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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.

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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

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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.


Contents

Part A – Product /Project Ranking Analysis

3


Contents

Alberta Resources & Feedstock Overview

Regional Advantages/Disadvantages

Derivative Ranking Parameters

Company Ranking Parameters

Project Scope & Approach

Report Materials Overview

4

Next Steps



• 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


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


Contents







7

Next Steps


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


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


Contents






NGL’s (C3 to C5+)

Crude Oil / Crude Bitumen

Natural Gas / Ethane

10

Off-Gasses



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




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


Alberta Feedstock Future Reserves &

Production

12

Sources: ERCB ST-98 Report and GoA


*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


Contents








14

Off-Gasses


NGL’s (C3 to C5+)


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.


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.


Contents








20

Off-Gasses


NGL’s (C3 to C5+)


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).


Contents






Propane/Butane

Crude Oil/Oil Sands


24

Off-Gasses


NGL’s (C3 to C5+)



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.



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.



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.


Contents






Propane/Butane

Crude Oil/Oil Sands


28

Off-Gasses


NGL’s (C3 to C5+)



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.


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.


Contents






Crude Oil/Oil Sands


31

Off-Gasses



NGL’s (C3 to C5+)


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.


Contents






Crude Oil/Oil Sands


33

Off-Gasses



NGL’s (C3 to C5+)


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



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.


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


Matrix Weight Percentage

1. Value Chain

2. Feedstock

3. Derivative Market Outlook

4. Technology

5. Operations

6. Financing

10%

25%

40%

5%

15%

5%



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).


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%


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.


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


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


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


Appendix and Supporting Data


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


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


% AAGR

2015-2020

% AAGR

2010-20152015

2020% AAGR

2010-2015

% AAGR

2015-2020

2010Units

C3 Value Chain – Supply

& Demand Outlook


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


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


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


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


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%


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


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


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%


Ammonia Summary Contd.

53


• 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.


Acetic Acid Summary

54


• 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.


• 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)%


Acetic Acid Summary Contd.

55


• 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.


Vinyl Acetate Summary

56


• 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.


• 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%


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 - %


Isopropanol Summary

58


• 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.



(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%


Propylene Oxide Summary

59


• 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.


• 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%


Acrylonitrile Summary

60


• 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.



(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)%


Polypropylene Resin Summary

61


• 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.



(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)%


Acrylic Acid Summary

62


• 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.



(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%


Propylene Glycol Summary

63


• 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.



(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%


n-Butyl Acrylate (Acrylate Esters) Summary

64


• 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.



(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 - %


Methanol Summary

65


• 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.



(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%


Formaldehyde Summary

66


• 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.



(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 - %


Polyacetal (Acetal Resins) Summary

67


• 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.


• 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%


Ammonium Nitrate Summary

68


• 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.


• 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)%


Dimethyl Ether Summary

69


• 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.


• 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 - %


Urea Summary

70


• 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.



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%


Polyethylene Resin Summary

71


• 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.


• Large Scale NAM Plant – 2,326 (CF Industries-

Donaldsonville, LA)


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)%


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.


Ethylene Oxide Summary

73


• 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.





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 - %


Ethylene Glycol Summary

74


• 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.





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)%


Phenol Summary

75


• 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.





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%


Butanediol Summary

76


• 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.





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%


Maleic Anhydride Summary

77


• 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.




• 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)%


Bisphenol-A Summary

78


• 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.





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%


Terephthalic Acid Summary

79


• 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.





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%


Benzene Summary

80


• 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.


• 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%


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.


• 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)

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