Between 2014 and 2018, US petrochemical capacity expansion projects are projected to increase domestic demand for ethane by nearly 600,000 bbl/d and propane by nearly 200,000 bbl/d. This growing demand is in response to growing domestic hydrocarbon gas liquids (HGL) supply and favorable petrochemical feedstock prices in the United States relative to the international market.
The petrochemical industry uses hydrocarbon feedstocks such as ethane and propane to create plastics, fibers, resins, and a wide range of other consumer and industrial materials. Ethylene-cracking plants most commonly process either ethane or naphtha to produce ethylene, an important compound used in the manufacture of plastics and other industrial materials. Although naphtha, a hydrocarbon that contains mostly molecules with 5–12 carbon atoms, is one of the lighter components produced by refining crude oil, it is a much heavier feedstock than ethane or propane, which respectively consist of hydrocarbon molecules with 2 or 3 carbon atoms. All ethylene projects currently planned for the US are designed to consume light feed, predominantly ethane, for the production of ethylene.
Most announcements of capacity expansions, feedstock changes, or new plant construction were made between early 2011 and mid-2013, when strong growth in natural gas production from shale provided the US with a significant increase in the availability of ethane. Decreasing ethane prices during this period increased the cracking spread (the margin received from processing ethane into ethylene), spurring the rise in new investment. More recently, ethylene-naphtha cracking spreads have also risen in response to decreased naphtha prices.
The recent rise in US natural gas production has also increased the supply of propane, which in turn decreased US propane prices and increased propylene-propane price spreads in the US. As with ethylene cracking, this has led to plans to increase the capacity for processing propane into propylene at propane dehydrogenation (PDH) plants.
Image from EIA