Economics

4 technologies that will disrupt the petrochemical industry

As an extraction technology, fracking is capable of extracting a large quantity of natural gas, which can, in turn, be made into petrochemical raw materials.

Published

3 years ago

June 4, 2018

Headline Editor

Technological advances and scientific innovations will play a great role in the years to come, and the petrochemical industry is no exception

As an extraction technology, fracking is capable of extracting a large quantity of natural gas, which can, in turn, be made into petrochemical raw materials.

Fracking is an extraction technique that combines two technologies, hydraulic fracturing and horizontal drilling. The technique involves pressurized injection of chemicals and sand into the ground.

The process causes fractures in the rock, through which shale gas and shale oil are released.

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Technological advances and scientific innovations will play a great role in the years to come, and the petrochemical industry is no exception, as new innovations will bring about major changes in the industry’s supply chain, from precursor sources to final products.
Technologies that will affect the sourcing of precursors are fracking technology and on-purpose technology. Since these two technologies significantly impact competitiveness, producers who can utilize them will be able to produce petrochemical precursors at a lower cost and at a higher quantity.
Similarly, bioplastic technology and 3D printing will better meet consumer needs. A number of types of plastics, e.g. ABS and PLA, will grow in response to higher demand.
EIC expects that as a result of innovations in precursor-sourcing technologies, such as fracking and on-purpose Technology, Thai operators must adjust themselves in order to remain competitive with other global players. As for technologies that directly serve customer needs, such as bioplastic and 3D printing, this will present an important opportunity for Thai operators to enhance the value of their supply chain in order to expand their markets in the future.

In the US, fracking technology has lowered the cost of shale gas among ethylene producers. This is because shale gas extracted through this method has become available in large supply and at a lower cost, leading to an expansion in ethylene and gas cracker production. The EIA estimates that ethane cracker production in the US will grow by 16.3% per annum between 2016 and 2018.

The Gas Cracker method can produce a proportion of 82% ethylene, whereas the Naphtha Cracker method can only produce 30% ethylene. Therefore, this new technology yields a higher ratio of ethylene. As for propylene, which is another important petrochemical precursor, the Gas Cracker method can produce a proportion of 13% propylene. By contrast, the Naphtha Cracker method can producer a higher proportion of 15% propylene. As a result of the lower proportion, the market’s demand for propylene currently does not meet supply.

On-purpose precursor-sourcing technology will help alleviate the problem of shortage in petrochemical precursors.

While the US has shale gas as a main petrochemical precursor, China uses coal as a source of petrochemical production to meet domestic demand. On-purpose technology has been introduced to coal extraction to produce a petrochemical precursor called coal-to-olefin (CTO) and methanol-to-olefin (MTO). Moreover, On-purpose Technology can address the issue of low-proportion propylene that results from the Gas Cracker method. An on-purpose technology called propane dehydrogenation (PDH) uses propane to pull out hydrogen atoms in order to more effectively extract propylene as an important petrochemical precursor.

The aforementioned technologies will present challenges to the petrochemical industry in competitiveness between international players.

Competitors in the US have advantage in the lower production costs of both ethylene and propylene as a result of fracking technologies for shale gas and PDH. In Asia, particularly in China, the CTO and MTO technologies remain expensive. However, if China succeeds in lowering their production costs in the future it will become a competitive player, thus presenting a challenge to other players in Asia, most of which are Naphtha-based producers, such as companies in South Korea, Japan, and Taiwan. Therefore, exports to China may not expand as fast as before. In this regard, previous exporters will face ruthless…

Author: Nattanan Apinunwattanakul

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