Petrochemical demand to continue to drive gas consumption – bic magazine 93 gas near me

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In contrast to energy demand, global petrochemical demand is growing at rates well in excess of economic growth rates. The shale-derived ethane supplies are feeding a boom in petrochemical investment in North America, and methane-based technologies are now competing with traditional sources of basic petrochemicals.

The key trends driving this growth are innovation and upstream technology, rapid growth in horizontal drilling and multistage fracturing, commented Blake Eskew, vice president, oil markets, midstream, downstream and chemicals, IHS Markit, at the recent CERAWeek by IHS Markit.

From 2000-2017, U.S. gas production grew about 40 percent, making it the largest gas producer in the world, and will increase production more than any other country over the next five years, according to the International Energy Agency. U.S. gas production will grow by nearly 3 percent per year, adding around 140 billion cubic meters (bcm) by 2022. More than half of this increase will turn into LNG for exports. Another 40 bcm is to meet demand growth, and the remainder is pipeline exports or substitutes for Canadian imports.

"About 7.5 percent of global gas production on a wellhead basis depends on the petrochemical market," Eskew added. "So it’s bigger than Africa and South America. And if you look at the next 10 years, that share that goes to the petrochemicals increases to about 16 percent."

While demand for petrochemicals grows at a multiple above GDP growth rates, North America will experience a large share of the global capacity expansion, IHS Markit reported. With global petrochemical capacity in 2017 at 610 million metric tons, North America‘s installed capacity is 90 million metric tons, representing 15 percent of the world’s capacity. On the horizon of the next decade, North America will construct 25 percent of the new capacity needed worldwide.

During the shale gas revolution, many chemical operators began converting their crackers, debottlenecking them to maximize the capability to consume ethane. This mindset created a wave of U.S. cracker and petrochemical construction. In this new wave, companies are giving projects more scrutiny to ensure they are feasible.

"The competitive position has changed, and anyone that’s building a cracker can’t only focus on the feedstock availability," stated Skip Teel, executive vice president of olefins for Westlake Chemical Corp. "You need to make sure that you understand what the price of oil is and advocate an outlook on the price of oil."

As inexpensive natural gas allows businesses to use it as a commodity to turn into commercial goods, the rapid succession of expansion projects along the Gulf Coast will continue until 2020. The American Chemistry Council counts 243 announced projects with a cumulative investment of $147 billion from 2010-2023. Global chemical demand is expected to double from 2000-2040.

As for LNG exports, the U.S. has created an upheaval of the energy sector. From 2016-2020, the U.S. will account for about half of the 20 Bcf/d of new export capacity worldwide. The U.S. is set to become one of the largest producers, replacing natural gas liquids out of the Middle East.

"That is an amazing thing that we are witnessing today: the ability to get propane and ethane from the United States cost effectively and then land it in China, land it in India at a competitive cost," remarked James Rekoske, vice president and chief technology officer, Honeywell UOP.

Thus far, Cove Point is the second U.S. LNG export terminal to come on line. Dominion Energy shipped its first LNG cargo from its $4 billion Cove Point export terminal in Maryland, and a handful of export terminals are in line to follow suit.