MTBE is at a turning point – are companies ready?

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A turning point for MTBE: Are companies ready? Author/Source: China Chemical Industry News Date: 2019-03-25 Clicks: 11 According to the \"Implementation Plan for Expanding the Production of Biofuel Ethanol and Promoting the Use of Ethanol-based Gasoline in Vehicles\", jointly formulated by 15 ministries and departments, by 2020, the use of ethanol-based gasoline in vehicles should be widespread across the country, with near-full coverage achieved. Currently, the latest standards for ethanol-blended gasoline for use in vehicles have been issued, which stipulate that oxygen-containing organic compounds must not be added artificially; thus, ether components such as MTBE (methyl tert-butyl ether) will no longer be used as components in gasoline blending. 　　Manufacturing companies approach this with caution. MTBE is one of the few products among traditional methanol downstream products for which new projects are being developed. MTBE production enterprises are mainly located in East China and South China, with operations also present in Northeast China, Northwest China, North China, and Central China; virtually all refineries owned by CNPC and Sinopec have such facilities. 　　Zhang Yudong, director of the R&D institute at Jinzhou Petrochemical Company, explained that due to the rapid increase in gasoline consumption, there is strong enthusiasm for building MTBE production facilities in China, leading to an increase in production capacity. The implementation of this plan is a fatal blow to MTBE, and it has a profound impact on the entire industry chain. 　　After more than 10 years of rapid development, the MTBE industry now has a production capacity of over 19 million tons, with more than 200 production units, and its manufacturing processes have evolved to five different types. The new production capacity added in recent years has mainly concentrated in large-scale oil refining and chemical enterprises. The MTBE plant plays a crucial role as a link in the production chains of various enterprises; it processes the by-product gas from refineries at the upstream stage and enhances the octane rating of high-purity gasoline at the downstream stage, serving as an important means to increase the added value of products. According to Cui Junfeng, deputy director of the refinery at Daqing Petrochemical Company, MTBE is a key component used to increase the octane rating of gasoline. With the widespread adoption of ethanol-based gasoline, significant changes will occur in MTBE’s production processes, demand levels, and market structure. 　　Zhang Yudong believes that, with the market already saturated and refineries significantly reducing the amount of materials they purchase from the market, it has become increasingly difficult for small and medium-sized MTBE manufacturers to operate, and their facilities face the risk of being shut down or left idle. 　　Li Yong, deputy director of the Planning Department at Jinzhou Petrochemical Company, shared his views on the future of MTBE: “The widespread use of ethanol-based gasoline will lead to the shutdown of units used for the etherification of light gasoline, as well as the cessation of MTBE production; this will pose challenges in terms of the transformation of isobutylene processing.” ” 　　Five key trends worth paying attention to At present, the most notable trends in the MTBE industry are evident in five areas. 　　Peak production period. Production capacity has been on a continuous upward trend; in particular, in 2017, 9 MTBE plants were built in China, of which 8 began operations. Among them, there are 3 sets of conventional units, 1 set of heterogeneous units, 3 sets of isobutane dehydrogenation units, 1 set of mixed hydrocarbon dehydrogenation units, and 1 set of PO/MTBE units. In 2018, MTBE production capacity continued to increase, with a growing trend toward larger manufacturing facilities. 　　Production costs are reduced. The production technology in the MTBE industry shows a trend toward diversified raw materials, larger scale for individual production units, and improved yield. The MTBE production processes that are currently in use include the C4 process, the aromatic isomerization process, and the isobutane dehydration process. Based solely on the calculation of raw material input-output ratios, the cost of the aromatic isomerization process is 196 yuan lower than that of the C4 process (per ton, the same below); the cost of the isobutane dehydration process is 321 yuan lower than that of the C4 process. Technological advancements are contributing to a continuous reduction in production costs across the industry. 　　There are uncertainties regarding the growth rate of demand. The growth in demand for MTBE is driven primarily by the production of higher-octane gasoline and the improvement in gasoline quality; however, the growth rate of MTBE demand for use in gasoline blending may vary in the future. According to forecasts by consulting firms, the growth rate of MTBE used for domestic oil blending will slow down. It is estimated that the average annual growth rate of MTBE for use in oil blending will be around 3% from 2015 to 2019, compared to a growth rate of 15% from 2009 to 2013. 　　The market structure is changing. **Since policies were introduced to regulate oil blending activities, the product names listed on the purchase and sales invoices issued by refined oil distributors are regularly compared, thereby preventing tax evasion through the use of fraudulent invoice adjustments. This measure has helped to adjust and optimize the structure of the clients of those engaged in oil blending. As the amount of oil adjusted by state-owned refineries increases, the amount of MTBE purchased from external sources also rises; meanwhile, the amount of oil adjusted by private entities declines rapidly, leading to a decrease in the amount of MTBE purchased from external sources. 　　As the growth in global MTBE production comes mainly from China, China will shift from being an MTBE importer to an exporter. As production capacity increases, exports will also increase. According to forecasts by consulting firms, China’s export volume of MTBE in 2019 will reach 290,000 tons. 　　The above five trends are bound to have a profound impact on the development of the MTBE industry. The cooperation between MTBE producers and state-owned refineries will become increasingly close. Plants with low production capacity and outdated technologies will be phased out rapidly, while blending companies and traders will gradually withdraw from the market. The level of development of this industry will depend on the degree of cooperation among state-owned refineries and manufacturers equipped with large-scale MTBE plants in terms of regional layout, price competition, and business models. On the other hand, complementary advantages among MTBE manufacturers will become increasingly important. Enterprises seek the optimal sales radius through competition and cooperation, gradually establishing mechanisms for consultation and communication among themselves; they can also jointly develop overseas markets by complementing and exchanging resources. 　　Transformation is an inevitable trend. Experts believe that once ethanol gasoline becomes widely used, the transition to MTBE will be inevitable. Before 2020, how to utilize C4 resources, especially isobutylene, after the shutdown of MTBE plants, and how to connect the upstream and downstream units involved in C4 processing in order to make the most of existing resources and minimize losses, would be the primary challenge faced by refineries. 　　Kunlun Consulting revealed that SINOPEC’s Research Institute of Petrochemistry has successfully developed selective isobutylene copolymerization-hydrogenation technology and non-selective butene copolymerization-hydrogenation technology. These technologies can provide technical solutions for the retrofitting of MTBE units in refineries and the efficient utilization of C4 resources, depending on the specific circumstances, while also serving as a valuable supplement to the octane rating of gasoline. In 2018, Sinopec converted the idle MTBE unit at the Shijiazhuang refinery into an industrial facility for the selective polymerization of isobutylene, producing qualified isooctene products with an octane rating of over 102, thereby providing a reference for the refining industry in addressing the challenges posed by MTBE. 　　According to Liang Fulan, an analyst at Longzhong Information, the MTBE plant of Qilu Petrochemical is capable of combining etherification and etherolysis technologies; it can produce both MTBE and high-purity isobutylene. This allows the company to expand from producing a single type of product to developing an industrial chain that uses MTBE as a raw material, thereby producing high-value chemical products such as butyl rubber and polyisobutylene, which are in demand in the market. As a result, the MTBE plant’s ability to withstand market risks is also enhanced. 　　Li Yong explained that after the full rollout of ethanol-blended gasoline, the MTBE plant at Jinzhou Petrochemical was shut down; the olefin content and alkene-to-alkane ratio of the two catalytic liquefied gas units were not sufficient for use as feedstock in alkylation processes, so isobutylene had to be utilized. Currently, they are considering three solutions: first, to continue operating the MTBE plant to produce MTBE for use in blending gasoline, thereby maintaining a normal alkene-to-olefin ratio; second, to shut down the MTBE plant and increase the processing capacity of the PIB plant in order to maintain that alkene-to-olefin ratio; third, to use a selective dimerization plant to produce blended gasoline, again with the aim of maintaining a normal alkene-to-olefin ratio. 　　Chen Lin, an analyst at Business Society, believes that the ban on MTBE will inevitably exacerbate the surplus of C4. Given the low volume of utilization of tetra-carbon fractions in the fine chemical industry and the complexity of the related technologies, it is recommended that companies in this sector seize the opportunities to leverage their resources and technical strengths to develop more straightforward large-scale technologies for the comprehensive utilization of tetra-carbon compounds. They should also focus on advancing the development of technologies for utilizing tetra-carbon compounds in refineries, particularly environmentally friendly processes such as InAIk and alkane conversion technologies, in order to create new gasoline blending products.