Ethane has potential in natural gas imports from China

Ethane production has potential through imports of liquefied natural gas (LNG) into China, concludes an analysis by IHS Markit.

An alternative option for Chinese ethylene producers could be to extract ethane from imported LNG.

China’s LNG industry has developed rapidly in recent years, increasing import capacity from zero in 2005 to around 74 million tonnes per year (MMtpa) by the end of 2019.

That year, China’s liquefied natural gas imports totaled 60.2 MMt, with volumes coming from no fewer than 18 different countries, according to IHS Markit.

However, not all LNG streams have the same ethane. For example, Nigeria’s LNG is relatively rich in liquefied natural gas, producing approximately 3.2 gallons of ethane per 1,000 cubic feet of natural gas.

Based on this and other data (e.g. recovery rates), IHS Markit estimates that approximately 55,200 b / d of ethane could be extracted from Nigeria’s current import volume into China, equivalent to 60% of what a cracker consumes. of ethane on a large scale.

Natural gas

Recovering and making ethane available as a feedstock from imported liquefied natural gas is complicated and an economic and commercial challenge.

To achieve full potential, the analysis indicates, there needs to be full collaboration and a global business model involving the entire chain.

Ethylene is one of the most important links in the hydrocarbon value chain. It is used in the production of countless chemicals, fibers, and plastics, especially polyethylene.

As a large and growing petrochemical center, China is a major consumer of ethylene. It is also one of the largest producers of ethylene in the world, but remains a net importer of this critical raw material.

Unsurprisingly, China’s growing ethylene demand has spurred a corresponding boom in domestic ethylene production capacity.

Ethane in China

Until now, the vast majority of this capacity has been based on naphtha (a heavier liquid hydrocarbon), diesel or coal as feedstock.

This is in contrast to the ethylene industries in North America and the Middle East, which are overwhelmingly dependent on ethane as a feedstock.

The use of ethane as a feedstock for ethylene production has numerous advantages, both in terms of initial investment cost per unit and fraction of ethylene yield. The problem in China has been ensuring an adequate supply of ethane, adds IHS Markit.

Unlike North America and the Middle East, China does not have a significant local supply of ethane. Nor is it easy to trade in pure ethane internationally; doing so requires specialized import and export facilities as well as specially designed ethane tankers.

Long-term supply contracts (more than 10 years) are therefore a necessity for any initial investment to pay off.

Additionally, the United States is currently the world’s leading source of exportable pure ethane, which is potentially problematic from a security of supply perspective.

However, investment in Chinese ethylene plants supplied by US-sourced ethane has accelerated in recent years. The SP Chemicals facility went online in late 2019, the Zhejiang Satellite Petrochemical Phase I project should start operations in early 2021, and several others are planned.