{"id":1390,"date":"2014-11-21T09:07:07","date_gmt":"2014-11-21T15:07:07","guid":{"rendered":"https:\/\/allenergyconsulting.com\/blog\/?p=1390"},"modified":"2014-11-21T09:15:24","modified_gmt":"2014-11-21T15:15:24","slug":"splitting-the-profit-condensate-splitters-under-pressure","status":"publish","type":"post","link":"https:\/\/allenergyconsulting.com\/blog\/2014\/11\/21\/splitting-the-profit-condensate-splitters-under-pressure\/","title":{"rendered":"Splitting the Profit \u2013 Condensate Splitters Under Pressure"},"content":{"rendered":"

As I noted in the Condensate Economics Explained<\/a> this summer, condensate splitters will not be a sustainable solution to the condensate flood in the US by itself.\u00a0\u00a0 The recent article by RBN indirectly supports this claim<\/a>.\u00a0 RBN expects very high natural gas liquids (NGL) production. \u00a0\u00a0The problem child in NGL is ethane.\u00a0\u00a0 Ethane, because of its unique property relative to propane, butane, and pentanes plus, requires much more effort to liquefy.\u00a0\u00a0 Therefore, often ethane is left in the gas stream (rejected) versus extracting and supplying it to the petchem industry.\u00a0 However, only so much ethane can be left in the dry gas stream before it would fail to meet pipeline specifications.<\/p>\n

With ethane falling to the lowest level ratio in decades to natural gas, there is a large incentive to go ahead and leave as much as one can in the dry gas stream.\u00a0\u00a0 As also noted by RBN, there is just so much NGL that ethane will easily exceed the current demand levels leaving prices to likely free fall in certain regions.\u00a0\u00a0 This will result in petchem plant demand which brings us back to Condensate splitters.\u00a0\u00a0 The yield of condensate splitters is mainly Naphtha.\u00a0\u00a0 Naphtha is used by many petchem plants.\u00a0\u00a0 There exist many chemical plants which can take multiple feedstocks to produce the same product.\u00a0 The driving products of the petchem industry are known as Olefins (CnH2n) \u2013 a hydrocarbon with one double bond carbon and single bonds elsewhere \u2013 aka Alkenes (sorry about being so nerdy, but sometimes you just have to be technical to really understand it all \u2013 I also need to use my Chemical Engineering Degree every now and then).\u00a0 These Olefins include the more recognized names of ethylene, propylene, and butylene. The process of taking the feedstock and converting the product is typically called cracking.\u00a0\u00a0 The reason for this is because you are breaking the molecular bonds and producing a new combination which constitutes your product.<\/p>\n

Historically speaking Naphtha is the dominant feedstock for world production of olefins.\u00a0 For ethylene production Naphtha represents almost 50% of the primary feedstock.\u00a0\u00a0 However the use of ethane to make ethylene is rapidly growing.\u00a0 Hopefully by now you are starting to see the convergence of Condensate Splitter and Ethane.\u00a0 Even if a petchem plant is designed for a certain feedstock \u2013 all it takes is some capital to be able to process other feedstock.\u00a0 Those who built US condensate splitter hopefully did their economics based on significant market competition with ethane.<\/p>\n

Petchem plants are essentially a simplified refinery.\u00a0\u00a0 Compared to trying to model refineries, petchem modeling is much simpler.\u00a0\u00a0 The feedstock is typically already cleaned out and the process can be placed in one block versus multiple conversion equipment in refining \u2013 see Figure below.<\/p>\n

\"\"<\/a><\/p>\n

Cracking a certain feedstock will result in varying yields of product \u2013 similar to processing crude oil in refineries.\u00a0\u00a0 There is a value point where one feedstock will be more profitable than another.\u00a0 A complete gross margin can be computed for the varying types of crackers.\u00a0 Gross Margin at a Petchem plant = Product Prices x Yields \u2013 Variable Cost \u2013 Cash Cost \u2013 Fixed Cost.\u00a0 Similar to a refinery each of these components will be different depending on your feedstock.<\/p>\n

Potentially All Energy Consulting will release another product Chemical Market Analysis (CMA) where, on a daily basis, a computed value of the various cracking modes (ethane, propane, butane, natural gasoline, and Naphtha) is computed based on future markets. We are close on our Oil Market Analysis (OMA) product release.\u00a0 Both these platforms will enable the user to input their own future expectations of price and a computed value will be calculated.\u00a0 We have the models and the platform and are just looking to finalize our data provider.\u00a0\u00a0 Please email me if you are interested in either of these products.\u00a0\u00a0 If you have your own forecast data, we can deliver this to you right now.<\/p>\n

Your Split in Many Ways Energy Analyst,<\/p>\n

David<\/p>\n

David K. Bellman
\nAll Energy Consulting LLC- \u201cIndependent analysis and opinions without a bias.\u201d
\n614-356-0484
\ndkb@allenergyconsulting.com
\n@AECDKB
\nblog:\u00a0 https:\/\/allenergyconsulting.com\/blog\/category\/market-insights\/<\/p>\n

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\n\u201cPull a thread here and you\u2019ll find it\u2019s attached to the rest of the world.\u201d
\n?\u00a0Nadeem Aslam,\u00a0The Wasted Vigil<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

As I noted in the Condensate Economics Explained this summer, condensate splitters will not be a sustainable solution to the condensate flood in the US by itself.\u00a0\u00a0 The recent article by RBN indirectly supports this claim.\u00a0 RBN expects very high natural gas liquids (NGL) production. \u00a0\u00a0The problem child in NGL is ethane.\u00a0\u00a0 Ethane, because of […]<\/p>\n","protected":false},"author":1,"featured_media":14,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,3,4],"tags":[330,96,329,327,331,87,328],"class_list":["post-1390","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-market-insights","category-natural-gas","category-ngls","tag-butane","tag-condensate","tag-cracker","tag-ethane","tag-naphtha","tag-ngl","tag-propane"],"_links":{"self":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts\/1390","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/comments?post=1390"}],"version-history":[{"count":6,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts\/1390\/revisions"}],"predecessor-version":[{"id":1395,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts\/1390\/revisions\/1395"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/media\/14"}],"wp:attachment":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/media?parent=1390"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/categories?post=1390"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/tags?post=1390"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}