LyondellBassell Expects to Eliminate Imported Naphtha From Its US Feedstock Mix

Netherlands-based petrochemicals company LyondellBassell expects to eliminate imported naphtha from its US feedstock mix within the next few years, a company executive said Wednesday. 

Speaking at the IHS CERAWeek conference in Houston, Sergey Vasnetsov, Lyondell's senior vice president of strategic planning and transactions, said that before 2009, its US feedstock mix consisted of 40% domestically produced ethane and propane with the remainder made up of imported naphtha. This produced some 11 billion pounds of ethylene. 

Last year, the feedstock mix was 80% ethane and propane, with the remainder coming from imported naphtha. Ethylene production was 9.8 billion pounds. 

Over the next few years, however, Lyondell plans to complete its shift from imported naphtha to US produced ethane and propane with condensates coming from the Eagle Ford shale in Texas, Vasnetsov said. 

By Lyondell's reckoning, the US is now the second-cheapest ethylene producer in the world, he said. 

US propane, which offered ethylene margins around 30 cents/lb in 2010, is now generating margins of 7.5 cents/lb. Ethylene margins from US ethane went from nearly 30 cents/pound in 2010 to about 10 cents/pound now. 

In contrast, ethylene margins when using northeast Asian naphtha have risen from 35 cents/pound in 2010 to nearly 60 cents/pound now. 

The Middle East still holds the best cost advantage, Vasnetsov said, with ethane-to-ethylene margins of between 3 and 6 cents/pound. 

Unlike its competitors in the US that have announced construction of new world-scale ethylene plants in the Gulf Coast, Lyondell has preferred to expand existing plants. 

"We have chosen to increase our ethylene production almost to the equivalent of a full plant, but we have done it in a way that is faster, cheaper and sooner." 

LyondellBassell has six crackers in North America.