Cost comparison of olefin projects using different feedstock routes

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This post was last edited by jordan569 on 2013-1-6 21:20. Summary: With the influx of large quantities of low-cost imported methanol from the Middle East, many domestic companies have begun to consider using imported methanol for the production of olefins. Using imported methanol to produce olefins can reduce the total investment required for olefin production projects, save domestic resources, and simultaneously decrease CO2 emissions. The competitiveness of imported methanol-based olefin production projects is largely determined by the import price of methanol. Based on the import prices of methanol and naphtha in recent years, this article calculates and compares the production costs of the MTO and naphtha-to-olefins processes. It suggests that, if it is possible to obtain methanol at lower prices, and given the current domestic policies permit it, it would be feasible to consider using imported methanol for the production of olefins ； Or build integrated olefin projects for methanol, olefins, and downstream products at lower coal prices in coal-producing areas. The main processes for producing olefins include cracking naphtha and LPG to produce olefins, as well as using methanol or LNG in MTO and MTP processes to produce olefins. To compare the costs of production for the naphtha-to-olefins and methanol-to-olefins (MTO) processes, it is necessary to establish a cost calculation model. Based on domestic data on olefin projects, this paper selects product options for producing olefins via the MTO process using imported methanol at a capacity of 1.8 million tons per year (300,000 tons of ethylene and 300,000 tons of propylene), as well as via naphtha at a capacity of 1.2 million tons per year (800,000 tons of ethylene and 400,000 tons of propylene), in order to develop cost models for comparison. Since both MTO of methanol and naphtha to produce olefins yield propylene and ethylene, along with other by-products, we chose the unit cost of the diolefins after deducting the costs of these by-products as the basis for comparison. First, the raw material prices under different unit costs per diolefin for the two raw material routes were calculated; when the price of methanol was around 2400 yuan/ton and the price of naphtha was around 5100 yuan/ton, the unit cost per diolefin was approximately 7000 yuan/ton ； When the price of methanol is around 3,650 yuan per ton and the price of naphtha is around 7,100 yuan per ton, the unit cost of diolefins is approximately 10,000 yuan per ton. To reflect the relationship between the unit cost of dienes and the import price of dienes in recent years, the production cost of dienes was calculated using the monthly average prices of imported methanol and imported naphtha from 2007 to 2010, and this figure was compared with the average import price of dienes. The cost of producing olefins from imported naphtha is lower than the price of imported diolefins, resulting in relatively lower risks. The price of imported methanol fluctuated significantly before 2009, and there are price risks associated with using imported methanol to produce olefins ； From 2009 to the first half of 2010, prices remained stable and at low levels, making it an appropriate time to consider investment projects ； In the first three quarters of 2010, the cost of producing olefins from imported methanol was lower than that of producing olefins from imported naphtha. In the fourth quarter of 2010, import prices for methanol and naphtha rose; the costs of olefins were already close to those of imported products, leaving limited profit margins, so caution is required when making investments. The unit cost of olefins is greatly influenced by raw material prices, which account for over 80% of the production costs associated with olefin manufacturing. Changes in international oil prices and domestic coal prices have a direct impact on both the prices of raw materials used in olefin production and the costs of olefins. Taking a methanol plant with a production capacity of millions of tons as an example, when the coal price is 200 yuan per ton, the cost of methanol is approximately 780 yuan per ton ； When the coal price is 400 yuan per ton, the cost of methanol is approximately 1200 yuan per ton ； When the coal price is 800 yuan per ton, the cost of methanol is approximately 2050 yuan per ton ； When the coal price is 1,000 yuan per ton, the cost of methanol is approximately 2,500 yuan per ton. The price changes of naphtha are even more closely related to those of crude oil. A correlation analysis using the Prudhoe Bay spot prices for naphtha and the Tapis spot prices for crude oil from 2003 to 2010 yields the following formula: Prudhoe Bay naphtha price (dollars per barrel) = 3.18047 + 0.8759 × Tapis crude oil spot price (dollars per barrel). With an R2 value of 0.944337, which is close to 1, it can be concluded that the fit of this formula is relatively good. The domestic naphtha price can also be approximated by using an empirical formula that reflects the relationship between the Prudhoe Bay naphtha price and changes in naphtha prices: Domestic naphtha price = [(Prudhoe Bay naphtha price + 0.05) × 10.35 + 20.5] × exchange rate × (1 + tariff rate). The impact of oil prices on the cost of producing olefins from different feedstocks can be determined by calculating the unit cost of diolefins based on naphtha prices at various oil price levels; thereafter, the competitive price of methanol can be calculated using the feedstock price at the cost-equilibrium point. Calculations show that when the crude oil price is $80 per barrel, the price of naphtha is approximately 6,200 yuan per ton, while the competitive price for methanol is around 3,100 yuan per ton. The unit cost of olefins produced from naphtha and those produced via the MTO process using methanol is roughly equal, at about 8,600 yuan per ton. By comparing the competitive price of methanol and the price of methanol itself at different crude oil prices, it can be concluded that when oil prices are above $70 per barrel, the cost of producing olefins from methanol can reach or even be lower than the cost of producing olefins from naphtha. Since fluctuations in international oil prices are influenced by various factors, model calculations also have their limitations; therefore, the critical points for the raw material costs of olefin projects corresponding to crude oil prices are provided for reference only. In summary, if imported methanol can be obtained at a lower price, and given the current domestic policies permit it, it is possible to consider using imported methanol for the production of olefins ； Or build integrated olefin projects for methanol, olefins, and downstream products at lower coal prices in coal-producing areas. Due to differences in the conditions for building plants and the sources of various process technologies, the construction of projects for producing olefins from imported methanol should also take into account specific circumstances and choose an appropriate time for investment. Authors: Feng Kai, Chang Yi, China Chemical Industry Economic and Technical Development Center. 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