNRL upgraders would yield
another 425 million lb/yr but is currently not being captured.
• Coker off-gas produces valuable products used as petrochemical feedstocks. P&G
expects significant growth as reflected below.
Copyright © 2011 IHS Inc. All Rights Reserved.
Alberta Feedstock Analysis – Off Gasses
Contd.
26
• Petcoke inventory at the end of 2010 was 68 million Mtons according to
ERCB.
• Production is roughly 7.0 – 8.0 million MMTA with Syncrude, CNRL, and Suncor being
the primary producers.
• It is estimated within the FdP Associates report issued in 2009, that there
is potential for the Petcoke stockpile to reach between 300 and 500
million Mtons without gasification processes to consume this stockpile.
Copyright © 2011 IHS Inc. All Rights Reserved.
Alberta Feedstock Analysis – Off Gasses
Contd.
27
• The total gas liquids contained in offgas production in Alberta is estimated
to have increased from 35,600 B/D in 2005 to about 62,000 B/D in 2010.
• By 2020, PGI estimates that offgas production will exceed 90,000 B/D. By 2030, PGI
estimates that offgas production will exceed 125,000 B/D shown in figure VII-2.
• Offgas produced at a coking facility may be considered to include natural
gas liquids (NGL) and light olefinic components, often referred to as
synthetic gas liquids (SGL).
• Off gas associated with a typical delayed coker is referenced below and estimated by
Purvin & Gertz.
Copyright © 2011 IHS Inc. All Rights Reserved.
Contents
Regional Advantages/Disadvantages
Derivative Ranking Parameters
Company Ranking Parameters
Project Scope & Approach
Alberta Resources & Feedstock Overview
Propane/Butane
Crude Oil/Oil Sands
Natural Gas / Ethane
28
Off-Gasses
Report Materials Overview
NGL’s (C3 to C5+)
Crude Oil / Crude Bitumen
Copyright © 2011 IHS Inc. All Rights Reserved.
Alberta Feedstock Analysis – Propane
29
• Canadian propane production mainly comes from regional natural gas
processing, and in 2010 was 7.9 million cubic meters.
• Currently, the largest demand for Propane is export.
Copyright © 2011 IHS Inc. All Rights Reserved.
Alberta Feedstock Analysis – Butane
30
• As shown in the previous slide, Alberta’s butane production in
2010 was 4.4 million cubic meters of liquid.
• The majority of Alberta’s butane is derived from gas plants with
the remainder coming from refineries and upgrading facilities.
• Butane reserves in 2010 are estimated at 35.4 million cubic
meters liquid.
• Pentanes+ production in 2010 was 7.4 million cubic meters
liquid and remaining reserves total 48.7 million cubic meters
liquid.
Copyright © 2011 IHS Inc. All Rights Reserved.
Contents
Regional Advantages/Disadvantages
Derivative Ranking Parameters
Company Ranking Parameters
Project Scope & Approach
Alberta Resources & Feedstock Overview
Crude Oil/Oil Sands
Natural Gas / Ethane
31
Off-Gasses
Report Materials Overview
Crude Oil / Crude Bitumen
NGL’s (C3 to C5+)
Copyright © 2011 IHS Inc. All Rights Reserved.
Alberta’s Regional
Advantages/Disadvantages
32
• Advantages
• Supporting infrastructure in place and linked to North America (corridors to assist with growth).
• Huge resource exports (61% of Alberta’s crude oil was exported to the United States in 2010).
• Alberta has about 8.6 billion pounds per year of installed ethylene production capacity.
• Alberta’s estimated recoverable crude oil from oil sands could be as great as 315 billion barrels.
• Advantaged/stranded low cost feedstocks and intermediates.
• Vast natural resource reserves (natural gas/bitumen, coal).
• Fewer environmental constraints (GHG’s)
• Regional incentives from the government (IEEP).
• Close proximity to the US, the largest importer/consumer of Alberta’s resources and derivatives.
• Upstream opportunities as well as downstream projects resulting from Oil Sands processing
(upgrader products, and GPU products).
• Future backward and forward integration opportunities to hedge capital risk.
• Government supports Value-add development.
• Very Few Disadvantages
• Slightly longer regulatory Time-Frames to create/modify incentives or change policies.
• Modestly high skilled labor rates.
• Heavy reliance on world oil price leads to on-again off-again bitumen related projects.
Copyright © 2011 IHS Inc. All Rights Reserved.
Contents
Regional Advantages/Disadvantages
Derivative Ranking Parameters
Company Ranking Parameters
Project Scope & Approach
Alberta Resources & Feedstock Overview
Crude Oil/Oil Sands
Natural Gas / Ethane
33
Off-Gasses
Report Materials Overview
Crude Oil / Crude Bitumen
NGL’s (C3 to C5+)
Copyright © 2011 IHS Inc. All Rights Reserved.
Project (Derivative) Ranking Pool
• A quantitative approach to ranking projects was used.
• Numerical scale from 1 to 10 was used to differentiate projects based
upon the agreed parameters.
• A pool of the parameters considered in the quantitative evaluation is
shown on the following page.
• These were funneled into subcategories and a weight was assigned to each.
• A weighted percentage was assigned to each of these.
• The following matrix subcategories were used to evaluate projects:
• Value Chain
• Feedstock
• Derivative Market Outlook
• Technology
• Operations
• Financing
Copyright © 2011 IHS Inc. All Rights Reserved.
Project (Derivative) Ranking Pool
35
1) Forecast pricing, profitability, and projected margins of the potential derivative.
2) The derivative’s reliance on a weak or strong economy for profitability (Will feedstock(s) become scarce as
circumstances change?)
3) Are there characteristics of the derivative making it costly, such as higher labor requirements or utility consumption .
4) Derivative forecast (Supply & Demand outlook in North America).
5) Existence of any favorable tariff & duty or incentives making production and export less costly than other competing
producers.
6) A reliance on “things needing to happen” including hypothetical, planned, and eventual capacities (gas processing,
additional off-gas/petcoke processing capacity).
7) Attractiveness of derivative for future integration with an operator looking to enter into parallel business.
8) Existence of any decommissioned or closed infrastructure that may easily be retrofit for new capacity.
9) Availability of licensing (if not already owning a suitable process).
10) Would there be a JV requirement for this technology? (Difficulty in obtaining licensing without a JV).
11) Is derivative production highly resource or utility intensive similar to chlor-alkali?
12) Susceptibility to environmental exposure during cold weather storage or transport.
13) Potential for a long-term feedstock supply agreement (20 years, 30 years).
14) Feedstock characteristics (seasonal availability risk, easy plant delivery, storage/stockpiling capability, secondary
sourcing availability, exposure to world recession & cost fluctuations).
15) Existing infrastructure for derivative sales (pipelines, rail, any regional consumers).
16) Potential to enter a long-term supply contract for downstream feed integration.
17) Capital (cost per metric ton produced).
18) Cost or logistics issues surrounding any ancillary feedstock, waste, or health & safety associated with derivative
production.
Copyright © 2011 IHS Inc. All Rights Reserved.
Project (Derivative) Ranking Matrix
Ranking Criteria
1. Value Chain 2. Feedstock 3. Derivative Market Outlook 4. Technology 5. Operations 6. Financing
Narrowed into Matrix
Categories
Copyright © 2011 IHS Inc. All Rights Reserved.
Matrix Weight Percentage
1. Value Chain
2. Feedstock
3. Derivative Market Outlook
4. Technology
5. Operations
6. Financing
10%
25%
40%
5%
15%
5%
Copyright © 2011 IHS Inc. All Rights Reserved.
Project (Derivative) Ranking Pool
38
Value Chain – 10%
• Existence of any favorable tariff & duty or incentives making production and export less costly than other competing producers.
• Susceptibility to environmental exposure during cold weather storage or transport.
Feedstock – 25%
• A reliance on “things needing to happen” including hypothetical, planned, and eventual capacities (gas processing, additional off-
gas/petcoke processing capacity).
• Potential for a long-term feedstock supply agreement (20 years, 30 years).
• Feedstock characteristics (seasonal availability risk, easy plant delivery, storage/stockpiling capability, secondary sourcing
availability, exposure to world recession & cost fluctuations).
• Potential to enter a long-term supply contract for downstream feed integration.
Derivative Market Outlook – 40%
• Forecast pricing, profitability, and projected margins of the potential derivative.
• The derivative’s reliance on a weak or strong economy for profitability (Will feedstock(s) become scarce as circumstances change?)
• Derivative forecast (Supply & Demand outlook in North America.
• Attractiveness of derivative for future integration with an operator looking to enter into parallel business.
Technology – 5%
• Availability of licensing (if not already owning a suitable process).
• Would there be a JV requirement for this technology? (Difficulty in obtaining licensing without a JV).
Operations – 15% • Is derivative production highly resource or utility intensive similar to chlor-alkali?
• Existing infrastructure for derivative sales (pipelines, rail, any regional consumers).
• Are there characteristics of the derivative making it costly such as higher labor requirements or utility consumption .
• Cost or logistics issues surrounding any ancillary feedstock, waste, or health & safety associated with derivative production.
Financing – 5%
• Existence of any decommissioned or closed infrastructure that may easily be retrofit for new capacity.
• Capital (cost per metric ton produced).
Copyright © 2011 IHS Inc. All Rights Reserved.
Matrix Weights & Subcategories
Feedstock
25%
Derivative
Market Outlook
40%
Technology
5%
Operations
15%
Financing
5%
Long-Term
Security in
Alberta
15%
Reliance on
Future
Investment
10%
Supply &
Demand
Outlook
20%
Margin Outlook
10%
Integration
(Forward)
5%
Variable/Fixed
Costs
5%
By-product/Co-
product
Considerations
5%
World Scale
Capacity
5%
100 PERCENT
Value Chain
10%
Integration
(Backward)
5%
Transportability
5%
Captive
Integration
5%
Copyright © 2011 IHS Inc. All Rights Reserved.
Matrix Subcategory Descriptions
Value Chain
• Easily Transportable Material (5%) – Derivative profitability limited by difficult or costly transportation.
• Captive Integration (5%) – Possibilities that exist for derivative once produced.
Feedstock
• Long-term security in Alberta (15%) – Base feedstock assumptions; less reliance on future infrastructure.
• Reliance on future investment (10%) – Without further investment, an adequate supply exists.
Derivative Market Outlook
• Forward Integration (5%) – Reliance on integration once produced in order to consume or sell derivative.
• Back integration (5%) – Reliance on back integration or parallel operations to produce derivative.
• Supply and Demand Outlook (20%) – Additional capacity can feasibly be added to supply.
• Margin Outlook (10%) – Relative attractiveness or profitability to investor compared to existing producers.
Technology
• Licensing Availability (5%) – Difficulty for an investor to obtain licensing if they do not already have it.
Operations
• World Scale (5%) – Regional raw material supply is sufficient to sustain plant consumption.
• By-product/Co-product Considerations (5%) – Extraordinarily costly ancillary feeds or waste.
• Variable/Fixed Costs (5%) – The aspects of production that may vary significantly as a function of region.
Financing
• Capital Requirement (5%) – The capital cost per MTon produced including fixed, variable and feedstock.
Copyright © 2011 IHS Inc. All Rights Reserved.
Selected Derivatives and Additional
Opportunities
First Tier Targets • Urea – 7.0
• Ammonia – 7.1
• Methanol – 6.9
• PE (LLDPE/LDPE) – 7.0
• Ethylene Oxide – 7.3
• Ethylene Glycol – 7.2
• Polypropylene – 7.0
Additional Possibilities
• Formaldehyde
• DME
• Acrylic Acid
• Maleic Anhydride
• BTX
• PO/PG
• PO Derivatives
Copyright © 2011 IHS Inc. All Rights Reserved.
Value Chains and their Derivatives Evaluated
Acetic Acid Methanol Acetal Resin Ammonium Nitrate Dimethyl Ether Vinyl Acetate Formaldehyde Urea Ammonia MTO (on-purpose olefins)
Polyethylene Ethylene Glycol Ethylene Oxide
Acrylic Acid Acrylonitrile Butyl Acrylate Cumene Isopropanol Phenol Polypropylene Propylene Glycol Propylene Oxide
Butanediol Maleic Anhydride
Benzene Bisphenol-A Terephthalic Acid Toluene Xylenes
C1 ► Methanol
Value Chain
C2 Value Chain
Ethylene
C3 Value Chain
Propylene
C4 Value Chain
Butenes
C6+Value Chain
Aromatics
Copyright © 2011 IHS Inc. All Rights Reserved.
Value Chain Integration and their Olefins
- Acetic Acid Methanol - Acetal Resin Formaldehyde Ethylene Oxide - Ammonium Nitrate Ammonia Nitric Acid - Vinyl Acetate Acetic Acid Ethylene - Formaldehyde Methanol - Urea Ammonia
- Ethylene Glycol Ethylene Oxide -Polyethylene (LLDP, LDP, HDP) Alpha Olefins/Eth
-Acrylonitrile Ammonia/Prop -Butyl Acrylate Acrylic Acid -Cumene Benzene/Prop -Phenol Cumene -Propylene Glycol Propylene Oxide
-Maleic Anhydride Butanediol
-Bisphenol-A Phenol/Acetone -Terephthalic Acid Para-xylene
C1 ► Methanol
Value Chain
C2 Value Chain
Ethylene
C3 Value Chain
Propylene
C4 Value Chain
Butenes
C6+Value Chain
Aromatics
Copyright © 2011 IHS Inc. All Rights Reserved.
Appendix and Supporting Data
Copyright © 2011 IHS Inc. All Rights Reserved.
Value Chains and Derivative Evaluation – C1
C1 Value Chain – Supply
& Demand Outlook
Demand KMTA 8,958 10,647 11,027 3.5 0.7 Demand KMTA 4,510 4,934 4,928 1.8 0.0
Imports KMTA 7,165 9,421 10,285 5.6 1.8 Imports KMTA - - - - -
Exports KMTA 1,182 782 702 -7.9 -2.1 Exports KMTA - - - - -
Production KMTA 15,570 13,500 13,110 -2.8 -0.6 Production KMTA 4,510 4,934 4,928 1.8 0.0
Capacity KMTA 17,465 17,490 16,990 0.0 -0.6 Capacity KMTA 6,772 6,673 6,673 -0.3 0.0
Op. Rate % 89 77 77 -2.9 0.0 Op. Rate % 67 74 74 2.0 0.0
Demand KMTA 6,531 7,535 7,770 2.9 0.6 Demand KMTA 988 1,147 1,272 3.0 2.1
Imports KMTA 5,960 5,439 5,674 -1.8 0.8 Imports KMTA 129 170 183 5.7 1.5
Exports KMTA 224 450 450 15.0 0.0 Exports KMTA 527 531 365 0.2 -7.2
Production KMTA 604 2,096 2,096 28.3 0.0 Production KMTA 1,386 1,507 1,454 1.7 -0.7
Capacity KMTA 1,160 2,360 2,360 15.3 0.0 Capacity KMTA 1,705 1,705 1,705 0.0 0.0
Op. Rate % 52 89 89 11.3 0.0 Op. Rate % 81 88 85 1.7 -0.7
Demand KMTA 127 160 182 4.7 2.6 Demand KMTA 3,354 3,366 3,308 0.1 -0.3
Imports KMTA 52 64 75 4.2 3.2 Imports KMTA 373 340 336 -1.8 -0.2
Exports KMTA 95 70 55 -5.9 -4.7 Exports KMTA 984 832 792 -3.3 -1.0
Production KMTA 170 166 162 -0.5 -0.5 Production KMTA 2,959 3,026 2,972 0.4 -0.4
Capacity KMTA 181 181 181 0.0 0.0 Capacity KMTA 3,006 3,006 3,006 0.0 0.0
Op. Rate % 94 92 90 -0.4 -0.4 Op. Rate % 98 101 99 0.6 -0.4
Demand KMTA 8,202 8,197 8,260 0.0 0.2 Demand KMTA 18 19 20 1.1 1.0
Imports KMTA 1,014 981 958 -0.7 -0.5 Imports KMTA - - - - -
Exports KMTA 778 824 1,013 1.2 4.2 Exports KMTA - - - - -
Production KMTA 7,966 8,041 8,315 0.2 0.7 Production KMTA 18 19 20 1.1 1.0
Capacity KMTA 11,371 11,182 11,182 -0.3 0.0 Capacity KMTA 30 30 30 0.0 0.0
Op. Rate % 70 72 74 0.6 0.5 Op. Rate % 60 63 67 1.0 1.2
Demand KMTA 1,952 1,650 1,850 -3.3 2.3
Imports KMTA 8,470 9,093 10,332 1.4 2.6
Exports KMTA 1,952 1,650 1,850 -3.3 2.3
Production KMTA 10,135 9,675 9,703 -0.9 0.1
Capacity KMTA 10,874 11,004 11,004 0.2 0.0
Op. Rate % 93 88 88 -1.1 0.0
Units
Units
Units
Units
Units
2020
2020
2020
2020
Units
Units
Units
Units
2010
2020
2020
2020
2020
20152010 - 2015
%AAGR
Vinyl Acetate 2010 20152010 - 2015
%AAGR
Urea 2010 20152010 - 2015
%AAGR
Formaldehyde 2010
Acetic Acid 2010
Ammonium
Nitrate2010
2010 - 2015
%AAGR
20152010 - 2015
%AAGR
20152010 - 2015
%AAGR
2015
2010 - 2015
%AAGR
DME
Ammonia
Methanol
2015 - 2020
%AAGR
2015 - 2020
%AAGR
2015 - 2020
%AAGR
2015 - 2020
%AAGR
2015 - 2020
%AAGR
Acetal
Resin2010 2015
2010 2015
2010 - 2015
%AAGR
20102010 - 2015
%AAGR
20152020
North America Supply and Demand Analysis
2015 - 2012
%AAGR
2015 - 2012
%AAGR
2015 - 2012
%AAGR
2015 - 2012
%AAGR
Copyright © 2011 IHS Inc. All Rights Reserved.
Value Chains and Derivative Evaluation – C3
Demand KMTA 765 789 817 0.6% 0.7% Demand KMTA 7,528 7,000 7,469 -1.4% 1.3%
Imports KMTA 88 70 65 -4.5% -1.5% Imports KMTA 131 400 200 25.0% -12.9%
Exports KMTA 688 692 732 0.1% 1.1% Exports KMTA 1,870 1,300 1,390 -7.0% 1.3%
Production KMTA 1,327 1,411 1,484 1.2% 1.0% Production KMTA 7,378 6,600 7,269 -2.2% 1.9%
Capacity KMTA 1,540 1,640 1,740 1.3% 1.2% Capacity KMTA 8,446 8,125 8,625 -0.8% 1.2%
Operating Rate % 86% 86% 85% 0.0% -0.2% Operating Rate % 87% 81% 84% -1.4% 0.7%
Demand KMTA 3,292 3,280 3,341 -0.1% 0.4% Demand KMTA 405 384 399 -1.1% 0.8%
Imports KMTA 2 - - - - Imports KMTA 131 131 137 0.0% 0.9%
Exports KMTA 134 50 150 -17.9% 24.6% Exports KMTA 467 420 413 -2.1% -0.3%
Production KMTA 3,424 3,330 3,491 -0.6% 0.9% Production KMTA 741 673 675 -1.9% 0.1%
Capacity KMTA 3,955 3,955 4,255 0.0% 1.5% Capacity KMTA 797 807 807 0.2% 0.0%
Operating Rate % 87% 84% 82% -0.7% -0.5% Operating Rate % 93% 83% 84% -2.2% 0.2%
Demand KMTA 1,997 2,247 2,328 2.4% 0.7% Demand KMTA 1,187 1,279 1,412 1.5% 2.0%
Imports KMTA 99 118 127 3.6% 1.5% Imports KMTA 64 63 107 -0.3% 11.2%
Exports KMTA 482 307 278 -8.6% -2.0% Exports KMTA 32 15 15 -14.1% 0.0%
Production KMTA 2,446 2,436 2,478 -0.1% 0.3% Production KMTA 1,155 1,231 1,319 1.3% 1.4%
Capacity KMTA 2,945 2,945 3,345 0.0% 2.6% Capacity KMTA 1,369 1,449 1,534 1.1% 1.1%
Operating Rate % 83% 83% 74% 0.0% -2.3% Operating Rate % 84% 85% 86% 0.2% 0.2%
Demand KMTA 1,691 1,976 2,041 3.2% 0.6% Demand KMTA 506 545 559 1.5% 0.5%
Imports KMTA 43 77 81 12.4% 1.0% Imports KMTA 72 65 72 -2.0% 2.1%
Exports KMTA 242 150 150 -9.1% 0.0% Exports KMTA 150 190 190 4.8% 0.0%
Production KMTA 1,893 2,064 2,127 1.7% 0.6% Production KMTA 584 671 677 2.8% 0.2%
Capacity KMTA 2,424 2,424 2,424 0.0% 0.0% Capacity KMTA 750 750 750 0.0% 0.0%
Operating Rate % 78% 85% 85% 1.7% 0.0% Operating Rate % 78% 89% 84% 2.7% -1.1%
2010 2015 2020% AAGR
2010-2015
% AAGR
2015-2020
% AAGR
2015-2020
Propylene Oxide Units 2010 2015 2020% AAGR
2010-2015
% AAGR
2015-2020Propylene Glycol Units
% AAGR
2015-2020Crude Acrylic Acid Units 2010 2015 2020
Isopropanol Units 2010 2015
Phenol Units 2010 2015 2020% AAGR
2010-2015
UnitsAcrylonitrile 2020
Cumene Units 2010 2015 2020% AAGR
2010-2015
% AAGR
2015-2020
Polypropylene% AAGR
2015-2020
% AAGR
2010-2015202020152010
% AAGR
2010-2015
North America Supply and Demand Analysis
% AAGR
2015-2020
% AAGR
2010-20152015
2020% AAGR
2010-2015
% AAGR
2015-2020
2010Units
C3 Value Chain – Supply
& Demand Outlook
Copyright © 2011 IHS Inc. All Rights Reserved.
Value Chains and Derivative Evaluation
C2 , C4 , C6+ Value Chain –
Supply & Demand Outlook
Demand KMTA 4,282 4,566 4,741 1.3 0.8 Demand KMTA 916 1,056 1,016 2.9 -0.8
Imports KMTA - - 1 - - Imports KMTA 8 8 8 0.0 0.0
Exports KMTA 1 6 6 43.1 0.0 Exports KMTA 47 30 30 -8.6 0.0
Production KMTA 4,282 4,566 4,746 1.3 0.8 Production KMTA 908 1,048 1,008 2.9 -0.8
Capacity KMTA 4,756 4,856 5,516 0.4 2.6 Capacity KMTA 1,107 1,107 1,107 0.0 0.0
Op. Rate % 90 94 86 0.9 -1.8 Op. Rate % 82 95 91.0 2.9 -0.8
Demand KMTA 21,816 23,713 27,283 1.7 2.8 Demand KMTA 5,635 6,334 5,837 2.4 -1.6
Imports KMTA 4,494 5,087 4,410 2.5 -2.8 Imports KMTA 489 275 275 -10.9 0.0
Exports KMTA 7,148 7,182 9,636 0.1 6.1 Exports KMTA 1,417 1,290 625 -1.9 -13.5
Production KMTA 17,613 18,626 22,873 1.1 4.2 Production KMTA 5,346 6,059 5,562 2.5 -1.7
Capacity KMTA 20,053 20,420 25,770 0.4 4.8 Capacity KMTA 5,964 6,880 6,880 2.9 0.0
Op. Rate % 88 91 89 0.7 -0.4 Op. Rate % 90 88 81.0 -0.4 -1.6
Demand KMTA 4,467 4,650 4,629 0.8 -0.1 Demand KMTA 8,630 9,150 9,031 1.2 -0.3
Imports KMTA 1,309 1,327 1,302 0.3 -0.4 Imports KMTA 1,559 1,776 1,814 2.6 0.4
Exports KMTA 1,970 1,904 1,820 -0.7 -0.9 Exports KMTA 402 323 303 -4.3 -1.3
Production KMTA 3,158 3,323 3,327 1.0 0.0 Production KMTA 7,071 7,374 7,217 0.8 -0.4
Capacity KMTA 4,234 3,969 4,819 -1.3 4.0 Capacity KMTA 10,161 10,813 10,683 1.3 -0.2
Op. Rate % 75 84 69 2.3 -3.9 Op. Rate % 70 68 68.0 -0.6 0.0
Demand KMTA 325 349 370 1.4 1.2 Demand KMTA 6,655 6,614 6,355 -0.1 -0.8
Imports KMTA 45 55 67 4.1 4.0 Imports KMTA 370 213 217 -10.5 0.4
Exports KMTA 8 5 3 -9.0 -9.7 Exports KMTA 433 247 247 -10.6 0.0
Production KMTA 288 300 307 0.8 0.5 Production KMTA 6,269 6,401 6,137 0.4 -0.8
Capacity KMTA 360 360 360 0.0 0.0 Capacity KMTA 7,434 7,434 7,434 0.0 0.0
Op. Rate % 80 83 85 0.8 0.4 Op. Rate % 84 86 83.0 0.5 -0.7
Demand KMTA 243 285 319 3.2 2.3 Demand KMTA 6,741 6,915 6,553 0.5 -1.1
Imports KMTA 55 53 35 -0.7 -8.0 Imports KMTA 86 100 100 3.1 0.0
Exports KMTA 59 49 36 -3.6 -6.0 Exports KMTA 993 626 543 -8.8 -2.8
Production KMTA 247 281 321 2.6 2.7 Production KMTA 6,580 6,773 6,474 0.6 -0.9
Capacity KMTA 359 344 364 -0.8 1.1 Capacity KMTA 10,282 9,960 9,960 -0.6 0.0
Op. Rate % 69 82 88.0 3.5 1.5 Op. Rate % 64 68 65.0 1.2 -0.9
2015 - 2020
%AAGR
2015 - 2020
%AAGR
North America Supply and Demand Analysis
2015 - 2020
%AAGR
20152010 - 2015
%AAGR
EO 2010 20152010 - 2015
%AAGRBPA 20102020
2015 - 2020
%AAGR
20102015 - 2020
%AAGR
20152010 - 2015
%AAGR
PE 2010 20152010 - 2015
%AAGR
Terephthalic
Acid2010
2010 - 2015
%AAGR
Butanediol 2010 20152010 - 2015
%AAGRToluene 2010 2015
2010 - 2015
%AAGR
MEG
20152010 - 2015
%AAGRXylene 2010Units
20152010 20152010 - 2015
%AAGRBenzene
2020
2020
2020
2020
Maleic
Anhydride2010
2020
2020
Units
Units
Units
Units Units
Units
2015 - 2020
%AAGR
2015 - 2020
%AAGR
Units 20202015 - 2020
%AAGR
Units 20202015 - 2020
%AAGR
Units 20202015 - 2020
%AAGR2015
2010 - 2015
%AAGR
Copyright © 2011 IHS Inc. All Rights Reserved.
Derivative Ranking Matrix
49
Weighted
Ranking* Total Ranking* Total Ranking* Total Ranking* Total Ranking* Total Ranking* Total Ranking* Total Ranking* Total Ranking* Total Ranking* Total Ranking* Total Ranking* Total Ranking* Total
Petrochemical Projects 100%
Acetyls
Acetic Acid MeOH 3 0.2 4 0.2 3 0.5 3 0.3 4 0.2 3 0.2 5 1.0 6 0.6 1 0.1 8 0.4 4 0.2 7 0.4 6 0.3 4.4
Acetal Resin Formmaldehyde, EO 10 0.5 2 0.1 2 0.3 4 0.4 6 0.3 3 0.2 4 0.8 4 0.4 5 0.3 8 0.4 9 0.5 4 0.2 1 0.1 4.3
Vinyl Acetate Acetic Acid, Ethylene 6 0.3 3 0.2 4 0.6 5 0.5 6 0.3 3 0.2 3 0.6 6 0.6 5 0.3 8 0.4 9 0.5 5 0.3 6 0.3 4.9
Formaldehyde MeOH 8 0.4 8 0.4 3 0.5 3 0.3 1 0.1 4 0.2 4 0.8 6 0.6 10 0.5 8 0.4 8 0.4 5 0.3 10 0.5 5.3
Nitrogen
Ammonium Nitrate Ammonia, Nitric Acid 8 0.4 3 0.2 4 0.6 5 0.5 6 0.3 8 0.4 3 0.6 2 0.2 10 0.5 8 0.4 3 0.2 7 0.4 10 0.5 5.1
Urea Ammonia, CO2 10 0.5 6 0.3 8 1.2 7 0.7 7 0.4 8 0.4 5 1.0 4 0.4 10 0.5 8 0.4 7 0.4 7 0.4 10 0.5 7.0
Ammonia CH4 4 0.2 7 0.4 9 1.4 9 0.9 7 0.4 10 0.5 6 1.2 4 0.4 10 0.5 8 0.4 8 0.4 6 0.3 5 0.3 7.1
Methanol
Dimethyl Ether CH4 6 0.3 1 0.1 9 1.4 9 0.9 8 0.4 9 0.5 2 0.4 5 0.5 5 0.3 8 0.4 8 0.4 6 0.3 8 0.4 6.1
MTO MeOH 2 0.1 10 0.5 2 0.3 2 0.2 3 0.2 3 0.2 6 1.2 3 0.3 6 0.3 4 0.2 8 0.4 3 0.2 2 0.1 4.1
Methanol CH4 10 0.5 8 0.4 9 1.4 9 0.9 8 0.4 9 0.5 4 0.8 4 0.4 9 0.5 7 0.4 8 0.4 5 0.3 4 0.2 6.9
Polyethylene Ethylene 10 0.5 1 0.1 9 1.4 9 0.9 9 0.5 7 0.4 7 1.4 2 0.2 9 0.5 8 0.4 8 0.4 5 0.3 6 0.3 7.0
Ethylene Oxide & DerivativesEthylene, O2 2 0.1 6 0.3 9 1.4 9 0.9 5 0.3 6 0.3 6 1.2 6 0.6 5 0.3 8 0.4 8 0.4 5 0.3 6 0.3 6.6
Ethylene Oxide/Ethylene GlycolEO, H2O 10 0.5 4 0.2 8 1.2 8 0.8 8 0.4 6 0.3 7 1.4 7 0.7 6 0.3 8 0.4 7 0.4 5 0.3 8 0.4 7.2
Acrylic Acid Propylene 1 0.1 4 0.2 8 1.2 7 0.7 1 0.1 8 0.4 7 1.4 7 0.7 2 0.1 8 0.4 9 0.5 8 0.4 1 0.1 6.1
Acrylonitrile Propylene, Ammonia 2 0.1 5 0.3 7 1.1 8 0.8 4 0.2 7 0.4 3 0.6 3 0.3 2 0.1 8 0.4 1 0.1 3 0.2 3 0.2 4.5
Butyl Acrylate Crude A.A., n-Butanol, 2ethylhexahol 3 0.2 2 0.1 3 0.5 5 0.5 5 0.3 1 0.1 7 1.4 3 0.3 5 0.3 4 0.2 4 0.2 8 0.4 5 0.3 4.5
Cumene Benzene, Propylene 10 0.5 5 0.3 5 0.8 4 0.4 4 0.2 6 0.3 3 0.6 2 0.2 10 0.5 5 0.3 7 0.4 7 0.4 8 0.4 5.1
Isopropanol Sulfuric Acid, Propylene 6 0.3 2 0.1 7 1.1 8 0.8 6 0.3 8 0.4 2 0.4 2 0.2 6 0.3 7 0.4 3 0.2 4 0.2 7 0.4 4.9
Phenol Cumene 4 0.2 5 0.3 2 0.3 3 0.3 6 0.3 2 0.1 6 1.2 5 0.5 8 0.4 5 0.3 4 0.2 5 0.3 6 0.3 4.6
Polypropylene Propylene 10 0.5 1 0.1 8 1.2 8 0.8 9 0.5 10 0.5 5 1.0 4 0.4 10 0.5 8 0.4 10 0.5 7 0.4 7 0.4 7.0
Propylene Oxide/Propylene GlycolPO, H2O 8 0.4 4 0.2 6 0.9 6 0.6 6 0.3 6 0.3 6 1.2 7 0.7 9 0.5 8 0.4 7 0.4 7 0.4 7 0.4 6.5
Propylene Oxide & DerivativesH2O2, Propylene 5 0.3 6 0.3 8 1.2 8 0.8 5 0.3 6 0.3 6 1.2 7 0.7 4 0.2 8 0.4 5 0.3 7 0.4 6 0.3 6.5
Butanediol Form. & Acty, PO, Mal Anh. 6 0.3 3 0.2 4 0.6 5 0.5 4 0.2 6 0.3 5 1.0 4 0.4 4 0.2 7 0.4 4 0.2 3 0.2 5 0.3 4.6
Maleic Anhydride Butane 10 0.5 5 0.3 6 0.9 6 0.6 5 0.3 6 0.3 4 0.8 4 0.4 7 0.4 7 0.4 5 0.3 5 0.3 6 0.3 5.5
Benzene Extraction 8 0.4 7 0.4 7 1.1 4 0.4 6 0.3 6 0.3 5 1.0 5 0.5 10 0.5 5 0.3 8 0.4 8 0.4 8 0.4 6.3
Bisphenol-A Phenol, Acetone 9 0.5 3 0.2 2 0.3 3 0.3 7 0.4 2 0.1 2 0.4 5 0.5 8 0.4 5 0.3 4 0.2 6 0.3 7 0.4 4.1
Terephthalic Acid PXY, Acetic Acid 9 0.5 4 0.2 2 0.3 4 0.4 8 0.4 3 0.2 3 0.6 5 0.5 8 0.4 5 0.3 8 0.4 6 0.3 8 0.4 4.8
Toluene Extraction 8 0.4 7 0.4 7 1.1 4 0.4 6 0.3 6 0.3 3 0.6 6 0.6 10 0.5 5 0.3 8 0.4 8 0.4 8 0.4 6.0
Xylenes Extraction 6 0.3 7 0.4 7 1.1 4 0.4 6 0.3 6 0.3 3 0.6 6 0.6 10 0.5 5 0.3 8 0.4 8 0.4 8 0.4 5.9
*Ranking = 1 (Poor) - 5 (Acceptable) - 10 (Excellent)
5% 15% 5%
Value Chain
15% 20% 10%
10% 25% 40%
Derivative Market Outlook
5%
Captive IntegrationEasily Transportable Material
5% 5%
Integration Necessary (Forward) Integration Necessary (Back)Reliance on Future Investment
10%5%
Total
Ranking
s
World Scale Capacity Variable/Fixed Costs Capital Requirement
5% 5%
C6+ Derivative Chain
Financing
Supply & Demand Outlook Margin Outlook Licensing Availability
5%
By-product/Coproduct Considerations
5%
Technology
Feed
sto
cks
C1 Derivative Chain
C2 Derivative Chain
C3 Derivative Chain
C4 Derivative Chain
Strategic Project Screening Matrix
Opportunities in Alberta
Feedstock
Long-term Security in Alb.
Operations
5%
Copyright © 2011 IHS Inc. All Rights Reserved.
Derivative Ranking Matrix Results
50
4.4 4.3
4.95.3 5.1
7.0 7.1
6.1
4.1
6.9 7.06.6
7.2
6.1
4.5 4.5
5.1 4.94.6
7.06.5 6.5
4.6
5.5
6.3
4.1
4.8
6.0 5.9
0
1
2
3
4
5
6
7
8
Derivative Ranking Results
Copyright © 2011 IHS Inc. All Rights Reserved.
Selected Derivatives and Additional
Opportunities
First Tier Targets • Urea – 7.0
• Ammonia – 7.1
• Methanol – 6.9
• PE (LLDPE/LDPE) – 7.0
• Ethylene Oxide – 7.3
• Ethylene Glycol – 7.2
• Polypropylene – 7.0
Additional Possibilities
• Formaldehyde
• DME
• Acrylic Acid
• Maleic Anhydride
• BTX
• PO/PG
• PO Derivatives
Copyright © 2011 IHS Inc. All Rights Reserved.
Ammonia Summary
52
Product Use Process Technology Insights
• Fertilizer use accounts for about 85% of
the end-use market for ammonia
• A wide variety of industrial uses for
ammonia and its derivative products
account for the remaining 10-15% of
the world market.
• Although the direct application of
ammonia accounts for approximately
25% of the nitrogen fertilizer market in
the United States, on a worldwide basis
ammonia is generally processed into a
variety of downstream products prior to
being applied to the soil.
• Ammonia is manufactured from the
nitrogen in the air and hydrogen
produced mainly by steam methane
reforming.
• About 50% of the hydrogen produced
from syngas processes is used for
ammonia production.
• The main driving force of commercial
ammonia production is the use of low-
cost feedstocks to manufacture value-
added end products.
(i) Uhde Dual Pressure Technology
(ii) KBR PURIFIER plus Technology
(iii) Haldor Topsoe A/S
(iv) Ammonia Casale
• Present ammonia technology is not
expected to change fundamentally in the
next10 years.
• Based on supply & demand information
and feedstock availability, ammonia is
among the most attractive derivatives to
produce in Alberta.
• Tampa and New Orleans are regions
within North America that act as major
trade centers or hubs where fertilizer
derivatives are consumed and traded.
Exports from Alberta to these regions
may be slightly more expensive and
diminish margins when compared to
regional USGC producers.
World Scale Capacity-KMTA- Raw Materials Production Cost $/Mton
Large Scale NAM Plant – 1,100
(Canadian Fertiz.-Medicine Hat, ALB)
Smaller NAM Plant – 160 (LSB
Industries-Cherokee, AL)
• Natural gas, naphtha, coal or oil
residues and ambient nitrogen.
• 2015 – 370 US $/Mton
• 2020 – 450 US $/Mton
AAGR % (2010-2015)
Exports (-7.9)%
Demand 3.5%
Imports 5.6%
AAGR % (2015-2020)
Exports (-2.1%)
Demand 0.7%
Imports 1.8%
Copyright © 2011 IHS Inc. All Rights Reserved.
Ammonia Summary Contd.
53
Product Use Process Technology Insights
• The major downstream fertilizer
products include urea, ammonium
nitrate, ammonium sulfate and
ammonium phosphates.
• A wide variety of industrial uses for
ammonia and its derivative products
account for the remaining 10-15% of
the world market.
• CO2 may be captured from ammonia
plant furnace flue gas to supplement
urea production in an Ammonia-Urea
complex.
• Currently there are a range of
technology suppliers with offerings to
capture CO2 from combustion flue
gases that are mostly amine based;
among the front runners are Fluor
Econamine FG+ and MHI KS-1
process.
Copyright © 2011 IHS Inc. All Rights Reserved.
Acetic Acid Summary
54
Product Use Process Technology Insights
• Vinyl acetate monomer is the largest
end use for acetic acid in China, the
United States, Western Europe and
Japan.
• The majority of global acetic acid
consumption is for vinyl acetate
monomer (VAM) production (33% of
total). VAM is used in polymer
manufacture for adhesives and
coatings.
• Acetic acid use for acetic anhydride
production accounts for 14% of total
global acetic consumption and 22% for
PTA respectively.
• The methanol carbonylation route
accounts for greater than 80 percent of
the world’s acetic acid capacity.
• Before 1970, BASF used this process
which required a cobalt catalyst and
extreme temperatures/pressures.
• Monsanto developed a rhodium
carbonyl iodide catalyst that improved
production and selectivity along with
process conditions. In 1986, Monsanto
sold the technology to BP who currently
owns the rights to license the commonly
known “Monsanto/BP” process.
• Ethane oxidation process; alternative
technology (Sabic)
• Licensing is tightly guarded and difficult
to obtain.
• This is a more difficult material to
transport, therefore, integrated down-
stream consumption would avoid
shipping difficulties.
• Without adequate downstream
infrastructure for VAM production, there
will be less interest by producers in
creating new Alberta based capacity.
World Scale Capacity-KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 1,200
(Celanese-Clear Lake, TX)
• Smaller NAM Plant – 100 (Dupont-La
Porte, TX)
• Methanol (conventional route)
• Butane/Naphtha (oxidation)
• 2015 – 470 US $/Mton
• 2020 – 560 US $/Mton
AAGR % (2010-2015)
Exports (-3.3)%
Demand 0.1%
Imports (-1.8)%
AAGR % (2015-2020)
Exports (-1.0)%
Demand (-0.3)%
Imports (-0.2)%
Copyright © 2011 IHS Inc. All Rights Reserved.
Acetic Acid Summary Contd.
55
Product Use Process Technology Insights
• The major routes for synthetic acetic
acid production include methanol
carbonylation, butane/naphtha
oxidation and methyl acetate
carbonylation.
• Acetic acid manufactured by first intent
is termed virgin acid; that recovered
from other processing is termed
recovered.
• Carbonylation of methanol has become
the dominant technology for production
of acetic acid.
Copyright © 2011 IHS Inc. All Rights Reserved.
Vinyl Acetate Summary
56
Product Use Process Technology Insights
• Vinyl acetate’s exclusive use is as a
monomer.
• End markets for vinyl acetate include
paints, adhesives, textiles and safety
glass sheet for automotive and
architectural applications.
• The consumption pattern, however,
varies by world region. In North
America and Western Europe, polyvinyl
acetates account for over half the final
consumption. In Japan and China, the
major final consumption is for polyvinyl
alcohol.
• Vinyl Acetate Monomer (VAM)
technology was first developed in the
1930s and has seen many process
improvements over time. Currently,
VAM is predominantly produced by two
major routes, the ethylene process and
the acetylene process.
• Due to the low cost acetylene produced
in China from calcium carbide, the
acetylene process is predominantly
used in China.
• The reaction of acetaldehyde with
acetic anhydride yields ethylidene
diacetate, which can be thermally
cracked to yield vinyl acetate and acetic
acid.
• Most of the applications for vinyl acetate
are mature.
• The strongest growth areas are
ethylene–vinyl alcohol resins (EVOH),
polyvinyl butyral (PVB) and vinyl
acetate–ethylene resins (VAE).
• EVOH is a small-volume product, but
growth of 3% per year in the United
States, Japan and Western Europe is
forecast during 2010-2015.
• PVB use is growing in laminated safety
glass for architectural and commercial
applications.
• Celanese (with its affiliates) is the
dominant player in the VAM industry,
with about 24% of the world’s capacity.
World Scale Capacity-KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 400
(Millennium-La Porte, TX)
Smaller NAM Plant – 300 (Celanese-
Bay City, TX)
• Acetic Acid, Ethylene (Conventional)
• Acetylene, Acetic Acid (Alternative)
• 2015 – 770 US $/Mton
• 2020 – 940 US $/Mton
AAGR % (2010-2015)
Exports 0.2%
Demand 3.0%
Imports 5.7%
AAGR % (2015-2020)
Exports (-7.2)%
Demand 2.1%
Imports 1.5%
Copyright © 2011 IHS Inc. All Rights Reserved.
Cumene Summary
57
Product Use Process Technology Conclusions
• Essentially all cumene produced is
used in the manufacture of phenol and
its co-product acetone.
• While cumene manufacture has been
almost exclusively through the SPA
process for decades, the landscape
changed dramatically starting in the mid
1990s with advances in zeolite catalyst
technology, particularly in the US.
• Badger Licensing and UOP are the
primary technology providers.
• CD Tech (part of Lummus Technology)
also offers a process that was
commercialized in Taiwan in 2000.
• Dow has a process used at its
Terneuzen, Netherlands plant.
• Cumene’s value chain consists of
benzene + propylene to produce
Cumene. Next, Cumene is used to
produce Phenol which is consumed for
Bisphenol-A production which is
ultimately used in polycarbonate
production.
• Presently it is believed that there are
lower cost Cumene and Cumene chain
possibilities in the U.S. that may prove a
more attractive alternative for producers
looking to expand.
• Demand is extremely dependent on
phonol demand leading to bisphenol-A
and phenolic resin production.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 900 (Georgia
Gulf-Pasadena, TX)
• Smaller NAM Plant – 360 (Marathon
Petroleum-Catlettsburg, KY)
• Propylene, benzene (all through the
alkylation of benzene)
• 2015 – 1,400 US $/Mton
• 2020 – 1,540 US $/Mton
AAGR % (2010-2015) Exports (-17.9)%
Demand (-0.1)%
Imports - %
AAGR % (2015-2020) Exports 24.6%
Demand 0.4%
Imports - %
Copyright © 2011 IHS Inc. All Rights Reserved.
Isopropanol Summary
58
Product Use Process Technology Conclusions
• Use of IPA in direct solvent applications
consumed 62% of total IPA demand in
2008.
• IPA is also used in surface coatings,
inks, pesticide formulations, electronic
applications, reagents and as a
processing solvent in the production of
resins.
• Isopropyl alcohol is produced by three
different processes, two of which use
propylene as a starting material.
• The first method consists of indirect
hydration of propylene via a two-step
process.
• The second method of manufacture
involves the direct hydration of
propylene with an acid catalyst.
• The third method of manufacture
involves the hydrogenation of acetone
to isopropyl alcohol. This process is
used in Brazil and the United States.
• Global IPA-based acetone production is
expected to decrease with the increase
of phenol capacity and acetone (acetone
is a co product of phenol by the cumene
peroxidation process).
• Three IPA plants came on stream in Asia
during 2005-2008, adding 130 thousand
metric tons to world capacity; Shell
closed its Deer Park plant in part due to
ample supply overseas with the start-up
of these plants.
• Several recent capacity expansions
during 2006-2008, including ExxonMobil,
Sasol and Nippon Oil captured new
growth potential.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 325
(ExxonMobil-Baton Rouge, LA)
• Smaller NAM Plant – 170 (Shell
Chemical-Deer Park, TX)
• Propylene, sulfuric acid. • 2015 – 1,500 US $/Mton
• 2020 – 1,620 US $/Mton
AAGR % (2010-2015) Exports (-2.1)%
Demand (-1.1)%
Imports 0.0%
AAGR % (2015-2020) Exports (-0.3)%
Demand 0.8%
Imports 0.9%
Copyright © 2011 IHS Inc. All Rights Reserved.
Propylene Oxide Summary
59
Product Use Process Technology Conclusions
• Propylene oxide is used principally in
the manufacture of polyether polyols for
urethanes, propylene glycols, glycol
ethers and polyalkylene glycols for a
variety of chemical intermediates and
functional fluids.
• Growth of polyols produced for
urethane use in flexible and rigid foams,
which represent about two-thirds of
world propylene oxide consumption, is
anticipated in increase.
• Two major processes—chlorohydrin
and peroxidation—dominate worldwide
production of propylene oxide.
• Chlorohydrin process accounts for 44%
as of July 1, 2009.
• The peroxidation processes account for
49% of nameplate propylene oxide
capacity.
• Two types of peroxidation processes
are used, with PO-SM (styrene
monomer coproduct) comprising 33%
of the world’s capacity and PO/TBA
(MTBE coproduct) accounting for 16%.
• Easier to ship in merchant form than
ethylene oxide.
• An integrated propylene glycol unit is not
necessarily needed as other derivatives.
• A hydrogen peroxide unit would also
accompany new capacity as this would
be the route BASF and Dow would like
use.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 720 (Dow-
Freeport, TX)
• Smaller NAM Plant – 235 (Huntsman-
Port Neches, TX)
• Propylene, hypochlorous acid
• Propylene, hydrogen peroxide
• 2015 – 1,690 US $/Mton
• 2020 – 1,830 US $/Mton
AAGR % (2010-2015) Exports (-9.1)%
Demand 3.2%
Imports 12.4%
AAGR % (2015-2020) Exports 0.0%
Demand 0.6%
Imports 1.0%
Copyright © 2011 IHS Inc. All Rights Reserved.
Acrylonitrile Summary
60
Product Use Process Technology Conclusions
• Acrylonitrile is used as a vinyl
monomer for such products as
polyacrylonitrile and as a chemical
intermediate in the manufacture of
adiponitrile and acrylamide; there are
no neat uses.
• Major applications include acrylic
fibers, styrene copolymer resins,
adiponitrile (for manufacture of
hexamethylenediamine used in nylon
66 fibers and resins) and acrylamide
for water treatment polymers.
• In 2011, ABS and SAN resins
represneted 39% of world
consumption and acrylic fibers
represented 38%.
• Ammoxidation of propylene represents
the current commercial route for nearly
all of the world’s acrylonitrile
production.
• Standard Oil Company of Ohio, usually
referred to as Sohio, recognized and
began developing and commercializing
this technology in 1957.
• In the Sohio process, chemical-grade
(often refinery-grade) propylene,
fertilizer-grade ammonia and air
(sometimes oxygen enriched) are
combined in a fluidized-bed catalytic
reactor at about 405°C and 30 psia.
• ACN capacity additions:
• Sinopec Anqing plans to start 130 thousand
metric tons in China, by 2012.
• CNPC Jilin plans to add 28 thousand metric
tons of new capacity.
• China National Oil & Petrochemical Co.
(CNOOC) plans to start a new 200 KTA by
2013.
• Saudi Japanese Acrylonitrile Co. plans to
establish a 200 KTA plant at Al Jubail.
• Tongsuh Petrochemical plans to add 245
KTA in 2013.
• Global demand is slowing, the realization of
all of the above projects is questionable.
There is a risk that the market might fall
back into an oversupplied situation within
the next few years.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 544
(Ineos-Green Lake, TX)
• Smaller NAM Plant – 180 (Ineos-
Lima, OH)
• Propylene, ammonia, oxygen
• 2015 – 2,315 US $/Mton
• 2020 – 2,300 US $/Mton
AAGR % (2010-2015) Exports 0.1%
Demand 0.6%
Imports (-4.5)%
AAGR % (2015-2020) Exports 1.1%
Demand 0.7%
Imports (-1.5)%
Copyright © 2011 IHS Inc. All Rights Reserved.
Polypropylene Resin Summary
61
Product Use Process Technology Conclusions
• The distribution of end uses for PP
indicates that injection molding, fiber
and filament are the largest world uses
followed by film and sheet.
• Transportation constitutes one of the
major end-use markets for injection-
molded PP.
• As fiber, PP is used in carpet backing
and has a strong growth market in
carpet face yarn, particularly in the
United States.
• Polypropylene film provides excellent
optical clarity and low moisture vapor
transmission enabling its use in snack
food packaging, pressure-sensitive tape
backing and labels.
• Process technology is dominated by
LyondellBasell’s Spheripol bulk process
and Dow’s (formerly Union Carbide’s)
Unipol gas-phase process.
• These processes are used in over 40%
of the world’s PP capacity and have
been gradually displacing the older
slurry-based technologies.
• Among the top three processes, the
gas-phase process by ABB Lummus,
the Novolen process, is declining in
terms of market share, when compared
to Dow and LyondellBasell processes.
• Copolymerization improves PP’s impact
resistance (particularly at low
temperatures) and changes thermal
properties and flexibility.
• Polypropylene (PP) resins are one of the
fastest-growing commodity thermoplastic
resins in the world.
• In 2010, world PP production grew to
48.8 million metric tons, operating at
81.4% of nameplate capacity, which
translates to a relatively high operating
rate around 86-88% of effective capacity.
• With the advantaged propylene
feedstock in Alberta and healthy world
market, profitable capacity could be
attractive to producers.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 400
(ExxonMobil-Baton Rouge, LA)
• Smaller NAM Plant – LyondellBasell-
Bayport, TX)
• Propylene • 2015 – 1,900 US $/Mton
• 2020 – 2,050 US $/Mton
AAGR % (2010-2015) Exports (-7.0)%
Demand (-1.4)%
Imports 25.0%
AAGR % (2015-2020) Exports 1.3%
Demand 1.3%
Imports (-12.9)%
Copyright © 2011 IHS Inc. All Rights Reserved.
Acrylic Acid Summary
62
Product Use Process Technology Conclusions
• The largest markets for acrylic acid are
in polyacrylic acid and n-butyl acrylate.
• The largest proportion of acrylic acid is
used to produce acrylic esters such as
n-butyl acrylate, ethyl acrylate, 2-
ethylhexyl acrylate and methyl acrylate.
• Most of the acrylic acid produced in the
world is converted into esters, which
can be classified as either commodity
acrylate or specialty esters.
• The remainder of the acrylic acid is
used as a monomer to produce
polyacrylic acid-based polymers that
are used in superabsorbents,
detergent, dispersants, flocculants and
thickeners.
• Acrylic acid from acrolein through the
catalytic oxidation of propylene is the
dominant process used in industry.
• This process is the most economical
because of the availability of highly
active and selective catalyst systems
and the relative abundance of
propylene feedstock.
• The hydrolysis of acrylonitrile was used
to a limited extent by a few companies.
• The Reppe process was used in
Germany until 1995.
• Less efficient and more costly routes
via ketene-propiolactone and ethylene
cyanohydrin were abandoned by the
early 1970s.
• Acrylic acid is not readily transported and
demand tends to be supplied by local
producers.
• Licensing is difficult to obtain and is
tightly guarded.
• A joint-venture may be required to
produce additional capacity.
• Because of the difficulties in transporting
this material, down-stream integrated
consumption is recommended and with
no current consumers in Canada,
additional investment is necessary.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 410
(Rohm&Haas-Deer Park, TX)
• Smaller NAM Plant – 75 (BASF-
Freeport, TX)
• Propylene/Oxygen (Propylene
Oxidation)
Acrylonitrile/H2SO4 (Hydrolysis)
• Acetylene/CO (Reppe Process)
• 2015 – 1,770 US $/Mton
• 2020 – 1,800 US $/Mton
AAGR % (2010-2015) Exports (-14.1)%
Demand 1.5%
Imports (-0.3)%
AAGR % (2015-2020) Exports 0.0%
Demand 2.0%
Imports 11.2%
Copyright © 2011 IHS Inc. All Rights Reserved.
Propylene Glycol Summary
63
Product Use Process Technology Conclusions
• Unsaturated polyester resins (UPR)
remain the largest end use for
propylene glycol in the United States,
Western Europe, Japan and China for
the construction, marine and
transportation industries.
• The antifreeze market, which includes
engine coolants, has increased its use
of propylene glycol, although it
accounts for a small percentage of the
total worldwide market.
• Another important application in North
America and Western Europe is use as
a solvent for liquid detergents.
• The processes with the most extensive
set of patents are from Davy Process
Technology, Galen Suppes (University
of Missouri) and UOP LLC.
• Davy Process Technology uses a
vapor-phase hydrogenation in the
presence of a catalyst.
• The Suppes process uses hydrogen as
a coreagent with a copper-chromite
catalyst yielding acetol and propylene
glycol.
• The Dow Chemical Company and
LyondellBasell Industries are the two
dominant players in the propylene glycol
industry via their propylene oxide–based
capacity, are about 31% and 20% of
world capacity, respectively.
• Huge economic influences on demand in
cyclical markets; for example, U.S. and
Western European consumption in
unsaturated polyester resins dropped by
22% in the U.S. and 10%.
• The market is at a slight risk for
consolidation; an increasing number of
global players and rationalization of
small, older producers/production lines
will continue.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 250
(LyondellBasell-Bayport, TX)
• Smaller NAM Plant – 180 (Dow-
Freeport, TX)
• Propylene oxide • 2015 – 1,900 US $/Mton
• 2020 – US $/Mton
AAGR % (2010-2015) Exports 4.8%
Demand 1.5%
Imports (-2.0)%
AAGR % (2015-2020) Exports 0.0%
Demand 0.5%
Imports 2.1%
Copyright © 2011 IHS Inc. All Rights Reserved.
n-Butyl Acrylate (Acrylate Esters) Summary
64
Product Use Process Technology Conclusions
• Acrylic esters are used as
comonomers, which when
copolymerized with other compounds
such as methyl methacrylate, styrene,
or vinyl chloride to produce useful
products including paints, textiles,
coatings, adhesives and plastics.
• Other acrylic esters include Ethyl
acrylate and 2-ethylhexyl acrylate.
• Butyl acrylate is used in the production
of acrylic emulsion polymers, which are
then used in the production of paints,
coatings, adhesives, inks, engineered
plastic additives and lubricating oil
additives. BA is the largest volume AE
produced from crude acrylic acid.
• Butyl acrylate is produced through the
esterification of butanol (n-butyl alcohol)
and crude acrylic acid.
• n-Butyl acrylate (BA) is the leading
commodity acrylate esters produced and
consumed in the United States.
• In 2010, consumption of BA is estimated
at 429 thousand metric tons.
• BA is the most versatile acrylate and
used primarily in paints and coatings
(architectural) since it provides a soft and
flexible film.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 230
(Rohm&Haas-Deer Park, TX)
• Smaller NAM Plant – 80 (Dow-Clear
Lake, TX)
• Crude acrylic acid, n-butyl alcohol • 2015 – 2,430 US $/Mton
• 2020 – 2,800 US $/Mton
AAGR % (2010-2015) Exports - %
Demand - %
Imports - %
AAGR % (2015-2020) Exports - %
Demand - %
Imports - %
Copyright © 2011 IHS Inc. All Rights Reserved.
Methanol Summary
65
Product Use Process Technology Conclusions
• Worldwide, formaldehyde production is
the largest consumer of methanol with
almost 27% of world methanol demand
in 2010.
• Demand is driven by the construction
industry since formaldehyde is used
primarily to produce adhesives for the
manufacture of various construction
board products.
• Direct Fuel Use, Acetic Acid production,
and MTBE each accounted for roughly
10% of consumption respectively.
• Methanol is manufactured commercially
by reacting pressurized synthesis gas
in the presence of a catalyst. (Synthesis
gas is a mixture of gases composed
predominantly of carbon monoxide and
hydrogen, with small amounts of carbon
dioxide and other gases.)
• Cheap new coal-based methanol plants
are being built in China.
• Some of the new types of large methanol
plants being built, particularly in the
Middle East, are known as “mega-
methanol” plants and can have
capacities of between one million and 5
million metric tons.
• Production costs can vary considerably
among producers, depending on natural
gas supplies, treatment of depreciation,
overall plant efficiency and capacity
utilization.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 620
(Millennium-Deer Park, TX)
• Smaller NAM Plant – 120 (Terra
Industries-Woodward, OK)
• Methanol, coal • 2015 – 300 US $/Mton
• 2020 – 370 US $/Mton
AAGR % (2010-2015) Exports 15.0%
Demand 2.9%
Imports (-1.8)%
AAGR % (2015-2020) Exports 0.0%
Demand 0.6%
Imports 0.8%
Copyright © 2011 IHS Inc. All Rights Reserved.
Formaldehyde Summary
66
Product Use Process Technology Conclusions
• Formaldehyde is the most commercially
important aldehyde. Urea-, phenol- and
melamine-formaldehyde resins (UF, PF
and MF resins) accounted for
approximately 63% of world demand in
2009.
• Other large applications include
polyacetal resins, pentaerythritol,
methylenebis (4-phenyl isocyanate)
(MDI), 1,4-butanediol (BDO).
• Formaldehyde is produced from
methanol using either a silver or a
metal oxide (iron-molybdate) catalyst.
• Each process is practiced in a number
of variations, most of which are
available from licensers.
• Formaldehyde is usually produced close
to the point of consumption since it is
fairly easy to make, is costly to transport
and can develop problems associated
with stability during transport. As a
result, world trade in formaldehyde is
minimal and accounted for nearly 1% of
production in 2009.
• Most formaldehyde producers are
primarily concerned with satisfying
captive requirements for derivatives
and/or supplying local merchant sales.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 730
(Celanese-Bishop, TX)
• Smaller NAM Plant – 80 (Praxair-
Geismar, LA)
• Methanol • 2015 – 280 US $/Mton
• 2020 – 354 US $/Mton
AAGR % (2010-2015) Exports - %
Demand 1.8%
Imports - %
AAGR % (2015-2020) Exports - %
Demand 0.0%
Imports - %
Copyright © 2011 IHS Inc. All Rights Reserved.
Polyacetal (Acetal Resins) Summary
67
Product Use Process Technology Conclusions
• Polyacetal resins are important
engineering resins used in industrial,
transportation, agricultural, construction
and consumer markets.
• They possess excellent chemical,
thermal, electrical and mechanical
properties; as a result, they have
replaced metals and other plastics in
many applications.
• Polyacetals are substitutes in traditional
metal markets, at costs that are lower
than those of many other engineering
thermoplastics.
• Polyacetals continue to replace die-cast
zinc, brass, aluminum, steel and other
metals in various end-use industries.
• Polyacetal resins, also known as acetal
or polyoxymethylene (POM) resins,
were first produced by DuPont under
the name Delrin® in 1960 as a
homopolymer where purified
formaldehyde is polymerized, with the
addition of an initiator, by means of an
anionic mechanism.
• A copolymer production route exists
where formaldehyde is reacted with a
catalyst and through a series of
intermediates produces acetal
copolymer resin.
• Demand for polyacetal continues to
grow, especially in developing countries.
• After a very poor 2009, due to the global
economic slowdown, the industry is
experiencing higher capacity utilization in
2011.
• Global automotive production is
recovering and expected to be higher in
coming years.
• In the developed world, production of
polyacetal resins is highly concentrated,
with only a few world producers. Ticona
is by far the largest producer, followed by
DuPont, Daicel and Mitsubishi Gas
Chemical.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 100 (Ticonia-
Bishop, TX
• Smaller NAM Plant – 80 (Dupont-
Parkersburg, WV)
• Formaldehyde • 2015 – 1,780 US $/Mton
• 2020 – 2,207 US $/Mton
AAGR % (2010-2015) Exports (-5.9)%
Demand 4.7%
Imports 4.2%
AAGR % (2015-2020) Exports (-4.7)%
Demand 2.6%
Imports 3.2%
Copyright © 2011 IHS Inc. All Rights Reserved.
Ammonium Nitrate Summary
68
Product Use Process Technology Conclusions
• Ammonium nitrate is derived from the
reaction between ammonia and nitric
acid and contains 33.5-34% nitrogen, of
which half is in the nitrate form, which is
easily assimilated by plants.
• It is used principally as a nitrogen
source in fertilizers and is the main
component of most nonmilitary
industrial explosives and blasting
agents.
• Anhydrous ammonia is the raw material
for manufacturing ammonium nitrate.
• Some of the ammonia is used to
produce nitric acid (50-65% HNO3) that
is subsequently reacted with additional
anhydrous ammonia to produce
ammonium nitrate solution.
• The heat of reaction (contributed by the
nitric acid) is used to evaporate the
water and concentrate the reaction
mixture to about 83-87% AN.
• Urea has become the leading nitrogen
fertilizer because safety issues are
minor, it has a higher nitrogen content
(46% versus 34% for AN and 27% for
CAN), and it is usually less expensive to
produce.
• Ammonium nitrate had been a popular
fertilizer since the 1920s, reaching a low
in 2001 and 2002, coinciding with
security apprehensions following the
September 2001 events.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 1,815 (CF
Industries-Yazoo City, MS)
• Smaller NAM Plant – 150 (Rentech
Energy-East Dubuque, IL)
• Anhydrous Ammonia, Nitric Acid • 2015 – 320 US $/Mton
• 2020 – 380 US $/Mton
AAGR % (2010-2015) Exports 1.2%
Demand 0.0%
Imports (-0.7)%
AAGR % (2015-2020) Exports 4.2%
Demand 0.2%
Imports (-0.5)%
Copyright © 2011 IHS Inc. All Rights Reserved.
Dimethyl Ether Summary
69
Product Use Process Technology Conclusions
• DME is used primarily as an alternative
fuel source to replace traditional
hydrocarbon based fuels.
• Single-Step or Direct DME
Manufacturing ― (syngas is used to
direcrlt produce DME) - JFE
Technology
• Integrated Methanol DME
Manufacturing ― (Combines the
production of MeOH with DME via
syngas) - Haldor Topsoe Technology
• Two-Step or Indirect DME
Manufacturing ― (Production of DME
via MeOH that’s integrated or
standalone plant) - Toyo Technology
• Japan is looking into development and
commercialization of DME in place of
LPG.
• China is looking at using its coal to
produce DME in order to reduce its
dependence on imported oil and gas.
• Currently there is very small capacity
produced in NAM and the merchant
market is virtually nonexistent.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Only NAM Plant – 30 (DuPont-Belle,
WV)
• Syngas to MeOH to DME
• MeOH to DME
• 2015 – 280 US $/Mton
• 2020 – 354 US $/Mton
AAGR % (2010-2015) Exports - %
Demand 1.1%
Imports - %
AAGR % (2015-2020) Exports - %
Demand 1.0%
Imports - %
Copyright © 2011 IHS Inc. All Rights Reserved.
Urea Summary
70
Product Use Process Technology Conclusions
• Fertilizer applications account for
roughly 91% of all urea consumption.
• Industrial applications accounted for the
remaining 9%, led by production of
urea-formaldehyde resins and
melamine, livestock (animal) feed, and
environmental and other applications.
• Use in environmental applications is
rapidly growing for both stationary and
mobile nitrous oxide (NOx) reduction
applications.
• Synthesized from ammonia and carbon
dioxide (CO2), urea is the only primary
nitrogen product chemically classified
as organic (because of its carbon
content).
• Partly driving the growth of urea
consumption is the increasing global
population and available disposable
income and dietary changes.
• More fertilizer will be needed to meet the
growing need for food.
• Because of its high nitrogen content
(46%), urea is the most popular form of
solid nitrogen fertilizer, particularly in the
developing regions of the world, and is
traded widely in the international market.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 2,326 (CF
Industries-Donaldsonville, LA)
• Smaller NAM Plant – 100 (Dyno Nobel-
Cheyenne, WY)
• Ammonia, CO2
• 2015 – 320 US $/Mton
• 2020 – 390 US $/Mton
AAGR % (2010-2015) Exports (-3.3)%
Demand (-3.3)%
Imports 1.4%
AAGR % (2015-2020) Exports 2.3%
Demand 2.3%
Imports 2.6%
Copyright © 2011 IHS Inc. All Rights Reserved.
Polyethylene Resin Summary
71
Product Use Process Technology Conclusions
• HDPE: Blow molding is about 30% of global
consumption-milk containers, motor oil
containers, drums, etc.
• Injection molding is about 20% for shipping
pails, food containers, housewares, etc.
• Film and Sheet is about 20% for t-shirt sacks
and other retail bags, trash can liners, snack
food packaging, etc.
• Pipe and tubing are roughly 12% ranging from
small domestic pipe to larger storm sewer or
drainage lines.
• Misc. account for about 18% and include wire,
cable, fibers, ropes, cement reinforcement
• Blow molding, injection molding and film
applications represent 27%, 20% and 20% of
global or 68.3% together.
• Low density (LDPE) polyethylene has
densities from 0.910-0.925 g/cc and is
produced in a high pressure process.
Polyethylene is produced by both liquid-
phase and gas-phase processes.
• High density polyethylene (HDPE) has a
linear structure, with little side branching, with
densities of 0.940-0.965 g/cc, and is
produced by medium or low pressure
processing.
• Linear low density polyethylene (LLDPE) is
an ethylene copolymer having a linear
configuration with little or no side chain
branching. Densities range between 0.910
and 0.940 g/cc; medium or low pressure
processing is used.
• There will be less LDPE built in
US with the future shale gas PE
expansions to compete against.
• LDPE would be a good product
for export into China.
• Alberta based PE would likely
need to rely on the merchant
alpha olefin market for
comonomers.
• The possibility of building a small
adjacent butene-1 comonomer
plant would likely be a feasible
option and could fuel additional
PE capacity if independently
operated.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 2,326 (CF Industries-
Donaldsonville, LA)
• Smaller NAM Plant – 100 (Dyno Nobel-
Cheyenne, WY)
• Ethylene • 2015 – 1,710 US $/Mton
• 2020 – 1,920 US $/Mton
AAGR % (2010-2015) Exports 0.1%
Demand 1.7%
Imports 2.5%
AAGR % (2015-2020) Exports 6.1%
Demand 2.8%
Imports (-2.8)%
Copyright © 2011 IHS Inc. All Rights Reserved.
Polyethylene Resin Summary Contd.
72
Product Use Process Technology Contd.
• LDPE:
• Film and sheet (55%), LDPE is
currently dominant in high clarity film
markets such as bakery, candy, meat
and poultry wrap, and bags for dairy
products, frozen foods, produce, and
garments.
• Extrusion coating (10%), in coating
paper and paperboard for consumer
packaging, particularly where the heat-
sealing properties of LDPE can be used
to advantage, such as in milk cartons.
LDPE is also widely used as one of the
components in high-barrier coextruded
laminates for aseptic packaging, and
packaging of drugs and dairy products.
• Injection molding (8%)
• Wire and cable (4%)
• Virtually all LLDPE, 80% of HDPE and approximately 10% of LDPE, contains
comonomer. The major comonomers used to produce HDPE and LLDPE are butene-
1, hexene-1, and octene-1.
• Conventional LDPE is produced by two high-pressure, gas-phase processes:
autoclave and tubular.
• Linear polyethylene (LLDPE and HDPE) are produced both by liquid-phase (solution)
and gas-phase processes. There are three main processes for making linear
polyethylene: Solution-phase, Slurry-phase, Gas phase.
• New catalyst technologies that have emerged around the world are beginning to
transform the industry from a product to a materials orientation and are leading to
increased product tailoring for specific end use requirements.
Copyright © 2011 IHS Inc. All Rights Reserved.
Ethylene Oxide Summary
73
Product Use Process Technology Conclusions
• The largest market for EO in 2009 was
mono, di- and triethylene glycols, which
represented 77% of total ethylene oxide
consumption.
• Ethylene glycol is used as an
intermediate for terephthalate polyester
(used for fiber, film and bottle resins)
and for antifreeze.
• Diethylene glycol markets (which are
included in the other category) include
polyurethane and unsaturated polyester
resins and antifreeze.
• Triethylene glycol uses were in gas
dehydration and plasticizers and as a
solvent.
• DIRECT OXIDATION OF ETHYLENE-
used with oxygen over a silver catalyst
in the vapor phase.
• CHLOROHYDRIN PROCESS-
Previously the traditional route to EO,
where ethylene is reacted with
hypochlorous acid.
• Almost all EO is produced by the direct
oxidation of ethylene. A small amount of
capacity in China is still based on the
chlorohydrin process, but this will be
eventually phased out.
• New capacity in Alberta would be export
oriented.
• Operating rates are currently running
very high and the capacity currently in
Canada is among the most profitable in
the world.
• Building HP EO facility and partnering
with EO derivatives partner for
surfactants makes sense, but would
need to import C12-C16 alcohols.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 2,326 (CF
Industries-Donaldsonville, LA)
• Smaller NAM Plant – 100 (Dyno Nobel-
Cheyenne, WY)
• Ethylene, O2 (direct oxidation)
• Ethylene, hypochlorus acid, calcium
hydroxide (chlorohydrin process)
• 2015 – 280 US $/Mton
• 2020 – 354 US $/Mton
AAGR % (2010-2015) Exports 43.1%
Demand 1.3%
Imports - %
AAGR % (2015-2020) Exports 0.0%
Demand 0.8%
Imports - %
Copyright © 2011 IHS Inc. All Rights Reserved.
Ethylene Glycol Summary
74
Product Use Process Technology Conclusions
• In 2009, 84.5% of the MEG consumed
worldwide went into polyethylene
terephthalate, which was converted into
fibers, film and bottles.
• Another 10% was consumed in
antifreeze and 5.5% in other uses.
• DEG and TEG are obtained as
coproducts .
• In the United States, 51% of the DEG
consumed in 2009 went into the
production of unsaturated polyester
resins and polyurethanes.
• In Japan, cement grinding was the
largest DEG market.
• Monoethylene glycol (MEG) is
produced predominantly by the
noncatalytic liquid-phase hydration of
ethylene oxide.
• Diethylene glycol (DEG) and triethylene
glycol (TEG) are coproducts with
ethylene glycol in this operation and are
separated by distillation.
• Shell - OMEGA (Intgrated Ethylene to
MEG Process)
• Dow - Meteor (Integrated Process)
• Conventional EO Process
• Most EO producers are integrated with a
downstream ethylene glycols (EG)
facility.
• EG producers must focus on
manufacturing and marketing to
polyester producers, the market segment
with the greatest growth potential, in
order to continue growing the EG
business.
• Large EG exporters are beginning to
face competition with ethylene glycol
from the low-cost regions of the world.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 2,326 (CF
Industries-Donaldsonville, LA)
• Smaller NAM Plant – 100 (Dyno Nobel-
Cheyenne, WY)
• Ethylene Oxide/CO2/H2O • 2015 – 280 US $/Mton
• 2020 – 354 US $/Mton
AAGR % (2010-2015) Exports (-0.7)%
Demand 0.8%
Imports 0.3%
AAGR % (2015-2020) Exports (-0.9)%
Demand (-0.1)%
Imports (-0.4)%
Copyright © 2011 IHS Inc. All Rights Reserved.
Phenol Summary
75
Product Use Process Technology Conclusions
• BPA accounted for 49% of global
phenol consumption in 2010, followed
by PF resins at 25%.
• Other applications for phenol include
caprolactam, alkylphenols, aniline and
adipic acid.
• Phenol consumption for caprolactam
and, to a lesser degree, alkylphenols is
limited mainly to the United States and
Western Europe.
• CUMENE PEROXIDATION-Cumene is
prepared by alkylating benzene with
chemical- or refinery-grade propylene.
• TOLUENE OXIDATION-Toluene is
oxidized with air to benzoic acid.
• NATURAL RECOVERY-Most natural
phenol originates from petroleum
caustic wash streams consisting
primarily of cresols; only minor amounts
are derived from coal tar refining
operations.
• There is a lot of acetone byproduct that
needs to be accounted for.
• Consumption of phenol for BPA will be
driven by growth in Asia, the Middle
East, and Central and South America.
• No capacity expansions in the developed
regions (United States, Western Europe
and Japan) are planned during 2011-
2015.
• About 2.0 million metric tons of phenol
are slated to come on stream by the end
of 2015, primarily in Asia due to healthy
demand from BPA and PF resins.
• With the exception of INEOS Phenol,
SABIC and Mitsui, none of the top
phenol producers currently operate
plants in more than one region.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 2,326 (CF
Industries-Donaldsonville, LA)
• Smaller NAM Plant – 100 (Dyno Nobel-
Cheyenne, WY)
• Cumene, O2 (Cumene peroxidation)
• Toluene, O2 (Toluene oxidation)
• 2015 – 1,486 US $/Mton
• 2020 – 1,520 US $/Mton
AAGR % (2010-2015) Exports (-8.6)%
Demand 2.4%
Imports 3.6%
AAGR % (2015-2020) Exports (-2.0)%
Demand 0.7%
Imports 1.5%
Copyright © 2011 IHS Inc. All Rights Reserved.
Butanediol Summary
76
Product Use Process Technology Conclusions
• 1,4-Butanediol (BDO) is a bifunctional,
primary alcohol with various industrial
applications.
• The major uses are in the production of
tetrahydrofuran (an intermediate of
spandex and other performance
polymer production) and polybutylene
terephthalate (PBT) resins for
engineering plastics.
• BDO is also used in the manufacture of
gamma-butyrolactone and polyurethane
elastomers.
• REPPE PROCESS-Since first
commercialized in 1942-1943, the
Reppe process has been the major
manufacturing method for the
production of 1,4-butanediol where
acetylene and formaldehyde are
reacted at high pressure.
• BUTADIENE–ACETIC ACID
PROCESS-Mitsubishi Chemical
Corporation operates a plant in Japan
for the production of 1,4-butanediol
from butadiene and acetic acid.
• PROPYLENE OXIDE PROCESS
• N-BUTANE/MALEIC ANHYDRIDE
PROCESS
• China has a lot of new capacity coming
on-line or that has already started.
• BDO capacity increased in China which
was originally fueled by PBT
tightness. Now an over investment in
BDO is a possibly.
• A new plant in Saudi was recently
slapped with a hefty tariff for exports into
China. This was ultimately reduced to
4% from something higher.
• BASF is a dominant player.
• There are only a few producers currently
in NAM for a reason. Additional capacity
in Canada is not likely to become a
reality especially after this new Saudi
capacity and export issues.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 2,326 (CF
Industries-Donaldsonville, LA)
• Smaller NAM Plant – 100 (Dyno Nobel-
Cheyenne, WY)
• Acetylene, formaldehyde (Reppe)
• Butadiene, acteic acid
• Propylene Oxide
• Others
• 2015 – 280 US $/Mton
• 2020 – 354 US $/Mton
AAGR % (2010-2015) Exports (-9.0)%
Demand 1.4%
Imports 4.1%
AAGR % (2015-2020) Exports (-9.7)%
Demand 1.2%
Imports 4.0%
Copyright © 2011 IHS Inc. All Rights Reserved.
Maleic Anhydride Summary
77
Product Use Process Technology Conclusions
• Approximately 52% of all maleic
anhydride consumed in 2010 was for
the production of UPR.
• 1,4-Butanediol was the next largest
consumer of Maleic Anhydride with
Fumaric Acid and Lubricating Oil
Additives representing smaller
percentages.
• Essentially all maleic anhydride
(MAN) is manufactured by the
catalytic vapor-phase oxidation of
hydrocarbons, with only minor
amounts being recovered as a by-
product of phthalic anhydride
production.
• OXIDATION OF BENZENE
• OXIDATION OF N-BUTANE
• OXIDATION OF N-BUTENES
• Coproduct of phthalic anhydride (very
small production)
• Unsaturated polyester resins (UPR) will
continue to have the largest market share
and will drive refined maleic anhydride
consumption on a global scale.
• Developing regions will experience the
highest growth in MAN for UPR production
since a considerable amount of UPR goes
into infrastructure.
• Consolidation over the next six years may be
observed, smaller inefficient plant shut
downs, particularly in Central and Eastern
Europe.
• Several new plants are planned in China
during 2012-2013.
• Huntsman’s new 45 KTA MAN facility in
Geismar, Louisiana came on stream in 2009.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 2,326 (CF
Industries-Donaldsonville, LA)
• Smaller NAM Plant – 100 (Dyno
Nobel-Cheyenne, WY)
• Benzene, O2
• Butane, O2
• Butene-1 & butene-2, O2
• 2015 – 280 US $/Mton
• 2020 – 354 US $/Mton
AAGR % (2010-2015) Exports (-3.6)%
Demand 3.2%
Imports (-0.7)%
AAGR % (2015-2020) Exports (-6.0)%
Demand 2.3%
Imports (-8.0)%
Copyright © 2011 IHS Inc. All Rights Reserved.
Bisphenol-A Summary
78
Product Use Process Technology Conclusions
• Bisphenol A (BPA) is used primarily in
the production of polycarbonate resins
and epoxy resins.
• Other much less prevalent uses may
include flame retardants, unsaturated
polyester resins, polysulfone resins,
polyarylates and polyetherimides.
• Bisphenol A is manufactured by the
reaction of phenol with acetone in the
presence of an acid catalyst.
• Traditionally, commercial production
has been based on a strong acid
catalyst such as anhydrous hydrogen
chloride.
• An alternative catalyst now widely in
use is a sulfonated styrene-
divinylbenzene cation exchange resin,
which is based on Union Carbide
technology. This catalyst is preferred
over the anhydrous chloride because it
is noncorrosive and does not require
expensive waste treatment.
• By 2014, an additional 900 thousand
metric tons of BPA capacity is scheduled
to be operational.
• In the United States, Sunoco and SABIC
Innovative Plastics (at its older plant) are
thought to be using this process.
• Many years of research have shown
BPA to be safe at current exposure
levels. However, there was some
controversy regarding potential
endocrine effects caused by exposure to
BPA.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 2,326 (CF
Industries-Donaldsonville, LA)
• Smaller NAM Plant – 100 (Dyno Nobel-
Cheyenne, WY)
• Acetone, phenol
• 2015 – 280 US $/Mton
• 2020 – 354 US $/Mton
AAGR % (2010-2015) Exports (-8.6)%
Demand 2.9%
Imports 0.0%
AAGR % (2015-2020) Exports 0.0%
Demand (-0.8)%
Imports 0.0%
Copyright © 2011 IHS Inc. All Rights Reserved.
Terephthalic Acid Summary
79
Product Use Process Technology Conclusions
• More than 90% of worldwide
consumption of terephthalic acid (TPA)
is for the production of intermediate
polyethylene terephthalate (PET)
polymer.
• PET polymer, also referred to as
reactorgrade polyester or PET melt-
phase resin, is consumed primarily in
the production of polyester fibers, solid-
state (bottle-grade) resins, and
polyester film.
• Fiber applications currently command
the bulk of the world polyester market
and account for about 65% of the total
TPA consumption.
• The core technology for producing TPA
has remained the same since the
1960s—crude TPA is produced by
bromine-promoted catalytic oxidation of
p-xylene, and purified by a
hydrogenation step.
• Another technology that has attracted
renewed interest is the production of
medium-quality terephthalic acid (MTA).
• The MTA process uses a post-oxidation
system that allows for elimination of the
entire purification section of the PTA
process.
• Fast population growth, combined with
the replacement of cotton as textile raw
material, has prompted brisk demand for
polyester fibers in China and Southeast
Asia.
• In North America and Europe, TPA
demand has been driven mainly by
applications in the bottle and container
markets, where glass has been largely
replaced by lightweight PET bottles.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Plant – 2,326 (CF
Industries-Donaldsonville, LA)
• Smaller NAM Plant – 100 (Dyno Nobel-
Cheyenne, WY)
• P-xylene, acetic acid
• 2015 – 280 US $/Mton
• 2020 – 354 US $/Mton
AAGR % (2010-2015) Exports (-1.9)%
Demand 2.4%
Imports (-10.9)%
AAGR % (2015-2020) Exports (-13.5)%
Demand (-1.6)%
Imports 0.0%
Copyright © 2011 IHS Inc. All Rights Reserved.
Benzene Summary
80
Product Use Process Technology Conclusions
• Ethylbenzene which is used to produce
styrene continues to account for just
over half of benzene demand in 2011
and this has been the case since 2006.
• Combined benzene consumption of
cumene, cyclohexane and
ethylbenzene represents over 80
percent of global benzene demand in
2011.
• Benzene was originally produced as a
byproduct of coke production for the
steel industry.
• Today, benzene is primarily produced
as a by-product of refinery and steam
cracker operations.
• Other toluene conversion processes
include - toluene disproportionation
(TDP) and selective (STDP), both
produce benzene as a co-product, but
represent a small share of total supply.
• Only one process, hydrodealkylation
(HDA), produces on-purpose benzene.
• In 2011, operating rates stand at just
over 73 percent.
• The main sources of supply of benzene
continues to be reformate and pygas
which tegether account for over 70
percent of the world’s benzene
production.
• Production economics and market
pricing are such that HAD, TDP and the
STDP processes show negative ROI and
are not profitable.
• Alternatively, sulfolane extraction is
highly profitable with remaining
C6+raffinate getting co-product credit.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale NAM Extraction Plant –
710 (ExxonMobil-Baytown, TX)
• Smaller NAM Extraction Plant – 52
(Shell Canada - Sarnia, ONT)
• Toluene, H2 (TDP, HDA)
• C6+raffinate stream (extraction)
• 2015 – 935 US $/Mton (Extraction)
• 2015 – 1,300 US $/Mton (HDA)
• 2020 – 1,100 US $/Mton (Extraction)
• 2020 – 1,475 US $/Mton (HDA)
AAGR % (2010-2015) Exports (-4.3)%
Demand 1.2%
Imports 2.6%
AAGR % (2015-2020) Exports (-1.3)%
Demand (-0.3)%
Imports 0.4%
Copyright © 2011 IHS Inc. All Rights Reserved.
MTO Process Summary
81
Process Technology Conclusions
• Propylene can be produced from methanol in either methanol to olefins (MTO)
facilities, which produce a mixture of ethylene and propylene, or methanol to
propylene (MTP) units which produce predominantly propylene.
• Currently the only commercial MTO or MTP facilities are located in China using coal
as the feedstock.
• A large amount of methanol is required to make a world-scale ethylene and/or
propylene plant. MTO, which produces from 30 to 45 weight percent of propylene
and a similar level of ethylene.
• Depending on the production mode, MTP produces up to 71 weight percent
propylene.
• Lurgi licenses MTP technology and is the only commercially-proven process,
employed in two completed MTP units, as well as a third planned unit, all in China.
• JGC and Mitsubishi jointly developed DTP (Dominant Technology for Propylene) for
converting dimethyl ether (DME) into propylene. This technology has not been put
into commercial practice, but could be considered a potential competitor to Lurgi
MTP since a reactor for converting methanol into DME can be included as part of the
design.
• With the abundance of olefins readily
available in Alberta already available at
advantaged costs, the methanol used as
an intermediate or primary feedstock
may be better suited or profitable without
conversion into olefins.
• The processes are largely unproven or
are only in operation at a few plants.
• With the emergence of shale-gas into the
market in coming years, the potential for
MTO to be profitable are in question.
• Selection of process technology (MTP)
that maximizes propylene production
may prove to be more profitable due to
shift to lighter feedstock resulting from
increased shale gas dependence.
World Scale Plant -KMTA- Raw Materials Production Cost $/Mton
• Large Scale Eth Plant – 300 (Yili
Meidianhua-Xinjiang, China)
• Large Scale Prop Plant – 500 (Shenhua
Ningmei-Ningdong, China)
• Methanol (mixed butylenes/C5+
hydrocarbon feed)
• 2011 – 1,150 US $/Mton (Eth/Prop Mix)