Petrochemical Industry: Role of Innovations and Feedstock Availability

Bipin VoraConsultant, Former UOP Fellow

Lecture organised by PetroFedand

Lovraj Kumar Memorial Trust

AtIndianOil Institute of Petroleum Management,

Gurgaon, India on March 6, 2008

Vora International Process (VIP) Corp

Outline Introduction Technology

Innovations and Feedstocks Coal & Natural Gas Aromatics Olefins

SummaryVora International Process (VIP) Corp

PetrochemicalsPetrochemicalsThere are three basic raw materials that make up major part of Petrochemical industry

1. Synthesis Gas from Coal or Natural GasHydrogen, Ammonia, Urea, Methanol, GTL/CTL and derivatives

2. AromaticsBenzene, Toluene and Xylenes (BTX) and its derivatives

3. OlefinsEthylene, Propylene and its derivatives

Outline Introduction Technology

Innovations and Feedstocks Coal & Natural Gas Aromatics Olefins

Summary

Petrochemicals:MethanePetrochemicals:Methane DerivativesDerivatives

CoalCoal Gasification

NaturalGas

LNG

FT

Methanol

Synthesis Gas

MTO

Ethylene Propylene

GTL Fuel

Fuel

Fuel

Electricity

Steam

Reforming, Partial Ox. MTG

Liquid Fuel

Hydrogen Ammonia Urea

Formaldehyde Acetic acid MTBE & Other Chemicals

DME Fuel

Vora International Process (VIP) Corp

Coal & Natural Gas New investments and

production for some products shifting where lower cost natural Gas is available

With high crude oil prices Coal is coming back

Alternative Feedstocks for petrochemicals and polymersVol. 2, Issue 2 January 28,2008, A weekly publication

1. PT Bumi Resources interested coal liquification plant in Indonesia

2. Reliance Industries interested in CTL plant in India3. Gail planning coal project in China4. Yankuang Groups CTL plant approved in China5. China Coal to fund chemical projects from IPO6. Sasol plans to build indirect CTL plant in China7. Malaysia plans integrated gas-petrochemical project8. Itera and Uralkhimpst to build 600 KTA methanol plant

in Rusiia9. Shell proposes LNG/GTL project in Egypt10. Mitsubishi gas Chemical kicks off 850 kta methanol

plant in China11. Dow invests in direct methane utilization technology

There are 5 to 10 weekly news items on coal and natural gas upgrading

Synthesis Gas :Synthesis Gas :-- Key to Conversion of Key to Conversion of Natural gas or CoalNatural gas or Coal

For Coal or natural For Coal or natural gas to chemicals, gas to chemicals, synthesis gas is the synthesis gas is the key intermediatekey intermediate

With continuous With continuous incremental incremental improvements, basic improvements, basic technology is technology is unchangedunchanged

Natural GasNatural GasCoal

Steam Reforming,Partial Ox

Synthesis Gas

LNGElectricity

Gasification

Synthesis Gas :Synthesis Gas :-- Key to Conversion of Key to Conversion of Natural gas or CoalNatural gas or Coal

Synthesis Gas

Methanol

Fisher-Tropsch

GTL

DME

MTO Ethylene, Propylene

MTG Gasoline

Acetic Acid Formaldehyde

MTBE Chemicals

Fuel

Hydrogen Ammonia

Urea

Linear paraffins

Wax

Liquid Fuel

Fuel

UOP 4628I-34

Coal & Natural gas (Methane)Coal & Natural gas (Methane)

Pre-1950s Coal based petrochemicals

In 1955 US Benzene production 70 % from Coal and 30% from Petroleum

Late 1950s - With Refining capacity increasing and development of catalytic reforming technology, naphtha becomes primary feedstock

Methanol Plant ConstructionMethanol Plant Construction1980s1980s 1990s1990s 20002000--20082008

NANA--USA & CanadaUSA & Canada VenezuelaVenezuela Trinidad & TobagoTrinidad & TobagoRussiaRussia--SiberiaSiberia NorwayNorway ChileChileSaudi ArabiaSaudi Arabia IranIran IranIranMalaysiaMalaysia Qatar, Qatar, QatarQatarUkraineUkraine Saudi ArabiaSaudi Arabia OmanOman

IndonesiaIndonesia

LibyaLibya TrinidadTrinidad ChinaChina--CoalCoalNew ZealandNew Zealand LibyaLibyaIndonesiaIndonesia ChileChile

MalaysiaMalaysia

Pre 1980 production mostly in NA, WE and Japan Post 1980 new Construction mostly at advantaged natural gas sites

MethanolMethanol--SummarySummary Industry shifted to locations where cost

of natural gas is lower

Single train production capacity increased from 2500 MTD to 5000 MTD, lowering cost of production per ton of methanol

One or more new plants under design construction with capacity of up to 10000 MTD

Outline Introduction Technology

Innovations and Feedstocks Coal & Natural Gas Aromatics Olefins

Summary

Aromatics (BTX): Raw Material &TechnologyAromatics (BTX): Raw Material &Technology 1950s: Development of liquid-liquid solvent

extraction technology accelerates production and uses of BTX

1952 Extraction by EG; Dow Chemical 1960s Extraction by Sulfolane; Shell

1960s: Adsorptive separation of components, employing molecular sieves, by class and molecular shape developed

1964: separation of normal paraffins from kerosene accelerated production of linear alkylbenzene (LAB)

Until 1970 paraxylene produced via Crystallization 1971 Adsorptive Separation, UOP Parex

Commercialized for pX production

Petrochemicals:BTXPetrochemicals:BTX DerivativesDerivativesBenzeneBenzene

2007: 38 mm MTA2007: 38 mm MTATolueneToluene

2007: 36 mm MTA2007: 36 mm MTAXyleneXylene

2007: 33 mm MTA 2007: 33 mm MTA EBEB--StyreneStyrene Toluene Toluene diisocynatediisocynate pXpX--PTAPTA--PolyesterPolyester

CumeneCumene--PhenolPhenol--PhenolicPhenolic resinsresins

Motor FuelMotor Fuel--Octane Octane EnhancementEnhancement

oXoX--PhathalicPhathalic anhydrideanhydride

LABLAB SolventSolvent mXmX--isophthalicisophthalic acidacid

CyclohexaneCyclohexane Conversion to Conversion to BzBz--pXpX

CyclohexnolCyclohexnolCyclohexanoneCyclohexanone

oX/mXoX/mX Conversion to Conversion to pXpX

CaprolectumCaprolectum--NylonNylon

AdipicacidAdipicacid--NylonNylon

Aromatics (BTX)Aromatics (BTX)

Pre-1950s Coal based petrochemicals In 1955 US Benzene production 70 % from

Coal and 30% from Petroleum

1950s - With Refining capacity increasing and development of catalytic reforming technology, naphtha becomes primary feedstock

Two ways of deriving aromatics from naphtha

Naphtha reforming Pyrolysis of Naphtha

Crystallizer Capacity

Parex

02468

1012141618202224

C

a

p

a

c

i

t

y

,

M

T

A

(

m

i

l

l

i

o

n

s

)

1970 1975 1980 1985 1990 1995 2000

.

CrystallizationOther

Increasing market share by adsorptive Increasing market share by adsorptive separation technologyseparation technology

Worldwide Worldwide pp--Xylene Production CapacityXylene Production Capacity

Source: UOP

UOP UOP ParexParexRR UnitsUnitsIncreasing single train production CapacityIncreasing single train production Capacity

00

200200

400400

600600

800800

10001000

12001200

14001400

19701970 19751975 19801980 19851985 19901990 19951995 20002000 20052005

p

p

-

-

X

y

l

e

n

e

,

K

M

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A

X

y

l

e

n

e

,

K

M

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A

20102010

Parex Units Under ConstructionParex Units Under ConstructionParex Units On-StreamParex Units On-Stream

November 2006November 2006

yy 77 Parex units had been brought on stream77 Parex units had been brought on streamyy 14 Parex units under construction14 Parex units under construction

Source: UOP

BenzeneBenzene-- ParaxyleneParaxyleneSummarySummary

Sulfolane continues to be preferred solvent for aromatics extraction

Adsorptive separation is preferred technology for paraxylene

No radical shift foreseen in use of raw material or technology, Naphtha remains dominant raw material

Linear Linear AlkylbenzeneAlkylbenzene (LAB)(LAB)3.3 mm MTA production in 20073.3 mm MTA production in 2007

Kerosene n- paraffins Adsorptive separation

n-paraffins linear olefins + H2 Catalytic dehydrogenation

Linear olefins + Benzene LAB HF Acid or Solid acid Catalysis

Continuous Renewal of LAB TechnologiesContinuous Renewal of LAB Technologies

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1965 1970 1975 1980 1985 1990 1995 2000 2005Year

C

a

p

a

c

i

t

y

,

K

M

T

A

UOP DetalUOP HFOther AlCl3/HFDDB

Source: UOP

Linear Linear AlkylbenzeneAlkylbenzene (LAB)(LAB)SummarySummary

Use of DDB began in 1940s, though superior in detergency, it is phased out due to poor biodegradability

All future growth of LAB is expected to use alkylation technology employing solid acid catalyst

Kerosene based paraffins may face competition from GTL based paraffins in future

Outline Introduction Technology

Innovations and Feedstocks Coal & Natural Gas Aromatics Olefins

Summary

Petrochemicals:OlefinsPetrochemicals:Olefins DerivativesDerivatives

EthyleneEthylene2007: 120 mm MTA2007: 120 mm MTA

PropylenePropylene2007: 70 mm MTA2007: 70 mm MTA

ButadieneButadiene2007: 10 mm MTA 2007: 10 mm MTA

PolyethylenePolyethylene PolypropylenePolypropylene Polymers and copolymers Polymers and copolymers with styrene and ACNwith styrene and ACN

EBEB--StyreneStyrene AcrylonitrileAcrylonitrile ABSABS

Ethylene OxideEthylene Oxide--Ethylene glycols,Ethylene glycols,

CumeneCumene--PhenolPhenol nButenenButene--MEKMEK

EDC, VCMEDC, VCM Propylene OxidePropylene Oxide IsobuteneIsobutene--TBATBA

Vinyl acetateVinyl acetate EpichlorohydrinEpichlorohydrin, , GlycerolGlycerol

DiisobuteneDiisobutene, , triisobutenetriisobutene& & polyisobutenepolyisobutene

Ethyl alcoholEthyl alcoholacetaldehydeacetaldehyde

NonylphenolNonylphenolTetramerTetramer

IsobuteneIsobutene--MTBEMTBE

Motor Fuel Motor Fuel AlkylateAlkylate

Ethylene: Ethylene: Raw Material &TechnologyRaw Material &TechnologyRaw Materials Technology EthanePropane, butane Thermal PyrolysisNaphtha, gas oil

Incremental innovations in thermal cracking and furnace design technology have allowed single train ethylene capacity to exceed 1 mm MT/Yr

Natural gas based or coal based Methanol toOlefins technology is on horizon

EthyleneEthylene Until 1980 primary production in NA, WE and Japan

Choice of feedstock depended on region Feedstock USA WE JapanYear 79 91 06 79 91 79 91C2-C4 65 75 70 4 8 10 2Naphtha-GO 35 25 30 96 92 90 98

NA more ethane based WE and Japan Naphtha based

Expansion of ethylene production in ME promotes more ethane based crackers

Middle east Ethylene CapacityMiddle east Ethylene CapacityYearYear MTAMTA20002000 7720042004 111120082008 181820122012 3535

Source: CMAI- 2007 World Petroch. Conf.

Ethylene produced from Ethane in ME has on average 250 to 400 $/MT production cost advantage over NA/WE Europe production

Ethylene Supply Ethylene Supply Global ViewGlobal View

Gas Oil5%

Others2%

Propane

8% Butane

4%

Ethane29%

Naphtha

52%

Gas Oil5%

Others2%

Propane

8% Butane

4%

Ethane29%

Naphtha

52%

2006 Supply2006 Supply(Steam Crackers)(Steam Crackers)

Incremental Supply

100

120

140

160

180

2

0

0

6

2

0

0

8

2

0

1

0

2

0

1

2

2

0

1

4

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Non-ethaneEthaneCurrent BaseDemand

Incremental Supply

100

120

140

160

180

2

0

0

6

2

0

0

8

2

0

1

0

2

0

1

2

2

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1

4

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Non-ethaneEthaneCurrent BaseDemand

Source: CMAI 2007Source: CMAI 2007

47%

UOP 4585F-04

53%

Production from ethane crackers will increase Non-ethane sources of ethylene are needed to

meet the demand

Production from ethane crackers will increaseProduction from ethane crackers will increase NonNon--ethane sources of ethylene are needed to ethane sources of ethylene are needed to

meet the demandmeet the demand

Other2%PDH3%

Metath.2%

OC0.3%

FCC31%

Steam Crackers

62%

Propylene Supply Propylene Supply Global ViewGlobal View2006 Supply2006 Supply

(Polymer & Chemical Grades(Polymer & Chemical Grades)

Source: CMAI 2007Source: CMAI 2007

Incremental Supply

60

70

80

90

100

110

2

0

0

6

2

0

0

8

2

0

1

0

2

0

1

2

2

0

1

4

m

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On-purpose propyleneFCC RefineriesSteam CrackersCurrent BaseDemand

42%

14%43%

Substantially more propylene will come from on-purpose propylene technologies

Substantially more propylene will come from Substantially more propylene will come from onon--purpose propylenepurpose propylene technologiestechnologies

PDH = Propane Dehydrogenation, Metath. = Metathesis, OC = Olefin Cracking, MTO = Methanol-to-Olefins

On-purpose propylene = PDH + Metath. + OC + MTOUOP 4585F-05

PDH Capacity GrowthPDH Capacity Growth

0.0

1.0

2.0

3.0

4.0

5.0

1990 1994 1998 2002 2006 2010

C

a

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,

M

M

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A

0

100

200

300

400

500

600

U

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A

Installed CapacitySize of New Units

0.0

1.0

2.0

3.0

4.0

5.0

1990 1994 1998 2002 2006 2010

C

a

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M

M

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100

200

300

400

500

600

U

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Installed CapacitySize of New Units

UOP 4824D-06

ZeoliteZeolite--catalyzed catalyzed MeOHMeOH conversionconversion

1975 1975 Mobil Oil discloses ZSMMobil Oil discloses ZSM--5 catalyst for 5 catalyst for conversion of methanol to gasoline (MTG)conversion of methanol to gasoline (MTG)

2 CH3OH CH3-O-CH3-H2O

+H2O-H2O

IsoparaffinsAromaticsC6+ olefins

C2 - C5 olefins

Chang, Silvestri, and Smith, US 3894103 and 3928483

ZeoliteZeolite--catalyzed catalyzed MeOHMeOH conversionconversion

1977 1977 Mobil Oil discloses the use of various Mobil Oil discloses the use of various small pore small pore zeoliteszeolites for converting methanol to for converting methanol to olefins (MTO)olefins (MTO) CC22CC44 olefin concentration < 60% at 100% conversionolefin concentration < 60% at 100% conversion

Olefin fraction increases as conversion decreasesOlefin fraction increases as conversion decreases

Chang, Lang, and Silvestri, US 4062905

ZeoliteZeolite--catalyzed catalyzed MeOHMeOH conversionconversion 1982 1982 Edie Edie FlanigenFlanigen and her associates at and her associates at

Union Carbide announce discovery of Union Carbide announce discovery of silicosilicoaluminum aluminum phospatephospate molecular sieves. molecular sieves. FlanigenFlanigenand her group became part of UOP upon and her group became part of UOP upon merger of CAPS Division of UCC with UOPmerger of CAPS Division of UCC with UOP

SAPOSAPO--34 shows remarkable selectivity for 34 shows remarkable selectivity for conversion of methanol to light olefinsconversion of methanol to light olefins

CC22CC44 olefin concentration < 85% at 100% olefin concentration < 85% at 100% conversionconversion

Structures of SAPOStructures of SAPO--34 and ZSM34 and ZSM--55

H O

(Al-O)3Si Al(O-P)3

H O

(Al-O)3Si Al(O-P)3

H O

(Si/Al-O)3Si Al(O-Si)3

H O

(Si/Al-O)3Si Al(O-Si)3

Small PoreWeak Acid Sites

Medium PoreStrong Acid Sites

3.8 5.5

Source: UOP

Product Yields from Product Yields from MeOHMeOH::SAPOSAPO--34 and ZSM34 and ZSM--5 Catalysts5 Catalysts

0

10

20

30

40

50%

Y

i

e

l

d

C2= C3= C4= C5+ C1-C5Paraffins

Coke +COx

SAPO-34ZSM-5

SAPO-34 Catalyst: Once through C2= + C3= yield of 80%ZSM-5 Catalyst: Once through C2= + C3= yield of 50%

Source: UOP

MTO Capacity GrowthMTO Capacity Growth

0.0

1.0

2.0

3.0

4.0

5.0

1996 2000 2004 2008 2012

C

a

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200

400

600

800

1000

1200

1400

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k

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Installed CapacitySize of New Units

0.0

1.0

2.0

3.0

4.0

5.0

1996 2000 2004 2008 2012

C

a

p

a

c

i

t

y

,

M

M

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A

0

200

400

600

800

1000

1200

1400

U

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A

Installed CapacitySize of New Units

UOP 4824D-06

Patent Activity in USA

Syngas Conversion

0102030405060708090

100

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

Year

#

U

S

P

a

t

e

n

t

s

Syngas to MeOHSyngas to C2+ alcoholSyngas to FT LiquidMTO + MTG

EthyleneEthylene--PropylenePropyleneSummarySummary

ME becomes a major player: China, India growing as well

Advantaged ethane supply in ME is limited Coal or natural gas based Methanol will be a new

raw material source for ethylene and propylene Naphtha cracker and refinery FCC units will

continue to be major source for propylene Advantaged propane feed stock will promote

PDH at selective locations In future, natural gas based MTO projects at

advantaged NG locations (ME, USSR..) may give tough competition to naphtha based projects.

Value of Products Produced from Value of Products Produced from 1MM BTU of Natural Gas1MM BTU of Natural Gas

0

2

4

6

8

10

12

Natural Gas

LNG Gasoline Methanol Olefins Polymers

V

a

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f

P

r

o

d

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s

,

$

Minimum of $4 per mmBTU differential is needed for NG to delivered LNG

Stranded Gas Monetization Options(for world-scale capacities with $ 2 to 6 billion

investment)30 Years

Consumptionbillion SCM

Worldscaleeconomic capacity

Gas neededmm SCMD

Monetizationroute

5 MM MTALNG 22.2 222LNG

100,000 BPDF-T LiquidsGTL 26.8 268

1,000,000 MTAPE + PPGTP 7.5 75

LNG and GTL are suitable for only the largest gas fieldsGTP can be implemented on many more gas fields

WorldWorlds gas fields by sizes gas fields by size

Number of Fields0%

10%20%30%40%50%60%70%80%90%

100%%

o

f

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l

d

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s

g

a

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s

50 - 500 Tcf5-50 Tcf1 - 5 Tcf0.5 - 1 Tcf0.25 - 0.5 Tcf0.1 - 0.25 Tcf0.01 - 0.1 Tcf< 0.01 Tcf

Large Fields =13%

Total = 4,448 Fields Source: Oil & Gas Journal

Why is Methanol Attractive?Why is Methanol Attractive? Readily synthesized on a large Readily synthesized on a large

scale (current largest unit is 5000 scale (current largest unit is 5000 MTD, 10,000 MTD under design)MTD, 10,000 MTD under design) Transportable liquid fuelTransportable liquid fuel Has high energy densityHas high energy density

HH2 2 gasgas

Methane Methane gasgas

DME DME gasgas

Methanol Methanol liquidliquid

Naphtha Naphtha liquidliquid

3.97x103.97x1066 8.2x108.2x1066142001420024002400Kcal/MKcal/M33

@ 1 atm. @ 1 atm. 25C25C

86008600

LNG Transportation Cost about $150-200MTMethanol Transportation Cost $10-20/MT

Advances in Methanol TechnologyAdvances in Methanol Technology Significant advances Significant advances

have taken place in have taken place in mega methanol mega methanol projectsprojectsFirst 5000 MTD First 5000 MTD methanol plant in methanol plant in operation in Trinidad operation in Trinidad since July 2004since July 20047500 MTD plant for 7500 MTD plant for Nigeria in designNigeria in design10 to 15000 MTD 10 to 15000 MTD plants for Qatar in plants for Qatar in planningplanning

Cost of methanol Cost of methanol production has come production has come down significantlydown significantly

100 $/MT MeOH = 229 $/MT HC Equiv.150 $/MT MeOH = 343 $/MT HC Equiv.

0

50

100

150

200

250

300

Industrial location

Stranded gas location

Mega-scalemethanol

Mega-scaleMethanol

Shipping15% ROCDepreciationFixed costsConsumablesNat. gas

C

o

s

t

,

$

/

M

T

m

e

t

h

a

n

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l

0

50

100

150

200

250

300

Industrial location

Stranded gas location

Mega-scalemethanol

Mega-scaleMethanol

Shipping15% ROCDepreciationFixed costsConsumablesNat. gas

C

o

s

t

,

$

/

M

T

m

e

t

h

a

n

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Nat. gas Price, $/MM Btu $5.00 $0.75 $0.50 $2.00Capacity, MT/D 1500 3000 7500 7500

269

121

85

136

Methanol Plant Closure

19901990--20042004 20052005--2007 Closure2007 Closure

Japan 100%Japan 100% Beaumont, USA 850Beaumont, USA 850

Norway 100%Norway 100% Celanese, Bishop, USA 500Celanese, Bishop, USA 500

Korea 100%Korea 100% Celanese, Clear Lake, USA 600Celanese, Clear Lake, USA 600Italy 100%Italy 100% MethanexMethanex, , KitimatKitimat, Canada 520, Canada 520

Spain 100%Spain 100% Edmonton, Canada 800Edmonton, Canada 800

France 100%France 100% PemexPemex, Mexico 180, Mexico 180USA Part of itUSA Part of it MethanorMethanor, Netherland 1000, Netherland 1000

Canada Part of itCanada Part of it MethanexMethanex, New Zealand , New Zealand 700700Total 5150Total 5150

Source: 2007 CMAI World Methanol Conf.

Why is Methanol Attractive?Why is Methanol Attractive?

NG to LNG Delivered C efficiency about 85-90%

NG to Methanol C efficiency about 70-80%

LNG Transportation Cost about $150-200MT

Methanol Transportation Cost $10-20/MT

Gas to Polymer/Olefin ScenariosGas to Polymer/Olefin Scenarios

Polyolefin Markets

Remote Gas Production

Methanol PlantMTO Plant

Polyolefin Plant

Integrated GTPMethanol Plant

MTO PlantPolyolefin Plant

Segregated GTP

Patent Activity in USA

Syngas Conversion

0102030405060708090

100

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

Year

#

U

S

P

a

t

e

n

t

s

Syngas to MeOHSyngas to C2+ alcoholSyngas to FT LiquidMTO + MTG

Overall SummaryOverall Summary

New application for production of light olefins will accelerate growth

Significant Patent activity for Methanol to Olefins

Though research continues in direct conversion of methane, no breakthrough on horizon

Overall SummaryOverall Summary Time and time again, technology breakthrough has made

major impact on industry.

Industry always looks at availability of lower cost raw material or shifts to where they are

No major changes expected in BTX or LAB production technologies

As happened to the methanol industry, Olefins industry is poised for another change to come

Natural gas based ethylene and propylene via MTO will dominate future new capacity

Methanol will become a bigger and more important industry

AcknowledgementAcknowledgement

My thanks to UOP and UOP colleagues for providing me updates on UOP processes

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