Ethylene Production Pathways

Ethylene Production
Pathways
P056A

P056A
Ethylene Production Pathways
Production Pathways Report
ABSTRACT
This report presents alternatives for producing PG Ethylene from different feedstocks, and compares their
economic potential across different countries. More specifically, the report compares the costs of PG Ethylene
production through the following pathways:
* Pathway 1: Ethylene Production from Ethane
* Pathway 2: Ethylene Production from Ethane and Propane
* Pathway 3: Green Ethylene Production from Ethanol
In Pathways 1 and 2, Ethylene is produced via steam cracking of different feedstocks: ethane and a mixture of
ethane and propane. In Pathway 3, Ethylene is produced from ethanol, which is a renewable feedstock.
The analysis presented in this report includes:
* A comparison of the economic potential of the pathways listed above in several countries, comprising:
* Comparative analysis of capital costs
* Comparative analysis of production costs
* Historical behavior of the economic potential in the last 4 years
* Comparison between product price and raw materials costs of each pathway
* An overview of each production pathway, including:
* Raw material(s) consumption figures and product(s) generated
* Related technology licensors and block flow diagram of representative industrial processes
Keywords: Hydrocarbon Pyrolysis, Cracking Furnace, Ethene, Propene, Shale Gas, CB&I Lummus, Technip, Shaw
Stone & Webster, Kellogg-Braun & Root, KBR, Linde, Green Ethylene, Braskem, Chematur Technologies, Petron
Scientech, Scientific Design, Dow Chemical, BP, Ethanol Dehydration

TERMS OF USE
Data, information, tools, analyses and/or models herein presented are prepared on the basis of publicly available
information and non-confidential information disclosed by third parties. Third parties, including, but not limited to
technology licensors, trade associations or marketplace participants, may have provided some of the information
on which the analyses or data are based.
The data, information, tools, analyses and/or models herein presented are developed independently by Intratec
and, as such, are the opinion of Intratec and do not represent the point of view of any third parties nor imply in any
way that they have been approved or otherwise authorized by third parties that are mentioned in this report.
Intratec conducts analyses and prepares reports and tools for readers in conformance with generally accepted
professional standards. Although the statements in this report are derived from or based on several sources that
Intratec believe to be reliable, Intratec does not guarantee their accuracy, reliability, or quality; any such
information, or resulting analyses, may be incomplete, inaccurate or condensed. All estimates included in this
report are subject to change without notice. This report is for informational purposes only and is not intended as
any recommendation of investment.
Reader agrees it will not, without prior written consent of Intratec, represent, directly or indirectly, that its products
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TABLE OF CONTENTS
ABOUT THIS REPORT......................................................................................................................................................................5
Study Objective............................................................................................................................................................................ 5
Report Overview...........................................................................................................................................................................6
Production Pathways: Understanding the Concept.............................................................................................................7
How to Understand the Analysis Presented in this Report................................................................................................ 9
ABOUT ETHYLENE.........................................................................................................................................................................10
Description................................................................................................................................................................................. 10
Applications................................................................................................................................................................................10
PG Ethylene Production Pathways Diagram.......................................................................................................................11
Other Ethylene Production Pathways Reports................................................................................................................... 12
PRODUCTION PATHWAYS EXAMINED.....................................................................................................................................13
Pathway 1: Ethylene Production from Ethane.................................................................................................................... 14
Pathway 2: Ethylene Production from Ethane and Propane............................................................................................19
Pathway 3: Green Ethylene Production from Ethanol....................................................................................................... 24
PATHWAYS COMPARATIVE EVALUATIONS............................................................................................................................29
Introduction................................................................................................................................................................................29
Comparison of Pathways........................................................................................................................................................30
Regional Comparison...............................................................................................................................................................35
PATHWAYS' COMPARISON SUMMARY................................................................................................................................... 40
REPORT BASES & ASSUMPTIONS.............................................................................................................................................41
Pathways Inputs and Outputs Figures................................................................................................................................. 41
Market Prices............................................................................................................................................................................. 43
REFERENCES..................................................................................................................................................................................47
ANALYSIS METHODOLOGY......................................................................................................................................................... 48
Initial Research.......................................................................................................................................................................... 48
Pathways Overview.................................................................................................................................................................. 48
Definition of Input and Output Figures................................................................................................................................. 48
Pricing Data Gathering and Verification...............................................................................................................................50

Net Raw Materials Costs Estimating....................................................................................................................................50
Capital Costs Estimating.........................................................................................................................................................50
Other Production Costs Estimating...................................................................................................................................... 53
Depreciation............................................................................................................................................................................... 54
Economic Potential Estimating..............................................................................................................................................54
Regional Comparisons.............................................................................................................................................................55
ABOUT INTRATEC..........................................................................................................................................................................56
Our Business.............................................................................................................................................................................. 56
Our Reports................................................................................................................................................................................ 56

ABOUT THIS REPORT
When considering the production of a chemical, there are complex and interconnected issues which must be
thoroughly evaluated. Those who are interested in the production of a given chemical product must understand
the options available and the key aspects that impact the economics of such options.
There are several issues that affect the manufacturing economics of a chemical, such as feedstock used, other
products generated, construction location, manufacturing integration, process technology selected, logistics, local
government incentives and investment financing conditions, among others. Typically, the choice of feedstock
used, other products generated and location are key to the feasibility of a chemical venture; as such, those
variables should be the first to be addressed.
This report is one of Intratec’s Production Pathways Reports. These reports show how the feedstock used, other
products generated (if applicable) and construction location impact on the economics of chemicals production.
Specifically, this report is designed to support those with an interest in understanding the economics of Ethylene
manufacturing, including:
* Newcomers to the Ethylene sector,
* Skilled technical professionals needing to gain a business perspective on Ethylene production, and
* Professionals from the financial sectors, capital groups, consulting firms, legal, and research institutions, who
need a quick understanding of the Ethylene business.
While this report does not consider the other aforementioned aspects impacting chemical production (i.e., specific
process technologies, logistics, government incentives), it must be viewed as a first step to rapidly learning about
and comparing Ethylene production pathways and to serve as guide to further analyses.
Study Objective
This report presents the production paths of Ethylene, and preliminary economic comparisons between them, in
different countries. After initially describing each production pathway to be examined, the report illustrates how
options related to feedstock / other products mix and construction location affect the economics of Ethylene
production.
The main purpose of the present report is to provide a rational and systematic approach with which one can
discriminate between the economic potential of several production alternatives.
Nevertheless, caution must be used when reading the results of the evaluations hereby presented. They are
approximations, and intended to serve as "pointers" to production pathways that appear to be more competitive
across different countries, in terms of production costs and the order of magnitude of capital costs.
5

Report Overview
This report is structured into six main parts that follow a logical sequence, each of which is briefly described
below.
By way of introduction, the first part – the current chapter – explains the report, its structure and objective, and
introduces some basic concepts adopted in the study. To make the most of the study, the reader is encouraged to
dedicate a couple of minutes to this chapter.
In the second part, About Ethylene, the reader will learn the basics of Ethylene itself. This chapter covers
applications, commercialization forms and production pathways available related to Ethylene.
The third part, Production Pathways Examined, focuses exclusively on the production pathways which will be further
evaluated in the report. This chapter provides brief descriptions of the pathways examined and some of their basic
technical aspects, such as raw material(s), other product(s) generated and related industrial processes.
The fourth part, encompassing Pathways’ Comparative Evaluations and Pathways’ Comparative Summary, is the core
of the report. In these chapters, through a sequence of comparative analyses, reader will get a clear idea of how
competitive the production pathways examined can be, compared against each other, across different countries.
Readers needing to consult data used throughout the report, such as pricing and raw materials consumption
figures, can find that information in the fifth part: Report Bases & Assumptions.
Finally, to address any concerns about the methodology and procedures adopted throughout the development of
this report, the reader is referred to the Analysis Methodology chapter.
6

Production Pathways: Understanding the Concept
The current report is structured on the concept of “production pathways” to compare the economics of different
alternatives for manufacturing a chemical.
A production pathway is a general representation of similar industrial processes that generate the same set of
products from the same raw materials. Thus, within the concept of production pathways, this report combines
industrial processes that will present similar results in a preliminary economic analysis.
The figure below presents the production of a chemical of interest through 4 different pathways.
This general representation encompasses industrial processes that present distinct technical aspects (e.g., unit
operation sequence, catalysts, conversion rate and operating conditions). However, those differences are not
relevant to a preliminary economic analysis such as the analysis presented in this study.
7

The figure below illustrates how industrial processes are generalized under the concept of industrial pathways:
In the example illustrated in the figure above, Pathway A is defined by the consumption of the Raw Material A, the
generation of the Product X, and the production of the chemical product of interest. Pathway A can be achieved
through 3 different options: Process M, Process N and Process O. In contrast, Pathway B is defined by the
consumption of the Raw Materials A and B, by the generation of the Products X and Y, and the production of the
chemical product of interest. In this case, Pathway B can be carried out in two different ways: the integration of
the processes J and K, or by the process L. The definitions of Pathways C and D follow the same rationale.
8

How to Understand the Analysis Presented in this Report
Based on the definition of “production pathway” just given, it is important at this point to explain the nature of the
economic evaluations made throughout this report.
First, readers must bear in mind that all evaluations are made for “production pathways”, not for specific “industrial
processes”. This means that all figures presented, such as raw material consumption or cost values, are
representative of the respective production pathway examined.
These analyses of production pathways make sense because the economics of pathway-related process
technologies are typically in the same order of magnitude. Readers must be aware that the accuracy of pathways’
cost figures estimated derives from the methodology used to calculate them. Of course, as mentioned previously,
the cost figures of processes related to the same pathway fall within this accuracy range. The graph below
illustrates that the cost figures of concurring processes vary, but remain within the range associated with the
respective pathway.
Also, in light of this explanation of the estimates’ accuracy range, if a given production pathway presents costs
that are slightly higher than those of another pathway, it should not be deemed less competitive than the second
pathway a priori. Instead of precisely identifying which may be the most competitive pathway, this report aims to
identify pathways that are clearly less competitive, serving as a guide to further studies.
Once again, caution must be used when reading the results of evaluations hereby presented. The main purpose of
this report is to compare production economics, but within the accuracy associated with an analysis on a
“production pathway” level.
9

ABOUT ETHYLENE
Description
Ethylene is an unsaturated organic compound with the chemical formula C2H4. It has one double bond and is the
simplest member of the alkene class of hydrocarbons.
Ethylene is one of the largest volume petrochemicals worldwide. It is known as a key building block, serving as
raw material in the manufacturing of several chemicals and end products such as plastics, resins, fibers, etc.
Commercially, Ethylene is mainly traded as polymer grade (PG), i.e., min. 99.9% of purity. At room temperature, it is
a colorless, low-boiling, flammable gas with a sweet odor.
Applications
Commercial Ethylene major application in the chemical industry is as a raw material for the production of
polyethylene and other organic chemicals that are mainly utilized in consumable end uses, especially in packaging.
Polyethylene (PE) is responsible for about 60% of the global Ethylene demand. The main class of polyethylene
produced in the world is high density polyethylene (HDPE), which is responsible for the consumption of a third of
the available Ethylene, followed by low density (LDPE) and linear low density (LLDPE) varieties.
Other important products derived from Ethylene are ethylene oxide, an intermediate to ethylene glycol synthesis,
ethylene dichloride, styrene, and vinyl acetate.
With such a diverse range of derivative products, Ethylene demand is very sensitive to economic cycles. Therefore,
it is often used as a reference in the performance evaluation of the petrochemical industry.
10

PG Ethylene Production Pathways Diagram
PG Ethylene is primarily produced by the pyrolysis of hydrocarbons and by recovery from some refinery products.
It can also be produced from other pathways, such as ethanol dehydration or methanol-to-olefins plants. The
following chart presents different pathways for PG Ethylene production.
11

Other Ethylene Production Pathways Reports
Below, the reader can find other reports offered by Intratec that introduce alternatives for producing propylene and
compare the economic potential of such alternatives in different locations. For further details, please refer to the
links below the report descriptions.
Ethylene Production Pathways - P056B
More specifically, this report compares the following production pathways
* Pathway 1: Ethylene Production from Ethane
* Pathway 2: Ethylene Production from Light Naphtha
* Pathway 3: Ethylene Production from N-Butane
In Pathways 1 and 2, Ethylene is produced via steam cracking of different feedstocks: ethane, naphtha and
butane. These pathways also generate by-products such as hydrogen-rich gas, propylene and fuel.
www.intratec.us/products/p056b
Ethylene Production Pathways - P056C
More specifically, this report compares the following production pathways
* Pathway 1: Ethylene Production from Ethane
* Pathway 2: Ethylene Production from Propane
* Pathway 3: Ethylene Production from Atmospheric Gas Oil (AGO)
In all pathways, Ethylene is produced via steam cracking of different feedstocks.
www.intratec.us/products/p056c
12

PRODUCTION PATHWAYS EXAMINED
This chapter introduces the production pathways examined in this report. The pathways are listed below followed
by an ID, in parentheses, which will be used in the charts and tables comparing these alternatives:
* Pathway 1: Ethylene Production from Ethane (C2)
* Pathway 2: Ethylene Production from Ethane and Propane (C2C3)
* Pathway 3: Green Ethylene Production from Ethanol (ETOH)
In Pathways 1 and 2, Ethylene is produced via steam cracking of different feedstocks: ethane and a mixture of
ethane and propane. In Pathway 3, Ethylene is produced from ethanol, which is a renewable feedstock.
Next, key technical information, such as a brief description, raw material(s) consumed, other product(s) generated
and related industrial processes, will be presented for each one of the pathways listed above.
13

Pathway 1: Ethylene Production from Ethane
Description
In this pathway, ethane is thermally cracked in the pyrolysis furnaces with the central goal of producing Ethylene
as the major product. The product mixture from cracking is then sent through a complex sequence of separation
steps to obtain Ethylene and other desired products.
Raw Material(s) Required
The main raw material used in this pathway is ethane, which is detailed as follows.
* Ethane
Ethane is a colorless, odorless gas with the chemical formula C2H6.
The main commercial sources of ethane are wet natural gases and refinery waste gases. Ethane is the secondlargest
component of natural gas, only after methane. In natural gas from shale (or shale gas), the ethane content
can reach up to 16% by volume. On industrial scale, it is separated from methane by liquefaction at cryogenic
temperatures.
The main use of ethane is as petrochemical feedstock for Ethylene manufacturing. In some cases, ethane is not
separated from natural gas and it is burnt along with methane as fuel.
Product(s) Generated
The main product of this pathway is PG Ethylene. In addition, a hydrogen-rich gas and fuel are also generated, as
described below.
* Hydrogen-Rich Gas
The cracking reaction also generates a hydrogen rich stream. In this pathway, this stream contains about 95 mol
% of hydrogen and can be used as fuel.
* Fuel
In this pathway, other hydrocarbons are also generated in the cracking reaction such as: propylene, butadiene, etc.
As only low amounts of such components are obtained, additional separation steps are not economically viable, in
such a way that heavy ends, light ends and C3+ hydrocarbons streams generated are used as fuel.
14

Pathway Scheme
The following diagram shows the main steps utilized in this pathway, as well as the main raw materials consumed
and the products and by-products generated.
15

Industrial Processes Related to This Pathway
16

* Industrial Process Diagram Example
17

* Related Intratec Reports
As mentioned previously, analyses provided in the current report are made on a “production pathway” level. For
more detailed and accurate information about industrial processes related to Pathway 1: Ethylene Production from
Ethane, the reader is referred to Industrial Process Economics Reports offered by Intratec, as listed below.
Economics of Ethylene via Steam Cracking of Ethane | Ethylene E11A
Economics of a steam cracking process for Polymer Grade (PG) Ethylene production from ethane in the USA.
www.intratec.us/products/e056110a0
Each of the above reports provide a techno-economic evaluation of a specific process technology, including capital
costs in several locations, operating costs, raw materials consumptions, and detailed block flow diagrams.
18

Pathway 2: Ethylene Production from Ethane and Propane
Description
In this pathway, a mixture of propane and ethane is thermally cracked in the pyrolysis furnaces with the central
goal of producing Ethylene as the major product. The product mixture from cracking is then sent through a
complex sequence of separation steps to obtain Ethylene and other desired products.
Raw Material(s) Required
The main raw material used in this pathway is a mixture of ethane and propane, which is detailed as follows.
* Ethane/Propane Mix
Ethane/Propane Mixture (or E/P Mix) is a blend of ethane (C2H6) and propane (C3H8). It is a colorless, odorless,
flammable gas. It is mainly used as feedstock in steam cracking processes for ethylene production.
The composition of this mixture typically varies between 70% and 90% of ethane and between 10% and 30% of
propane. In this report, the composition considered is 80% ethane and 20% propane.
Ethane, propane and butanes are also collectively referred to as natural gas liquids (NGL). Such components are
recovered from “wet natural gas”. In the USA, NGLs market has substantially grown with the exploration of shale
gas.
Product(s) Generated
The main product of this pathway is PG Ethylene.
propylene, hydrogen-rich gas, and fuel.
In addition, the following products are also generated: PG
* PG Propylene
Propylene is an unsaturated organic compound with the chemical formula C3H6. It is the second simplest
member of the alkene class of hydrocarbons, only after ethylene. In this pathway, polymer grade (PG) propylene is
obtained, i.e., propylene with min. 99.5% of purity.
PG propylene is mainly used in polypropylene production. In addition, is also used as raw material in the
manufacture of propylene oxide, oxo-alcohols, acrylonitrile, etc.
* Hydrogen-Rich Gas
The cracking reaction also generates a hydrogen rich stream. In this pathway, this stream contains about 95 mol
% of hydrogen and can be used as fuel.
* Fuel
In this pathway, other hydrocarbons are also generated in the cracking reaction such as: butenes, butadiene, etc.
As only low amounts of such components are obtained, additional separation steps are not economically viable, in
such a way that heavy ends, light ends and C4+ hydrocarbons streams generated are used as fuel.
19

Pathway Scheme
The following diagram shows the main steps utilized in this pathway, as well as the main raw materials consumed
and the products and by-products generated.
20

Industrial Processes Related to This Pathway
21

* Industrial Process Diagram Example
22

* Related Intratec Reports
As mentioned previously, analyses provided in the current report are made on a “production pathway” level. For
more detailed and accurate information about industrial processes related to Pathway 2: Ethylene Production from
Ethane and Propane, the reader is referred to Industrial Process Economics Reports offered by Intratec, as listed
below.
Economics of Ethylene via Cracking of Ethane/Propane | Ethylene E21A
The process examined in this report uses a mixture of ethane and propane as raw material.
analysis considers a plant located in the USA.
The economic
www.intratec.us/products/e056210a0
Each of the above reports provide a techno-economic evaluation of a specific process technology, including capital
costs in several locations, operating costs, raw materials consumptions, and detailed block flow diagrams.
23

Pathway 3: Green Ethylene Production from Ethanol
Description
In this pathway, ethanol is dehydrated to ethylene. Since ethanol is produced from renewable sources, this
pathway is an interesting alternative to the conventional production of ethylene from fossil-based feedstocks.
Raw Material(s) Required
The main raw material used in this pathway is hydrous ethanol, which is detailed as follows.
* Hydrous Ethanol
Ethanol, CH3CH2OH, also known as ethyl alcohol, performs several functions.
germicide, a fuel, and as a chemical intermediate for other organic chemicals.
It may work as a solvent, a
In the present pathway, hydrous ethanol is used as feedstock, i.e., ethanol containing about 7% of water.
Currently, ethanol is mostly produced via fermentation of sugars, which can be obtained from crops, such as
sugarcane and corn starch. Researches have also been focused on the use of low-value biomass, often deemed
“waste”, to produce ethanol. That low-value biomass is lignocellulosic material found in wood, sugarcane bagasse
or grain crop stubbles. Lignocellulosic biomass could represent a new fermentable raw material. However,
technological advances in this arena still need to be achieved in order to make it economically feasible and render
this usage of the agricultural residues competitive with respect to others.
Product(s) Generated
PG Ethylene is the only product generated in the current pathway.
24

Pathway Scheme
The following diagram shows the main steps utilized in this pathway, as well as the main raw materials consumed
and the products and by-products generated.
Chemistry
In this pathway ethanol is dehydrated to produce ethylene and water (see the reaction below). The dehydration
reaction is an endothermic reversible reaction, with the equilibrium being favored by high temperatures and low
pressures.
25

Industrial Processes Related to This Pathway
26

* Industrial Process Diagram Example
27

* Related Intratec Reports
As mentioned previously, analyses provided in the current report are made on a “production pathway” level. For
more detailed and accurate information about industrial processes related to Pathway 3: Green Ethylene
Production from Ethanol, the reader is referred to Industrial Process Economics Reports offered by Intratec, as
listed below.
Economics of Ethylene via Ethanol Dehydration | Ethylene E81A
Techno-economic analysis of PG Ethylene production from hydrous ethanol in the USA using a dehydration
process similar to the one proposed by BP Chemicals.
www.intratec.us/products/e056810a0
Economics of Ethylene via Ethanol Dehydration | Ethylene E82A
Economics of Polymer Grade (PG) Ethylene production from hydrous ethanol in the USA. Different from the report
“Ethylene E81A”, the dehydration process examined in this report is similar to the processes developed by
Chematur and Petron.
www.intratec.us/products/e056820a0
Economics of Ethylene via Ethanol Dehydration | Ethylene E83A
This study also presents the costs associated with Green Ethylene production from ethanol in the USA. Different
from the report “Ethylene E82A”, this study depicts a process similar to the processes developed by Braskem and
Petrobras. In this process, the reaction system is composed of multiple reactors and multiple furnaces.
www.intratec.us/products/e056830a0
Economics of Ethylene via Ethanol Dehydration | Ethylene E84A
Different from the other reports about ethylene production via ethanol dehydration, the process analyzed in this
study is similar to the process developed by Scientific Design. In this process, the reaction system is composed by
only one reactor and one furnace. The study also assumes a plant constructed in the USA.
www.intratec.us/products/e056840a0
Economics of Ethylene via Ethanol Dehydration | Ethylene E85A
This study also concerns Green Ethylene production in the USA. Different from the other reports, the technology
examined in this report is similar to the one developed by Dow Chemical. In this process, a selective oxidation
reactor is used in the purification step to remove CO and hydrogen from the process.
www.intratec.us/products/e056850a0
Each of the above reports provide a techno-economic evaluation of a specific process technology, including capital
costs in several locations, operating costs, raw materials consumptions, and detailed block flow diagrams.
28

PATHWAYS COMPARATIVE EVALUATIONS
Introduction
Throughout this chapter, a number of economic comparative evaluations between the production pathways
described are made, encompassing raw materials costs, utilities costs, fixed costs, capital costs and pathway
economic potential. Such evaluations consider typical representative industrial units based on each pathway
under analysis and utilize the following main assumptions:
* All industrial plants present the same annual production
* Economic analysis date is
More information on assumptions adopted can be found in the chapter “Report Bases & Assumptions”.
In order to provide a solid understanding of the economic potential of all pathways, the comparative evaluations
are made from two perspectives, as explained below.
1) Comparison of Pathways. The goal here is to compare the economic aspects of the different production
pathways examined in the United States. In other words, the reader will be able to evaluate the competitiveness of
all pathways under analysis, using the USA as a basis for comparison (see figure below).
2) Regional Comparisons. This analysis compares the economic aspects of a given pathway across different
countries. For each pathway examined, the reader will learn which country tends to be more competitive (see
following figure).
29

Caution must be used when examining the results of these comparisons presented hereafter. They are
approximations, and intended to serve as "pointers" to the production pathways which appear to be the most
competitive across different world regions.
Comparison of Pathways
This section compares the economic aspects of the production pathways examined, assuming all industrial plants
are constructed in the USA.
Net Raw Materials Cost
In the following graph, each bar represents the net raw materials costs related to a specific pathway in the USA, in
US dollars per metric ton of PG Ethylene. “Net raw material costs” is the difference between raw materials costs
and credits from by-products generation, if available, in each pathway examined.
Net Raw Material Costs Comparison @ USA (USD / metric ton product)
This graph itself is a first indicator of the economic potential of each pathway. The pathway representing the
greatest difference between PG Ethylene price and net raw materials costs has the highest margin to bear further
production costs (i.e., utilities costs, other production costs, capital costs). Ultimately, the lower the bar, the higher
the potential of a pathway to be economically attractive.
In contrast, pathways with net raw materials costs higher than the PG Ethylene prices can be considered
economically unfeasible at this time. It is important to highlight, however, that a pathway considered to be
economically unfeasible is related to the period in which this analysis was made. Evolving pricing conditions may
of course lead to different conclusions.
30

Capital Costs
The following graph illustrates, comparatively, pathways-related capital costs, i.e., each bar represents the capital
costs related to a specific pathway for an industrial unit constructed in the USA. As presented in the graph, the
capital costs bar comprises two items: Total Process Capital and Contingency.
For the sake of comparison, the capital costs for all pathways were normalized, meaning that the capital costs of
each pathway were divided by the capital costs related to Pathway 1: Ethylene Production from Ethane.
Capital Costs Comparison @ USA
The total process capital estimates encompass the investment required for the construction of the main
processing units necessary to the manufacture of product(s), as well as auxiliary facilities typically needed for the
functioning of such production units (i.e., storage, utilities supply, and auxiliary buildings).
In addition, as presented in the graph, a contingency for each capital cost estimate was considered. Contingency
constitutes an addition to capital cost estimations, implemented based on previously available data or experience
to encompass uncertainties that may incur, to some degree, cost increases. Higher contingencies were assumed
for new, emerging production pathways, based on the risks associated with the uncertainties involved in such
pathways.
The capital costs estimates presented do not include working capital and additional capital costs associated with
plants’ start-up. The presented estimates were obtained using methods designed for the rapid calculation of
capital costs for the construction of process industries. For information on how capital costs were estimated, the
reader is referred to the Capital Costs Estimating section in the chapter titled “Analysis Methodology”.
31

Economic Potential
In this section, the economic potentials of each pathway examined are compared when considering industrial
plants constructed within the USA.
The economic potential of a pathway is directly related to the “product value” associated with that pathway.
“Product value” is a term commonly used wherein all costs associated with the production of a product are
combined. More specifically, it includes the production cost (net raw materials, net utilities, fixed costs, corporate
overhead costs and depreciation), as well as an expected return on capital employed (ROCE).
It should be noted that the product value must not be confused with product price. While the product value, as
previously mentioned, is calculated based on the costs associated with the production of a product, the product
price is the actual value as seen in the market.
In the following graph, each bar represents the product value of a specific pathway normalized by division by the
Pathway 1: Ethylene Production from Ethane product value.
Product Value Comparison @ USA
This graph, in fact, combines all comparisons done so far. In the end, pathways with the lowest product values
stand out as the best candidates for further studies.
The following table complements the graph presented, providing the cost figures that make up pathways’ product
values. Once again, the product values presented were normalized utilizing Pathway 1: Ethylene Production from
Ethane as the basis.
32

Product Value Comparison @ USA
The raw materials costs and capital costs presented were already discussed in previous chapters.
components making up the product value are briefly described below.
Other cost
* Utilities costs: costs associated with main process utilities required in each pathway (steam, electricity, fuel, and
refrigeration).
* Other production costs: includes the fixed costs (e.g. maintenance, operating labor, operating charges, plant
overhead) and corporate overhead costs (i.e., company’s costs associated with R&D, administrative activities,
marketing and products distribution).
* Depreciation: refers to the decrease in value of industrial assets over the passage of time, primarily because of
wear and tear.
* ROCE: a component of product value which reflects the capital costs of a given pathway, based on an expected
return on capital employed in the construction of the plants.
For information on how product values were calculated, the reader is referred to Economic Potential Estimating
section in the chapter titled “Analysis Methodology.”
The comparisons presented so far are frozen snapshots, based exclusively on
it should be kept in mind that different pricing conditions could lead to different results.
economic data. Of course,
In order to provide a more consistent approach to pathways’ competitiveness, this analysis also compares how
pathways’ economic potentials have evolved over time in the USA. In this context, the following graph presents
the product values variation over the last quarters.
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Quaterly Comparative Product Values History @ USA
Complementing this analysis, a 4-year economic potential history based on the USA is presented below. The
figures presented are yearly averages for the product values available up to the period of the analysis. Here, the
values presented are also comparative - they were normalized using Pathway 1: Ethylene Production from Ethane
product value at the current period of analysis as the basis.
Yearly Comparative Product Values History @ USA
34

Regional Comparison
This section examines each pathway individually, comparing its economic aspects across the following countries:
* United States
* Germany
* China
* Brazil
* South Africa
Basically, this presents economic aspects previously discussed, specifically, net raw material costs and product
values, under a regional perspective.
Net Raw Materials Costs
The next graphs present the net raw materials cost and PG Ethylene price in US dollars per ton of PG Ethylene for
each of the pathways in different countries.
Pathway C2: Net Raw Material Costs Vs. Product Price (USD / metric ton product)
35

Pathway C2C3: Net Raw Material Costs Vs. Product Price (USD / metric ton product)
Pathway ETOH: Net Raw Material Costs Vs. Product Price (USD / metric ton product)
36

Net raw materials costs were calculated using the same methods as the previous section, considering, however,
local pricing data related to the country examined (presented in the chapter titled “Report Bases & Assumptions”).
Historical Economic Potential Comparison
In order to regionally compare the economic potential of each pathway, all items that comprise the product value
(namely, net raw materials costs, utilities costs, other production costs, depreciation and return on capital
employed) were properly adjusted for each country examined.
Similar to the analysis provided for the USA in the previous section (Comparison of Pathways), this section also
compares how pathways’ product values have evolved over time in several world locations.
The following graphs present a 4-year history of the economic potential for each production pathway in several
countries. The figures presented are yearly averages for the product values available up until the period of the
analysis ( ). Here, the values presented are also comparative - they were normalized considering Pathway
1: Ethylene Production from Ethane product value in the period of the analysis, in the USA as the basis.
37

Pathway C2: Yearly Comparative Product Values History
Pathway C2C3: Yearly Comparative Product Values History
38

Pathway ETOH: Yearly Comparative Product Values History
39

PATHWAYS' COMPARISON SUMMARY
The following graph is an overall summary presenting the economic potential of each production pathway in
several countries.
Each bar represents the product value associated with a specific pathway in a specific country in . The
values are normalized based on the product value related to Pathway 1: Ethylene Production from Ethane, in the
United States.
Product Values Comparison Summary
40

REPORT BASES & ASSUMPTIONS
Pathways Inputs and Outputs Figures
This section presents raw materials consumption figures and products generated rates, if applicable, for each
production pathway examined. The tables below summarize major input and output figures adopted.
It is important to mention that the figures hereby presented are not related to any specific industrial process.
Rather, they are averages that represent each pathway sufficiently to support the comparative evaluations
presented in this report within the accuracy expected.
For information on how processes inputs and outputs were defined, the reader is referred to the Definition of Input
and Output Figures section in the chapter titled “Analysis Methodology.”
Pathway C2: Input & Output Figures (unit per MMBtu of product)
DESCRIPTION UNIT
STOICHIOMETRY VALUE ADOPTED VALUE
Raw Materials
By-Products
Pathway C2C3: Input & Output Figures (unit per metric ton of product)
DESCRIPTION UNIT
STOICHIOMETRY VALUE ADOPTED VALUE
Raw Materials
By-Products
41

Pathway ETOH: Input & Output Figures (unit per metric ton of product)
DESCRIPTION UNIT
STOICHIOMETRY VALUE ADOPTED VALUE
Raw Materials
42

Market Prices
This section presents raw materials and products market prices used in the economic analysis for the current
report. Each table presents a 4-year history for a certain product in the countries studied in this report.
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44

45

46

REFERENCES
47

ANALYSIS METHODOLOGY
After more than a decade supporting leading companies worldwide, Intratec has gained considerable expertise in
the analysis of chemical markets and process economics. All of this expertise is distilled in our reports through
the use of consistent development methodologies.
Our methodologies ensure that our reports are reliable, structured, and continuously tested and proven by the
many corporations, R&D centers, EPC companies, financial institutions and government agencies that rely on
those reports.
The methodology used in the development of Production Pathways Reports is illustrated in the diagram presented
on the next page.
Initial Research
The development of a Production Pathways report starts with research focused on existing alternatives
(pathways) for manufacturing a given chemical, related to different raw materials and/or products generated. This
encompasses patents, encyclopedias, text books, technical papers and non-confidential information disclosed by
licensors, duly reviewed by the Intratec team.
Following completion of this initial research, Intratec assembles a diagram, illustrating major production pathways
that have been identified.
Pathways Overview
Subsequently, the Intratec team conducts additional bibliographical research and data gathering focused on each
individual production pathway, with the goal of identifying the key aspects of the pathways under analysis,
including:
* Overall manufacturing scheme,
* Raw material(s) required and product(s) generated,
* Related industrial processes and technology licensors, and
* Annual production adopted and utilization rates assumed (based on competitive plants on a global market)
Regarding raw materials, and product(s) generated, in particular, the Intratec team evaluates their basic
specifications (grade, purity, water content, etc.) and if product(s) are sold at market price or at the fuel equivalent
price.
Definition of Input and Output Figures
In a next step, raw materials consumption and products generation figures associated with each production
pathway examined are estimated. Initially, the stoichiometry of main reactions involved in the process is identified
after which additional research is carried out focusing on identifying conversions, yields and/or selectivity of
processes’ main reactions in order to find the ranges of key input and output figures. This research encompasses
process information currently available in patents, encyclopedias, text books, technical papers and non-
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confidential information disclosed by licensors.
Finally, the input and output figures adopted in the analysis are defined by utilising:
* Best judgment based on the conversions, yields and/or selectivity ranges identified on processes reactions,
* Values directly disclosed in the literature (when available), and
* Analogies with similar processes and/or reactions data available in Intratec’s database.
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Pricing Data Gathering and Verification
In order to compare the economic aspects of the pathways, the Intratec team uses average transaction prices of
products and raw materials across different regions. These prices are based on trade statistics issued by the
official government agencies of the countries examined, over the time period considered. The pricing information
is checked to verify consistency, but issues such as discounts related to volumes or contractual negotiations are
not considered.
In some cases, e.g., when market prices do not exist for some chemicals or raw materials, the Intratec team
assumes transfer prices, based on estimates of costs to produce that chemical.
In addition, when by-products are utilized for energy generation, their prices are calculated based on fuel prices
and their respective heat of combustion.
Net Raw Materials Costs Estimating
From previously identified raw materials consumptions and historical pricing data, the Intratec team calculates the
net raw materials costs of each pathway. “Net raw material costs” is the difference between raw materials costs
and credits from by-products generation, as expressed in the formula below.
Net Raw Material Costs = Raw Material Costs – By-product Credits
The raw materials costs, in turn, are estimated by multiplying pathways’ consumption figures by the respective
raw material prices in the region considered. The formula below illustrates the raw materials costs calculation:
Raw Material Costs = Sum ( Raw Material Price * Raw Material Consumption )
By-products credits were estimated in a similar way, based on pathways’ input and output figures and pricing data.
Capital Costs Estimating
The first step in estimating capital costs is determining the definition of a comparison basis for the production
pathways under analysis. Initially, based on previous research, the Intratec team defines a common annual
production target for the industrial units that represent each pathway.
The actual nominal capacity of each representative process plant is then established according to typical
utilization rates addressing specific raw materials availability constraints. For instance, plants based on renewable
raw materials (e.g., sugar cane) present lower utilization rates than plants relying on oil derivatives, since some
renewables raw materials are only available during harvest season, while oil is available throughout the entire year.
Another issue in the comparison basis definition concerns the maximum feasible nominal capacity of industrial
units based on different pathways. Due to technical limitations, industrial units based on some pathways are not
able to achieve the same maximum production capacity as plants based on another compared pathway. In those
cases, instead of thinking in terms of an unfeasible plant scale for the former pathway, the Intratec team considers
multiple industrial units side-by-side (multiple production trains), thus establishing a fair comparison basis for all
pathways.
The Intratec team then begins elaborating the capital costs estimates associated with each pathway. The capital
cost is essentially composed of two items: Total Process Capital and Contingency. Both items’ definitions and
50

estimating methods are more fully described in the next sections.
The following figure summarizes the capital costs estimating methodology.
Total Process Capital Estimating
The total process capital is comprised of the investment required for the construction of main processing units
necessary to the manufacture of product(s), as well as auxiliary facilities typically necessary to the functioning of
such production unit(s) (i.e., storage, utilities supply, and auxiliary buildings).
The Intratec team employs three different methods for estimating total process capital, according to the nature of
the pathway under analysis.
* Pathways Based on Established Industrial Processes
This type of pathway is based on mature industrial processes, i.e., several plants worldwide have been constructed
over the years, employing processes related to such a pathway.
For these pathways, total process capital is primarily estimated from the Intratec database. More specifically, the
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Intratec team initially gathers investment data in the company’s database (such data were actually generated in
previous studies, specifically targeting the industrial processes under analysis). The total process capital data
collected are then adjusted to the same basis – converted in time, location and production capacity. Finally, the
Intratec team double-checks total process capital estimates that have been obtained; this is based on published
investment data, related to the construction of industrial plants of that pathway worldwide.
* Pathways Based on New Industrial Processes
Pathways are based on new industrial processes when there have only been a few plants constructed around the
world.
Total process capital associated with this kind of pathway is calculated according to internal cost estimating
methods, refined from established techniques designed for rapid calculations of total process capital for the
construction of process industries. These established techniques include significant step methods such as Zevnik
and Buchanan, Wilson, Timm, and Petley correlations (see “References” chapter).
Generally speaking, Intratec methods consist of making rapid total process capital calculations from preliminary
block diagrams with main process steps and basic process parameters, such as the physical state of fluid being
processed, capacity or throughput of processing steps, approximate information about operating conditions
(pressure and temperature) and probable materials of construction. Using these inputs, which are primarily
derived from the technical literature, the Intratec team calculates the initial total process capital figures.
Subsequently, total process capital estimates obtained are double-checked based on data available in Intratec’s
database that are related to the total process capital of similar plants (after correcting for time, location and scale).
In some cases, when the profitability associated with the pathway examined is known, the Intratec team may also
double-check estimates using reverse engineering methods. In other words, using this method, the total process
capital amount would be calculated based on the known profitability of the pathway examined.
* Pathways Based on Embryonic Industrial Processes
These pathways employ industrial processes which are still under development; in fact, no published data related
to investments or even a well-defined process exists.
In such cases, Intratec total process capital estimates are based on previously explained estimating methods
designed for rapid total process capital calculations and analogies with similar industrial plants and/or processing
units.
Similar to what is done for pathways based on new industrial processes, the Intratec team begins by drawing
preliminary flowsheet sketches and compiling basic process parameters from technical literature (e.g. patents,
articles) available. Based on such inputs, the Intratec team develops initial estimates of the amount of total
process capital required for the construction of hypothetical industrial plants. Estimates obtained are then
compared to the known total process capital figures (corrected in time, location and capacity) of similar industrial
plants and/or processing units.
Contingency
In addition, a contingency is considered for each total process capital estimate. Contingency constitutes an
addition to total process capital estimations, implemented based on previously available data or experience to
encompass uncertainties that may incur, to some degree, capital cost increases. More specifically, these
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uncertainties may be related to:
* Technical information: uncertainty in equipment and performance, accurate definition of process parameters (i.
e., severity of operating conditions, quantity of recycles) and allowance for design changes, and
* Problems that must be overcome during construction or plant start-up: project errors or incomplete
specifications, labor costs changes, strikes, problems caused by weather; inflation of costs.
Higher contingencies are assumed for emerging production pathways, according to the risks associated with the
uncertainties involved in such pathways. In this context, a contingency of 20% is assumed for established
pathways; a contingency of 30% is assumed for new processes, with few operating plants; and, for embryonic
processes still under development, a contingency of 45% is adopted.
Estimates Scope Limitations
It is important to mention that the capital costs estimates presented do not include working capital and additional
capital costs associated with plants’ start-up. Working capital is defined as the funds, in addition to the total
investment, that a company must contribute to a project to get the plant into operation and to meet subsequent
obligations. Further, additional start-up capital costs are associated with the money spent during the period
between the nominal end of construction and the production of quality product in the quantity required (e.g.,
operator and maintenance employee training, testing and adjustment of equipment, etc.).
Accuracy
The accuracy range for capital cost estimates obtained according to the methods hereby presented is -25% to
-40% on the low side and +35% to +80% on the high side, depending on the maturity level of the pathway
examined. The presented accuracy considers a confidence level of 90%, which is consistent with the type of
conceptual evaluations that this study aims to do.
Other Production Costs Estimating
At this point, net raw materials costs and capital costs of all pathways have already been calculated. There are,
however, other relevant production costs not yet included, namely, fixed costs, corporate overhead costs, net
utilities costs and depreciation.
In this study, the utilities costs component encompasses costs related to a plant’s energy requirements, mainly
including: steam, electricity, and fuel. These energy requirements are estimated based on the heat of reactions
involved in a given pathway. The correlation used by the Intratec team was refined from a well-established
method reported in technical literature by Lange, related to chemical process industries. (See “References”
chapter)
Fixed costs include costs of maintenance, operating labor, operating charges and plant overhead. Such costs do
not change when production volume in a plant changes.
Corporate overhead is associated with costs incurred by company’s head office such as general administrative
costs, research and development activities related to the process and product, market and product distribution.
Finally, it is worth noting that costs associated with catalyst and minor chemicals consumed in the process are
not considered in the analysis performed in the present report.
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Depreciation
Depreciation refers to the decrease in value of industrial assets with the passage of time, primarily due to wear and
tear. While not a true manufacturing cost, depreciation is considered to be a manufacturing expense for
accounting purposes – it allows the recovery of the cost of an asset over a time period.
In this report, depreciation is calculated based on the straight-line method, according to which the cost of an asset
is uniformly distributed over its lifetime. The Intratec team assumes a depreciation of 10 % of the capital costs per
year.
Economic Potential Estimating
Heretofore, the pathways examined were compared separately in terms of raw materials and capital costs. The
next step in the methodology is the comparison between the economic potential of each pathway examined. Such
economic potential, in turn, is measured through the combination of all costs estimated for a given pathway in a
single item: the “Product Value”.
More specifically, the product value results from the sum of production costs (i.e., net raw material costs, net
utilities costs, other production costs and depreciation) with the return on capital employed (ROCE). The formula
below expresses the product value calculation.
Product Value = Net Raw Material Costs + Net Utilities Cost + Other Production Costs + Depreciation + Expected ROCE
Amount
where all components are expressed in US dollars per amount of product.
The expected ROCE amount is a component which reflects the capital costs of a given pathway into its product
value. This component is based on the expected return on capital employed typically aimed by chemical
companies. It is calculated by multiplying capital costs by the expected ROCE percentage, divided by the total
amount of product manufactured:
Expected ROCE Amount = Capital Costs * Expected ROCE Percentage / Product Annual Production
This “Expected ROCE Amount” component is, in fact, a measure of the cost of investment required to construct the
plant, in terms of US dollars per amount of product.
Most chemical companies aim to achieve a ROCE percentage ranging from 10% to 30% for the construction of a
new plant. In this context, the Intratec team assumes an expected ROCE percentage of 10% for established
industrial processes.
In contrast, a 30% expected ROCE is assumed for emerging industrial processes, as such processes inherently
involve a larger amount of risk and cost uncertainty. It should be noted that the risk taken into account here is
limited to the technical risk associated with the process uncertainties. Other venture risks were not considered,
such as business environment, product market changes, increased competition, raw materials and product prices
variations, change in government policy, etc.
Finally, it is also important to mention that the product value must not be confused with product price. While the
product value is calculated based on production costs and expected ROCE, the product price is the actual value
practiced in market transactions.
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The accuracy range for product values estimated in the present study is -15% to -20% on the low side and +15% to
+25% on the high side, depending on the maturity level of the pathway examined. The presented accuracy
considers a confidence level of 90%, which is consistent with the type of conceptual evaluation that this study
aims to provide.
Regional Comparisons
Thus far, all analyses developed were based on a specific region. The last step of report development is the
evaluation of each pathway individually, comparing net raw material costs and economic potential, across
different countries. Next, the way in which such costs are calculated for each of the countries examined will be
presented.
Net raw materials costs are calculated using the same methods previously described, considering, however, local
pricing data related to the countries examined
Capital costs and depreciation estimates are directly converted to other locations according to Intratec’s chemical
plant location factors. These factors are calculated based on high volumes of local data of different locations,
relating to productivity, labor costs, steel and energy prices, equipment import needs, freight, taxes and duties on
imported and domestic materials and regional business environment, among others.
The utilities costs initially calculated are, in turn, adjusted for each country based on local market fuel price data.
Finally, fixed costs and corporate overhead costs are calculated mainly based on local labor costs and the capital
costs associated with each location examined.
55

ABOUT INTRATEC
Our Business
Intratec is an independent research and leading advisory firm, recognized for excellence in the evaluation of
chemical markets and the economics of industrial process. We are a mix of consulting professionals, market
researchers and cost estimators with extensive industry experience.
Since 2002, the reports and databases we provide have increased the early recognition of promising research and
capital investment opportunities in the chemical, petrochemical, oil, plastic, renewable and allied sectors. Our
products have been used by our clients in multiple ways, such as:
* To understand chemical market size, dynamics and attractiveness
* To understand the feasibility of competitors’ technologies and developments
* To obtain estimates of ventures’ profitability, capital and operating costs
* To assess the economic potential of R&D breakthroughs
* To ascertain the economic aspects and risks of their competitors’ research
* To screen and assess industrial investment options
* To define consistent business cases for investments
* To evaluate / select independent licensors
Our Reports
Intratec has an extensive portfolio of reports targeting chemical markets and process economics. With more than
900 up-to-date reports for the chemical, petrochemical, oil, energy, plastic, renewables and allied sectors, the
Intratec portfolio is constantly growing.
Intratec offers the following types of reports:
* Production Pathways Reports: Reports presenting paths to producing chemical and preliminary economic
comparisons of those paths. From these reports, you can learn the ways in which changes in feedstocks and
location can affect chemical production economics.
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costs.
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Find below the chemicals covered in Intratec reports.
encouraged to visit www.intratec.us
For a more complete and updated list, the reader is
3-Hydroxypropionic Acid
Acetone
Acetylene
Acetyls
Acrylic Acid and Derivatives
Acrylic/Maleic Copolymer
Acrylonitrile
Adipic Acid
Aldehydes
Alkylbenzenes
Amino Acids
Ammonia
Aniline
Biodiesel
Bisphenol A
BTX
Butadiene and C4's
C6's
Caprolactam
Carbon Monoxide
Chlorine and Derivatives
Chloroprene
Citric Acid
Cosmetics
Cumene
Detergents
Dicyclopentadiene
Diesel
Dimethyl Carbonate (DMC)
Dimethyl Terephthalate
Diols
Diphenyl Carbonate
Dyes & Pigments
Electricity
Epichlorohydrin
Ethanol
Ethylene
Ethylene Oxide
Fertilizers
Fibers
Fire Retardants
Food Additives
Furans and Derivatives
Glycerol
Glycols
Hydrogen
Hydrogen Cyanide
Hydrogen Peroxide
Industrial Gases
Insecticides
Isocyanates
Isophthalic Acid
Isoprene
Lactic Acid
Linear Alpha Olefins
Methacrylic Acid and Derivatives
Methanol
MTBE
Nitric Acid
Nitro Aromatics
Nylon
Oxalic Acid
Oxo Alcohols
Pentaerythritol
PET
Pharmaceuticals
Phenol
Phosgene
Phthalic Anhydride
Polyacrylate
Polyacrylonitrile
Polyalphaolefins
Polycarbonates
Polyesters
Polyethers
Polyethylenes
Polylactic Acid (PLA)
Polypropylene
Polyurethanes
Propanol and Isopropanol
Propylene
Propylene Oxide
PVC
Reformate
Resins
Silanes
Silicones
Siloxanes
Sodium Hydroxide
Speciality Polymers
Styrenics
Succinic Acid
Sulfuric Acid
Synhetic Rubbers
Synthesis Gas
Vitamins
Terephthalic Acid
Trimethylolpropane
Urea
Vinyls
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www.intratec.us