Technical and Economic Analysis and Recommendations for Ethylene Plants – (Data is somewhat outdated, from 2003)

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Technical and economic analysis and recommendations for ethylene plants. The ethylene industry is the cornerstone of the petrochemical industry and holds an important position within both the petrochemical sector and the national economy. The development of the ethylene industry is linked to the economic development level of a **country or region. Developed countries and regions such as the United States, Western Europe, and Japan are the main producers and consumers of ethylene in the world; they are also the regions that hold a monopoly on ethylene production technologies. For example, from 1986 to 1999, a total of 78 ethylene contracts were signed worldwide, of which ABB Lummus Global accounted for 34.6%, Kellogg Brown & Root (formed by the merger of M.W. Kellogg and Brown & Root) accounted for 25.7%, Stone & Webster accounted for 21.8%, Linde AG accounted for 11.5%, and TPL/Technip accounted for 6.4%. With the continuous and stable development of China’s national economy, particularly the growth of industries such as automobiles, electronics, building materials, and textiles, there is a strong demand for ethylene derivatives. This demand exceeds not only the growth rate of the national economy but also the growth rate of production of ethylene and its downstream products. The ethylene industry in China possesses significant market potential, which offers new opportunities for its development. At the same time, it has become a focal point for global petrochemical companies competing for market share. Therefore, how to improve overall competitiveness is an urgent issue that needs to be addressed in China’s ethylene industry. 1 Analysis of the ethylene market situation 1.1 Production capacity and scale In 2000, the world’s ethylene production capacity was 96,624 kt/year; 230 production units were located in 55 different countries and regions, with an average capacity per unit of 420 kt/year. By the end of the 20th century, many newly built units had a capacity of 600–1000 kt/year. Currently, the largest single-unit ethylene plant in the world is located in Canada, with a production capacity of 1,270 kt/year. Reports suggest that Iran’s **Petrochemical Company has signed a contract with the French company Technip to build an ethylene plant with a capacity of 1,400 kt/a. The United States is the world’s largest producer of ethylene; in 2000 its production capacity was 26,230 kt/year, accounting for 27.1% of the world’s total ethylene production capacity. Western Europe is the world’s second-largest region for ethylene production, accounting for 21.9% of the total capacity, while East Asia (excluding Japan) accounts for 17.9%, with Japan accounting for 8.3%. It is predicted that the average growth rate of global ethylene production capacity between 2000 and 2010 will be 1.6%, with the Middle East being the region with the fastest growth, at 4.7% (Table 1). It is estimated that world ethylene production capacity will increase by 12,300 kt between 2001 and 2005, with the United States seeing an increase of 2,340 kt, East Asia an increase of 3,710 kt, the Middle East an increase of 2,320 kt, Western Europe an increase of 1,820 kt, and Latin America an increase of 1,410 kt. Table 1: Average annual growth rates of ethylene production capacity by region worldwide from 1998 to 2010, %
United States: 1.0
Canada: 2.6
Latin America: 2.2
Western Europe: 1.0
Eastern Europe: 0.5
Middle East: 4.7
Africa: 2.7
Japan: -0.1
East Asia: 12.6
Oceania: 0.3
Total: 148.89

At present, China has 16 ethylene production enterprises with 18 production units, giving a total capacity of 4,690 kt/year. Among these, 7 units have a production capacity of over 300 kt/year, accounting for 65.4% of the total capacity, while those with a capacity of less than 300 kt/year account for 34.6%. The average capacity per unit is 261 kt/year; the largest single unit currently has a capacity of 660 kt/year. "During the 15th Five-Year Plan period, China will add 4,050 kt/a of ethylene production capacity, of which 1,750 kt/a will come from the upgrading of large and medium-sized ethylene plants, and 2,300 kt/a from newly built joint-venture ethylene plants. In addition, the 600kt/a ethylene plant of Fujian Refining & Chemicals-ExxonMobil in Quanzhou City, Fujian Province, along with its associated facilities – a 450kt/a polyethylene plant and a 300kt/a polypropylene plant – have been approved. 1.2 Production and Demand In 2000, the world’s ethylene production was 88,595 kt/year. The United States is the largest producer of ethylene in the world; in 2000 its ethylene production was 24,848 kt/year, accounting for 28.1% of the world’s total ethylene production. Western Europe is the second-largest region for ethylene production, accounting for 21.99% of the total, while East Asia accounts for 19.2%, with Japan accounting for 8.6%. It is estimated that the average annual growth rate of world ethylene production from 2000 to 2010 will be 2.2%, with the Middle East being the region with the fastest growth rate at 6.2%. Africa, Canada, Latin America, and East Asia also exhibit high growth rates (Table 2). Table 2 World ethylene production
Year: 2000, 2001, 2002, 2005, 2010
Average annual growth rate from 2000–2010, %:
United States: 248, 482, 527, 126, 308, 287, 133, 293, 51.3
Canada: 358, 643, 504, 833, 516, 659, 58, 3.4
Latin America: 476, 750, 435, 330, 661, 294, 38, 3.0
Western Europe: 194, 862, 077, 321, 411, 226, 522, 411, 21.4
Eastern Europe: 356, 436, 533, 792, 438, 248, 75, 1.9
Middle East: 641, 977, 998, 928, 124, 671, 804, 06.2
Africa: 906, 113, 412, 891, 385, 341, 73.9
Japan: 76, 107, 382, 748, 575, 537, 400, -0.1
East Asia: 169, 641, 819, 819, 665, 226, 123, 223, 82.6
Oceania: 445, 451, 465, 493, 670, 00.9
Total: 885, 959, 405, 499, 506, 112, 035, 139, 083, 2.2

In the year 2000, the global demand for ethylene was approximately 89 Mt/year. It is expected to rise to 107 Mt by 2005, with an average annual growth rate of 3.7%. Ethylene demand is primarily influenced by changes in ethylene derivatives such as polyethylene, styrene, and ethylene glycol. In 2000, polyethylene accounted for 53.0% of the world’s demand for ethylene, while dichloroethylene, vinyl chloride, and polyvinyl chloride together made up 16.0%. Ethylene oxide accounted for 13.5%, styrene for 7.5%, and other uses accounted for 10.0%. The United States and Western Europe are the largest consumers of ethylene in the world. In 2000, the United States accounted for 27% of the world’s total ethylene demand, Western Europe for 23%, East Asia for 20%, Japan for 8%, the Middle East for 7%, Latin America for 5%, Canada and Eastern Europe each for 4%, and Africa and Oceania each for 1%. It is expected that from 2000 to 2010, the Middle East and Africa will remain the main regions for ethylene exports, Japan and North America will have a basically balanced supply and demand, while East Asia and Western Europe will continue to be net importers. In 2001, China’s ethylene production was 4,806.7 kt, an increase of 64 kt compared to 2000, representing a growth rate of 1.35%. Among them, Sinopec Group’s ethylene production in 2001 was approximately 3,120 kt, an increase of 250 kt compared to 2000 ； In 2001, Sinopec’s ethylene production was approximately 1,570 kt, an increase of 70 kt compared to 2000. In 2001, China’s ethylene imports amounted to approximately 74.3 kt, a decrease of 14.6 kt compared to 2000, representing a 16.44% decline. In 2001, China’s apparent consumption of ethylene was 4,881 kt, an increase of 49.5 kt compared to 2000, representing a growth rate of 1.02%. The domestic demand for ethylene and its downstream products has maintained a high growth rate, while domestic ethylene production is insufficient to meet this demand; as a result, large quantities of ethylene-based products are imported each year. Based on an average annual GDP growth rate of 7% in China from 2000 to 2005, and an elasticity coefficient for demand for ethylene of 1.2 (i.e., the average annual growth rate of equivalent consumption divided by the average annual GDP growth rate), it is estimated that China’s demand for ethylene will be around 13,000 kt by 2005. 2 Raw material structure and its impact on ethylene production costs Raw materials are an important factor affecting the production costs of ethylene; in ethylene production plants that use naphtha and diesel as raw materials, these materials account for 70% to 75% of the total costs ； As a raw material for downstream products, ethylene also has a significant impact on the production costs of these products; for example, it accounts for around 80% of the production costs of polyethylene. Therefore, the selection and optimization of ethylene feedstocks are key to reducing ethylene production costs and enhancing the competitiveness of petrochemical products in the market. Over the past 10–15 years, 50% of the world’s ethylene has been produced using naphtha as a raw material, and naphtha still plays a dominant role as a feedstock for ethylene production, accounting for over 50% of such production ； Ethylene plants that use ethane as a raw material are mainly located in North America, Latin America, and the Middle East, accounting for 25%–30% ； Propane, used as a raw material, accounts for about 10%, primarily in North America ； Butane used as a raw material accounts for 3%–5% ； Light diesel is used as a raw material for ethylene only as a supplement and adjustment to naphtha, mainly in Western Europe, North America, and Asia. Tables 3 and 4 list the ethylene feedstock structure by region in the world and in China, respectively. Table 3 Composition of Ethylene Raw Materials by Region in the World in 2000 (%)
Raw Material: United States, Canada, Latin America, Western Europe, Eastern Europe, Middle East and Africa, Japan, East Asia
Ethane: 45, 60, 49, 59, 67, 0.5, 10.5
Propane: 22, 18, 3.5, 54, 50, 6.5
Butane: 80, 07, 11, 2.5, 2
Naphtha: 14, 17, 43.5, 71, 78, 239, 760
Crude Diesel: 75, 01, 05, 00, 21
Others: 40, 42, 34, 00

Table 4 Changes in the Structure of Ethylene Raw Materials in China
Raw Material: 1997, 1998, 1999, 2000
Total Raw Material Amount/kt·a-1: 1189, 411, 2326.4, 14068.9, 15049.1
Naphtha, %: 45.3, 54.38, 25.81, 66.152
Light Diesel, %: 33.9, 30.22, 16.44, 12.63
Hydrogenation Tail Oil, %: 9.96, 12.03, 9.90, 11.91
Light Hydrocarbons, %: 6.1, 6.69, 6.94, 6.20
Kerosene and Waxes, %: 0.56, 1.71, 2.31, 4.59
Others, %: 4.09, 5.53, 6.25, 3.15

It is expected that the composition of ethylene raw materials worldwide will remain relatively stable in the future; naphtha and light hydrocarbons will continue to be the main raw materials, with naphtha accounting for over 50% and light hydrocarbons (ethane, propane, butane) accounting for over 35%. Other raw materials will account for less than 10%. However, due to differences in resources, the composition of raw materials varies significantly across different ** and regions; for example, in the United States and the Middle East, ethane is the main raw material for producing ethylene, while in Western Europe and Asia, naphtha is the primary raw material. Studies on the impact of cracking feedstocks on the economics of ethylene show that as the feedstock becomes heavier, the capital investment for the plant, the amount of feedstock required, and the consumption of utility resources all increase, along with an increase in by-products. When using heavy feedstocks, the increase in by-products means that the benefits derived from their recovery have a significant impact on the production cost of ethylene. Ethylene plants abroad that use heavy feedstocks place great emphasis on the comprehensive utilization of by-products. However, in China’s ethylene plants that utilize heavy feedstocks, the comprehensive utilization of by-products above the C5 fraction is very poor; the hydroprocessed pyrolysis gasoline is used as a raw material for aromatics or as a component in gasoline blends, while the rest is mostly used as fuel, which significantly hinders the reduction of ethylene costs (see Tables 5, 6, and 7). Table 5: Impact of raw material flexibility on investment costs
Ratio of raw material investment costs: Ethane 1.00, Naphtha 1.35, Propane 1.20, Crude diesel 1.40

Table 6: Relative raw material consumption
Raw material consumption/kg·kg⁻¹ (mass ratio): Ethane 2.6841.00, Propane 4.8841.82, Light straight-run naphtha (high processing depth) 5.9182.20, Light straight-run naphtha (medium processing depth) 7.0842.64, Crude diesel 7.3922.75

Table 7: Budget items for ethylene production investment and costs in the United States in 2000
Ethane (high processing depth), Ethane/Propane (high processing depth), Naphtha (high processing depth), Naphtha (medium processing depth), Naphtha (low processing depth), Full-process naphtha (medium processing depth), Crude diesel (medium processing depth)
Production capacity, kt/a: 680.4, 680.4, 680.4, 680.4, 680.4, 680.4, 680.4, 680.4
Capital investment, million USD: 567.7, 623.29, 72.19, 72.19, 72.11, 0, 23.31, 083.3
In-process: 326.03, 57.65, 18.45, 18.45, 18.45, 45.75, 77.7
Outside process: 128.21, 41.02, 59.32, 59.32, 59.32, 72.92, 88.9
Other engineering costs: 113.5, 124.6, 194.4, 194.4, 194.4, 204.7, 216.7
Working capital, million USD: 55.86, 5.81, 03.1, 105.6, 108.2, 110.7, 114.8
Production cost/dollar·t⁻¹: Raw materials 344.64, 26.77, 85.68, 24.28, 63.38, 77.69, 92.05
By-product recovery: –67.1, –104.9, –549.0, –604.1, –661.0, –671.9, –814.4
Net raw materials: 277.53, 321.82, 336.62, 220.12, 202.32, 205.71, 106.2
Utilities: 46.86, 66.29, 99.01, 103.91, 108.91, 106.41, 112.6
Net raw materials and utilities/dollar·t⁻¹: 324.33, 387.93, 335.63, 324.03, 311.13, 312.12, 188.8
Variable costs: 324.33, 387.93, 335.63, 324.03, 311.13, 312.12, 188.8
Direct fixed costs: 17.4, 18.7, 26.9, 26.9, 26.9, 28.0, 29.3
Allocated fixed costs: 20.5, 22.2, 33.3, 33.3, 33.3, 34.8, 36.7
Cash costs: 362.3, 428.9, 395.8, 384.2, 371.3, 375.0, 284.7
Depreciation: 74.0, 81.2, 123.8, 123.8, 123.8, 130.3, 138.0
Production cost: 436.3, 510.1, 519.6, 508.0, 495.1, 505.3, 422.7
10% profit on invested capital: 91.6, 101.3, 158.0, 158.4, 158.8, 166.7, 176.1
Production cost + profit: 527.9, 611.4, 677.6, 666.4, 653.9, 672.0, 598.8

3 Operating cycle of ethylene plants
Due to improvements in production processes and equipment, the continuous operating cycle of ethylene plants is continuously increasing, resulting in a reduction in unplanned shutdowns. In the mid-1990s, the operating cycle of ethylene plants in Europe and North America was generally 2 to 3 years, while that of ethylene plants in Japan was 2 years. Currently, some ethylene plants in Europe and North America have been in operation for 5 to 6 years, with the longest operational period reaching 7 years; the average major maintenance cycle for olefin plants worldwide is 46 months. The longest operating cycle for ethylene plants in our country is 32 months, with an average of 2 years. The extended operation cycle of the device reduces maintenance costs and minimizes downtime losses. 4 Energy consumption analysis of ethylene plants: Thanks to advances in production technology, the yield of ethylene has increased, resulting in reduced overall energy consumption. Currently, the yield of ethylene from naphtha cracking abroad can reach 34%–35% ； The comprehensive energy consumption is as follows: 13,807 kJ/kg for ethane cracking, 15,899.2 kJ/kg for propane cracking, 23,012 kJ/kg for naphtha cracking, and 24,267 kJ/kg for light diesel cracking. All the large and medium-sized ethylene plants in our country were introduced as complete sets from abroad; 10 such sets were introduced in the 1980s, and 8 sets in the 1990s. Due to relatively backward technology, the key technical and economic indicators are significantly lagging behind. In 2000, China’s average ethylene yield was 31.2%, with a comprehensive energy consumption of 32,478.6 kJ/kg. 5 Suggestions for the Development of China’s Ethylene Industry To meet the huge demand of the domestic market, it is necessary to accelerate the development of China’s ethylene industry ； To cope with the increasingly fierce market competition, it is necessary to strive to narrow the gap between China’s ethylene industry and the world’s advanced standards. 5.1 Adhere to the trend of making ethylene raw materials lighter and of higher quality. Since raw material costs account for the largest portion of ethylene production costs, the optimization of these raw materials is the most important factor affecting the efficiency of ethylene production facilities. Lightweighting and improved quality are important measures taken by foreign petrochemical companies to reduce the production costs of ethylene, and they represent the development trend for ethylene raw materials worldwide. Lighter and higher-quality raw materials help to increase the ethylene yield, reduce investment costs, lower energy and material consumption, extend the operational cycle, and decrease operating expenses. Therefore, in order to reduce the production cost of ethylene, it is necessary to pursue the trend of using lighter and higher-quality raw materials for ethylene production, adhering to the principle of \"using ethylene when appropriate and aromatics when suitable.\" Efforts should be made to optimize the raw materials used for ethylene production, further reducing the proportion of light diesel in these materials, and making full use of the light hydrocarbons and condensate resources available in oil fields. 5.2 Adhere to the development strategy of integration of refining and chemical industries. Integration of refining and chemical industries represents a new trend in development. By combining refineries and ethylene plants, it is possible to achieve mutual supply of raw materials and products, as well as to optimize the ethylene feedstock. Naphtha, reformate overheads and bottoms, hydrodesulfurization tail oils, and light hydrocarbons produced by refineries are excellent feedstocks for ethylene plants. Through optimized allocation, the raw material consumption of these ethylene plants can be reduced, and a significant amount of ethylene can also be recovered from dry gas. The hydrogen produced as a by-product of the ethylene plant, along with hydrocracked gasoline, can be used respectively as raw materials for oil refining or as components for blending oils, thereby reducing the consumption of raw materials needed for hydrogen production from naphtha. This integration of refining and chemical manufacturing not only enhances the flexibility of the raw materials used in ethylene production facilities and their ability to respond to market changes, but it also increases corporate profitability. 5.3 Adhere to the development path of \"exploiting internal potential and carrying out technological upgrades.\" Technological upgrades to existing ethylene plants can increase production capacity, with low investment costs, a short construction period, and rapid results. Therefore, to accelerate the development of China’s ethylene industry, it is necessary to pursue a path of \"exploiting internal potential and technological transformation\". (1) For the ethylene plants at Yanshan Petrochemical, Shanghai Petrochemical, Yangzi Petrochemical, Qilu Petrochemical, Daqing Petrochemical, etc., which originally had an initial production capacity of 300 kt/a, technical upgrades were carried out. After that, the bottlenecks in their production capacity were carefully analyzed, and appropriate expansions were implemented to raise their capacity to over 800–900 kt/a, turning them into world-class large-scale ethylene plants. (2) For small ethylene plants with limited scale and lack of market competitiveness, it is necessary to draw on the experience gained from the upgrading of large ethylene plants in order to carry out capacity expansion upgrades and transform them into medium-sized ethylene plants. (3) Technical upgrades must combine the expansion of production capacity with the improvement of technical standards, focusing on reducing energy consumption, increasing ethylene yield, and ensuring long-term operation of the facilities. 5.4 Research and development of applications for by-products: In China, the proportion of ethylene raw materials is high, while the proportion of by-products is also high; moreover, the level of utilization of these by-products is low, which severely affects the competitiveness of ethylene production facilities. Therefore, it is necessary to research and develop applications for by-products in order to improve the overall efficiency of utilizing petrochemical raw materials. (1) Build high-quality C5 and C9 petroleum resin plants on an economic scale ； Expand the scale of cracking C5 extraction for the production of isoprene, cyclopentadiene, and mesitylene in a timely manner ； Develop technology for using C5 hydrogenation as a feedstock for ethylene. (2) Styrene is extracted from the C8 fraction of pyrolysis gasoline, and p-xylene is produced via the hydrogenation of C8. (3) Construct a naphthalene extraction unit for pyrolyzed diesel in a timely manner. (4) Producing high-performance carbon black for tires from cracked residue oil. 5.5 Attracting foreign investment for the joint construction of large-scale ethylene plants: The huge demand in the domestic market for downstream products derived from ethylene has motivated foreign ethylene producers to build such plants in China. We should strengthen cooperation, actively introduce foreign investment as well as advanced foreign technologies and management practices, work together to build world-class ethylene plants, and accelerate the development of China’s ethylene industry.