FIG. 5
Source: US Energy Information Administration, Petral estimates
PROPYLENE PRODUCTION, SALES
Jan. Apr. July Oct. Jan. Apr.
2014 2015
Refnery merchant sales Coproduct supply
100
80
60
40
20
0
Volu
me
,
mi
llio
n
lb/d
a
y
FIG. 4
Source: Petral Consulting Co.
US ETHYLENE PLANT FEED SLATE
Jan. Apr. July Oct. Jan. Apr.
2014 2015
Fe
ed
,
mi
llio
n
b/d
2.0
1. 5
1.0
0.5
0.0
Ethane Propane Others
Statistics from the US Energy Information Administration (EIA) indicate US refineries operated FCCUs at
4. 5 million b/d in first-quarter 2015
and an estimated 4. 9-5. 1 million b/d
in second-quarter 2015. Feed rates
for all FCCUs in first-quarter 2015
were 401,000 b/d ( 8.2%) less than in
fourth-quarter 2014 and 93,300 b/d
( 2.0%) less than in first-quarter 2014.
The drop in FCCU feed rates in first-quarter 2015 was consistent with seasonal patterns in refinery crude runs.
Regionally, EIA statistics showed
feed rates for FCCUs in the US Gulf
Coast and Midcontinent were 3. 36 million b/d in first-quarter 2015, 268,300
b/d ( 7.4%) less than in fourth-quarter
2014. Feed rates for these FCCUs were
3. 65-3. 75 million b/d in second-quarter 2015, 365,000 b/d ( 10.9%) more
than in first-quarter 2015.
EIA reported propylene production
from all US refineries was 46. 5 million lb/day in first-quarter 2015 before
increasing to 50. 3 million lb/day in
April. Petral Consulting estimates refinery-grade propylene was 52.0-52.5
million lb/day in May and June and was 51. 5-51. 7 million lb/
day for second-quarter 2015. US production in first-quarter
2015 was 772 million lb ( 15.6%) less than in fourth-quarter 2014 and 378 million lb ( 8.3%) less than in first-quarter
2014.
Refineries in the Gulf Coast and Midcontinent are the primary supply sources of refinery-grade propylene for chemical markets in the Gulf Coast. EIA reported production from
refineries in the Gulf Coast and Midcontinent was 40. 2 million lb/day in first-quarter 2015 and 44.0-45.0 million lb/
day in second-quarter 2015. Production from Gulf Coast
and Midcontinent refineries in first-quarter 2014 was 667
million lb ( 15.6%) less than in fourth-quarter 2014 and 362
million lb ( 9.1%) less than in first-quarter 2014 (Table 5).
Propylene economics, pricing
EIA statistics for refinery-grade propylene and Petral Consulting’s estimates for coproduct supply indicate total US
propylene supply was 73.0 million lb/day in first-quarter
2015 and 76. 5-77. 5 million lb/day in second-quarter 2015.
While the increase in coproduct supply for first-half 2015 vs.
first-half 2014 was significant, the decline in refinery supply
reduced total supply by 1. 6 million lb/day.
Fig. 5 shows trends in coproduct and refinery merchant
propylene sales, as reported by EIA.
Two factors greatly influence propylene pricing. Refinery-
Refinery propylene sales into the merchant market are a
function of:
• Fluid catalytic cracking unit (FCCU) feed rates (most
important variable).
• FCCU operating severity (important but not directly
measurable).
• Economic incentive to sell propylene rather than use it
as alkylate feed.
Variations in FCC unit feed rates are the most important
parameter. Economic factors affect operating severity and
are generally of secondary importance.
Feedstock prices, coproduct values, and ethylene plant yields
determine ethylene production costs. Petral Consulting maintains
direct contact with the olefin industry and tracks historic trends in
spot prices for ethylene and propylene. We use a variety of sources
to track trends in feedstock prices.
Some ethylene plants have the necessary process units to convert
all coproducts to purity streams. Some ethylene plants, however, do
not have the capability to upgrade mixed or crude streams of various coproducts and sell some or all their coproducts at discounted
prices. We evaluate ethylene production costs in this article based
on all coproducts valued at spot prices.
