Propylene Plants Are Coming -- RBN Energy, September 19, 2014

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RBN Energy: the propylene plants are coming.

Starting at the end of 2015 six new North American propane dehydrogenation (PDH) plants are expected to come online. These new plants will have the capacity to convert up to 170 Mb/d of propane into much more valuable propylene. If all the plants are built, these new supplies of propylene should more than replace declining output from olefin crackers and refineries. These on-purpose PDH plants should also make propylene supply more directly responsive to feedstock prices. Today we describe how PDH plants are likely to impact the propane market.

We last posted a blog about propylene just over a year ago.  As we explained then, propylene (C3H6 - also known as propene) is chemically similar to propane (C3H8) – it just has two less hydrogen atoms. Without those two hydrogen atoms, the propylene molecule is significantly more reactive than propane, making it an ideal chemical building block. 

Propylene is used in downstream petrochemical processes to make films, packaging and synthetic fibers. About two thirds of propylene is used to make polypropylene - one of the best-selling plastics, second only to polyethylene.  Polypropylene is used extensively in automobiles and in the manufacture of packaging films, bottle caps, fiber ropes as well as bicycle helmets and disposable diapers. 

According to IHS, the world consumed about 90 million metric tons per annum (mtpa) or 198 billion pounds of propylene in 2013 - expected to increase to 130 mmtpa (286 billion pounds) within the next decade. Current US demand is about 14 billion pounds per year. China is expected to drive propylene demand, which is tied closely to economic growth.

Apple: riding into Southlake, TX, town center today, I purposely rode by the Apple retail store. I arrived about 8:20. Two lines, as expected. The shorter line for those with pre-ordered pick-ups. And then a very, very long line, perhaps stretching three city blocks, possibly four, for those hoping to get an iPhone 6 or 6 Plus. My hunch is that a lot of folks will be getting "rain checks."