Methyl Tertiary-Butyl Ether (MTBE):Conditions Affecting the ...

More documents

Recommendations

Info

CHAPTER III U.S. INDUSTRY PROFILE, MARKET, AND MARKET CONDITIONS This chapter focuses on the production, trade, and consumption of MTBE in the United States. The chapter has three main sections: (1) A profile of the U.S. MTBE industry; (2) a section addressing U.S. production costs for MTBE and a presentation of market data trends during 1994-98; and (3) a discussion of factors that affected the market data trends during those years. Industry Profile The U.S. MTBE industry is the largest in the world. In 1994, 19 companies reported production totaling 143.7 thousand barrels of MTBE per day in the United States. 1 The industry expanded steadily as U.S. consumption increased with the establishment of minimum oxygen requirements in some gasoline. By 1998, there were 26 producers utilizing 44 production facilities 2 to produce 186.4 thousand barrels per day, 3 or about 3.5 times more than the volume of Saudi Arabia, the next largest producer. Although the number of MTBE producers increased during this period, there was some consolidation. Huntsman purchased Texaco’s 15,000-barrel-per-day MTBE production facility in 1997, 4 and in 1998 Lyondell acquired Arco Chemical Co., including its 58,500-barrel-per-day MTBE production facility, in a $5.6 billion transaction. 5 Both of these purchases included production capacity of other commercially important chemicals. These transactions added to the industry’s concentration and, at the end of 1998, the top four U.S. producers–Lyondell, Huntsman, Texas Petrochemical, and Valero–together were producing approximately 49 percent of domestic production. 6 As discussed in chapter I, the process for producing MTBE involves reacting methanol and isobutylene. The isobutylene needed is obtained from different sources. The type of producer will often determine the source of the isobutylene and vice versa. For example, MTBE can be produced 1 U.S. International Trade Commission, Synthetic Organic Chemicals, 1994, USITC publication 2933, Nov. 1995, p. 3-41. 2 DeWitt & Co., MTBE and Oxygenates, p. 49. 3 U.S. DOE, Petroleum Supply Monthly, Feb. 1999, p. 138. 4 “Huntsman Finetuning Its Petrochemical Empire,” Chemical Marketing Reporter, Mar. 31, 1997, p. 20. 5 Alex Tullo, “Lyondell Acquires Arco for $5.6 Billion, Deal Strengthens Company in Petrochems,” Chemical Marketing Reporter, June 22, 1998, p. 49. 6 DeWitt & Co., MTBE and Oxygenates, p. 49. 3-1
(1) in refineries using either their in-house FCCU C 4 streams or C 4 streams obtained from steam crackers during the production of ethylene; the refineries then use the resultant MTBE captively, blending it into gasoline; 7 (2) in large-scale petrochemical plants that convert tertiary-butyl alcohol (TBA), obtained as a coproduct in the production of propylene oxide (PO), into MTBE and then generally sell the product on the merchant market; and (3) in “on-purpose” plants that are built specifically to produce MTBE and that generally sell the MTBE produced on the merchant market. 8 In total, there are four main sources of isobutylene and, therefore, four main production processes. Each of these production processes is used in the United States. There are 33 MTBE-producing refineries in the United States. 9 These are owned by gasoline producers which produce at least one MTBE feedstock, MTBE itself, and the final blended gasoline product. They tend to be located near sources of petroleum or near major gasoline markets; there are 12 in Texas, 7 in Louisiana, and 5 in California, with the rest distributed in 9 other States. 10 Twenty-eight of these refineries use the FCCU production method. 11 The eight producers using the butane dehydrogenation and TBA production processes account for virtually all of the MTBE produced for the merchant market in the United States. 12 These plants are mostly chemical plants, owned by a variety of petrochemical and gasoline producers. Most of them purchase their feedstocks and then sell their production on the merchant market. All but one of these plants are in Texas, with its availability of feedstocks, purchasers, and shipping facilities (the exception is in Wyoming). 13 Although there are relatively few plants producing for the merchant market, their capacities are large enough that they account for roughly one-half of total U.S. production. 14 Foreign ownership levels within the industry vary depending largely on the type of producer. Although several refinery production facilities are owned by multinational petroleum companies which have some foreign ownership, all but one of the chemical production facilities are U.S. owned. Total U.S. MTBE production capacity for 1997 was 229.5 thousand barrels per day (see table 3-1), with an average capacity utilization level of about 81 percent. Most U.S. MTBE 7 Most refineries built MTBE units to add value to existing C 4 streams generated by refinery operations. 8 Approximately half of the MTBE produced in the United States is sold on the merchant market; the remainder is consumed captively by producing refineries. 9 DeWitt & Co., MTBE and Oxygenates, p. 49. 10 Ibid. 11 Ibid. 12 Refiners represent the majority of purchasers on the merchant market. Some sales are also made to gasoline blenders. 13 DeWitt & Co., MTBE and Oxygenates, p. 49. 14 U.S. DOE, Petroleum Supply Monthly, Feb. 1999, p. 138. During 1994-98, the ratio of merchant production to captive production varied widely each month. However, annual ratios for 1994-98 were 1.0:1.0 for each year except 1996 (1.2:1.0). 3-2
Page 1 and 2: Methyl Tertiary-Butyl Ether (MTBE):
Page 3 and 4: ITC READER SATISFACTION SURVEY Meth
Page 5 and 6: U.S. International Trade Commission
Page 8 and 9: TABLE OF CONTENTS iii Page Abstract
Page 10: Tables-Continued TABLE OF CONTENTS-
Page 13 and 14: accounts for about 30 percent of U.
Page 15 and 16: volatile organic compound emissions
Page 17 and 18: gases in Saudi Arabia regardless of
Page 19 and 20: Register (64 F.R. 5312) of February
Page 21 and 22: eportedly purchased imported MTBE d
Page 23 and 24: Table 1-1. The four main sources of
Page 25 and 26: Table 2-1 MTBE production levels of
Page 27 and 28: Saudi Arabia, 13 Venezuela, the UAE
Page 29: The third group of countries, the m
Page 33 and 34: production capacity is fairly recen
Page 35 and 36: Table 3-2 31 (...continued) In the
Page 37 and 38: Table 3-3 The cost of producing MTB
Page 39 and 40: accounted for approximately 94 perc
Page 41 and 42: exploring their options regarding a
Page 43 and 44: Table 3-7 U.S. MTBE import-to-consu
Page 45 and 46: Table 3-10 Average monthly and annu
Page 47 and 48: Table 3-12 Components of LDP unit v
Page 49 and 50: Transportation Costs Practically al
Page 51 and 52: Source: Compiled by the Commission
Page 53 and 54: the section describes health and en
Page 55 and 56: volume, 90 and contain no lead or h
Page 57 and 58: that opted in to the program, 112 m
Page 59 and 60: appendixes H and J). In addition, t
Page 61 and 62: prohibit the use of jet skis and, i
Page 63 and 64: produce disruptions in the fuel sup
Page 65 and 66: According to one source, the “vol
Page 67 and 68: level almost reached the record hig
Page 69 and 70: Europe consider ethanol to be too c
Page 71 and 72: TAME is produced in about five to s
Page 73 and 74: our continued economic growth.” 4
Page 75 and 76: with $5.5 billion in 1996. 17 As of
Page 77 and 78: Port in Madinat Al-Jubail. 35 Both
Page 79 and 80: Alujain was to have held about 30 p
Page 81 and 82:
(presented in descending order). 59
Page 83 and 84:
Using minimum estimated operating r
Page 85 and 86:
The cost of producing MTBE from n-b
Page 87 and 88:
Table 4-3 Butane dehydrogenation pr
Page 89 and 90:
consumed domestically “as fuel an
Page 91 and 92:
price would be determined by deduct
Page 93 and 94:
Government Policies This section pr
Page 95 and 96:
e available to all sectors in the K
Page 97 and 98:
intent of the investment condition
Page 99 and 100:
that “this is only a limited cush
Page 101 and 102:
In another argument, several source
Page 103 and 104:
Opinions within the industry differ
Page 105 and 106:
4-34
Page 107 and 108:
Appendix C Witness List
Page 109 and 110:
Appendix D Glossary
Page 111 and 112:
Gulf Cooperation Council (GCC)-the
Page 113 and 114:
D-4
Page 115 and 116:
MTBE Production Processes STEAM CRA
Page 117 and 118:
Figure E-2 is not available in the
Page 119 and 120:
dehydrated to form isobutylene) or
Page 121 and 122:
Appendix F U.S. Production and Cons
Page 123 and 124:
Table F-1 U.S. methanol producers,
Page 125 and 126:
Table F-3 U.S. methanol production,
Page 127 and 128:
increased during this period; Canad
Page 129 and 130:
another 3 to 5 percent is reportedl
Page 131 and 132:
2 percent. This growth rate was in
Page 133 and 134:
Table F-6 Annual production of liqu
Page 135 and 136:
Table F-7 U.S. annual production, t
Page 137 and 138:
Appendix G U.S. Tariff Treatment an
Page 139 and 140:
Appendix H Chronology of Events Rel
Page 141 and 142:
Year MTBE-related incidents, academ
Page 143 and 144:
Chronology of Events Related to the
Page 162 and 163:
Appendix J Legislation and Other Ac
Page 164 and 165:
Jersey introduced legislation that
show all

Methyl Tertiary-Butyl Ether (MTBE):Conditions Affecting the ...

Create successful ePaper yourself

Delete template?

Save as template?