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NGLs Week is PetroChem Wire's comprehensive summary of price trends, upstream and downstream costs, operations news and supply/demand forecasts. The report contains everything you'll need to understand what's happening in the NGL markets.

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Current PDH outage, future demand to have little impact on spot propane prices

HOUSTON, April 12, 2017 (PCW) -- With Flint Hills Resources propane dehydrogenation (PDH) unit going down for a planned two-month turnaround, some 20,000 b/d of propane demand will be lost.

With total propane demand coming in at around 1.7 million b/d and current PDH propane demand at a total of 55,000 b/d (3.2%), it is unlikely the outage would affect spot prices. In July, Enterprise Products Partners’ PDH unit is expected to go online, adding another 35,000 b/d of propane consumption, bringing PDH units’ demand share to about 5%.

Unlike ethane crackers that are being built and planned at a steady clip in North America, PDH units have had a rougher time crossing the finish line. Apart from the existing Flint Hills and Dow units in Texas and the upcoming EPD plant, the next wave of PDH units are only like to come to fruition in the post-2020 time frame.

Several plans have fallen by the wayside or been tabled indefinitely (REXtac’s Odessa and Ascend Materials’ Alvin plants). These delays are partly due to the softer commodities environment and the relatively larger capital outlay involved in a PDH project (PDH technology is relatively new with the first such unit only coming online in 1990).

Two projects -- Pembina/PIC and Inter Pipeline’s plants -- are expected to reach final investment decisions within the next 12 months. Assuming another two or three more PDHs come online by 2022, PDH consumption demand could total 145,000 b/d. At the same time, however, several analysts are projecting propane demand to surge, largely on the back of exports to Asia and continued use for domestic home heating.

While normal butane and propane remain the most competitive feedstocks for ethylene production through the end of the year, bumping up demand from the chemicals sector in the near term, the wave of new crackers being planned and built are largely ethane-only. This could limit future propane consumption for petchems cracking to the current fleet and leave price direction largely in the hands of the two current dominant sectors: exports and heating. Effectively, PDH’s share of the consumption pie could see minimal growth in the post-2017 period. -- Samantha Hartke

PetroChem Wire monitors the status of existing and upcoming PDH units as part of its comprehensive Chemical Plants Database. For more information, click here.

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