Confidential. © 2018 IHS MarkitTM Confidential. © 2017 IHS Markit . All Rights Reserved.

US Petrochemicals

The growing importance of export markets

EIA Energy Conference

June 4, 2018

Blake Eskew, Vice President - Business Development 

Oil Markets / Midstream / Downstream / Chemicals 

Houston, TX 

blake.eskew@ihsmarkit.com
Confidential. © 2018 IHS MarkitTM. All Rights Reserved.

Addressing strategic challenges 

with interconnected capabilities 

Resources

Financial

Consolidated Markets 

& Solutions

Transportation

© 2017 IHS Markit. All Rights Reserved.

The comprehensive single source for global 

data & information, key market insights, 

analysis & forecasts
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Core Segments within Energy & Natural Resources

• Country E&P Terms and 

Above-Ground Risk

• Plays and Basins

• Costs and Technology

• Companies and 

Transactions

UPSTREAM

• Global Gas

• Coal

• Power and Renewables

• Regional Gas, Power 

and Coal Markets

POWER, GAS, COAL

& RENEWABLES

• Long-Term Planning & Scenarios 

• Climate Strategy

• Curated Content

• Integrated Energy Events & CERAWeek

ENERGY-WIDE PERSPECTIVES

• Crude Oil Markets

• Midstream Oil and 

Natural Gas Liquids

• Refining and Marketing

• Company Strategies and 

Performance

OIL MARKETS, MIDSTREAM, 

DOWNSTREAM & CHEMICAL

• Chemical Week and 

Market Daily Service

• Base Chemicals 

& Plastics

• Specialty Chemicals

• Costs & Technology

• Company Benchmarking 

& Analytics

Our core capabilities serve our energy and chemical customers across the value chain 

through focused data and insight subscriptions as well as consulting. 
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• Transportation

• Consumer products

• Packaging

• Construction

• Recreation

• Industrial

• Medical

• Pharmaceutical

• Personal care

• Textiles

• Electronics

• Aerospace

• Business equipment

Oil

Gas

Coal

Minerals

Renewables

Customers

Olefins 

Aromatics

Chlor-alkali

Others

Commodities

Differentiated 

commodities

Technical 

specialties

Chemical industry value chain

Formulated 

products / 

performance 

materials

Natural 

resources

Chemical

intermediates

Base 

chemicals

The Chemical Industry Enables Modern Living
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-4

-2

0

2

4

6

8

10

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Percent change

World Advanced countries Emerging markets

Global economic growth remains strong and steady, if serious mistakes on trade, 

monetary policy, and international relations can be avoided

Real GDP

Source: IHS Markit © 2018 IHS Markit
Confidential. © 2018 IHS MarkitTM. All Rights Reserved.

Economic growth in advanced countries and emerging markets are key drivers to 

petrochemical demand growth

0

1

2

3

4

1990-2000 2000-2010 2010-2020 2020-2030

Ethylene Propylene (PG/CG) Methanol Chlorine

Benzene Paraxylene Weighted Average

GDP Elasticity: rate of market growth / rate of global economic growth 

Source: IHS Markit © 2018 IHS Markit Percentage
Confidential. © 2018 IHS MarkitTM. All Rights Reserved.

0

1

2

3

4

5

6

7

Ethylene Propylene

(PG/CG)

Methanol Chlorine Benzene Paraxylene

Avg. 2012 - 2016 2017 Avg. 2018 - 2022

Global demand growth and 2017 estimated total demand 

Source: IHS Markit © 2018 IHS Markit Million Metric Tons

Ethylene and propylene remain in high growth mode; methanol growth stabilizes 

152 102

78 73

46 41

Global demand estimate for 2017
Confidential. © 2018 IHS MarkitTM. All Rights Reserved.

The energy and petrochemical industries are closely related
Confidential. © 2018 IHS MarkitTM. All Rights Reserved.

There are several primary routes to produce olefins

Crude Oil

Natural Gas

Crude 

Unit

Nat Gas 

Processing

FCC 

Unit

Refinery Grade 

Propylene

Ethylene

Polymer grade 

Propylene Steam Cracker

Propylene

Splitter

Propane

Dehydrogenation

Methanol-to-Olefins

Methanol-to-Propylene

Coal-to-Olefins

Coal-to-Propylene

Ethane, Propane, 

Butane

Propane

LPG, Naphtha, Gas Oil

Coal

Nat Gas
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US NGL production is growing with shale gas and tight oil plays

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2000 2005 2010 2015 2020 2025

Natural

Gasoline

Isobutane

Normal

Butane

Propane

Ethane

US lower 48 NGL production by product

Source: IHS Markit © 2018 IHS Markit Million barrels per day

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2000 2005 2010 2015 2020 2025

Chart Title

Permian

SCOOP

Woodford

Utica

Niobrara

Marcellus

Eagle Ford

Barnett

Bakken

Other gas

sourced

Refining

NGL production from key shale gas and tight oil plays 

Source: IHS Markit © 2018 IHS Markit Million b/d
Confidential. © 2018 IHS MarkitTM. All Rights Reserved.

Combination of high crude prices and stable natural gas is attractive for North 

America gas-based chemical investments

0

5

10

15

20

25

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Brent Crude Henry Hub Gas USGC Ethane USGC Propane NEA Naphtha

Constant 2014 Dollars Per MMBtu

Crude Oil Crude Oil - VS - Natural Gas & NGLs - VS - Natural Gas & NGLs

Source: IHS Markit © 2018 IHS Markit
Confidential. © 2018 IHS MarkitTM. All Rights Reserved.

Ethane cracking is expected to maintain a large cash cost advantage

0

200

400

600

800

1000

1200

1400

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

USGC - Ethane Northeast Asia - Naphtha

Ethylene Cast Cost Comparison

Source: IHS Markit © 2018 IHS Markit US Dollar Per Metric Ton

Cash cost = Feed + VC + FC – co-product
Confidential. © 2018 IHS MarkitTM. All Rights Reserved.

57,481 63,832 

21,706 

9,812 

Global Ethylene production by feed type (KTA ethylene by feed)

Source: IHS Markit © 2018 IHS Markit

Naphtha, 

66,669 

Ethane, 

69,629 

Other, 

22,891 

LPG, 

13,383 

NGLs increasingly important to olefins as crackers shift to ethane

0%

20%

40%

60%

80%

100%

2000 2003 2006 2009 2012 2015 2018 2021

Gasoline (FCC) Naphtha Gas Oil

Nat Gas Ethane Propane

Butane Coal Other

Propylene production by feedstock

Source: IHS Markit © 2018 IHS Markit

Propane

More ethane for ethylene 

more propane for propylene

2017 (inner)

Production = 143 MMTA

2022 (outer)

Production = 173 MMTA

3.5 MMTA Ethylene

~ 9 MMTA LPG
Confidential. © 2018 IHS MarkitTM. All Rights Reserved.

Ethylene equivalent trade will continue to expand as the industry builds in low-cost 

regions and exports to high demand growth regions

-40

-20

0

20

40

1990 1995 2000 2005 2010 2015 2020 2025

North America South America West Europe Middle East

Indian Sub. Northeast Asia Southeast Asia Others

Global Net Equivalent Trade - Ethylene

Source: IHS Markit © 2018 IHS Markit Million Metric Tons
Confidential. © 2018 IHS MarkitTM. All Rights Reserved.

0

10

20

30

40

50

60

70

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2000 2005 2010 2015 2020 2025

Chart Title

Base Chemical Price Sensitive Miscellaneous Fuel Exports Rejection

US ethane demand and rejection

Source: IHS Markit © 2018 IHS Markit Million barrels per day

1st Wave 2nd Wave

MIllion Metric tons per year

The first wave of US ethane crackers and exports is proceeding but the second 

wave is uncertain
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Improvements in ethane shipping and capital cost differentials are changing olefins 

investment patterns

Ethane Export Terminal(s)

Ethane Cracker

PE unit

Ethane

Ship Pellets

Ethane Cracker

PE unit

Capital costs 

in China are 

currently 50 to 

70% of USGC

Can the 

advantage be 

sustained? Similar 

pattern seen 

for propylene, 

but China 

incentive is 

stronger
Confidential. © 2018 IHS MarkitTM. All Rights Reserved.

Ethylene cash costs and capital cost advantages make Chinese ethane-based capacity competitive

0

100

200

300

400

500

600

700

800

USGC - Ethane China - Ethane from US China - Naphtha Europe - Naphtha

2020-2025 Average

2020-2025 Average

World Ethylene Cast Cost Comparison

Source: IHS Markit © 2018 IHS Markit US Dollar Per Metric Ton

Cash cost = Feed + VC + FC – co-product

• Cash costs for ethane cracking in China 

are higher than in the US due to ethane 

transport costs

• But - finished product shipping is reduced 

or eliminated

• In addition, capital cost savings may 

outweigh the higher operating and 

feedstock costs

• Ethane cracking capital cost in China is 

roughly half of naphtha cracking –

economics depend on need for coproducts
Confidential. © 2018 IHS MarkitTM. All Rights Reserved.

NGL and mixed feed crackers dominate near-term capacity additions

• In addition, over 9 million tons of 

additional ethane-based units have been 

announced for China but are still in the 

planning stages

• In the US, almost 15 million tons of 

additional ethane-based capacity is 

under discussion

• With annual demand growth of 6 million 

tons, the capacity will be needed

• But – is there enough ethane? And 

where will it be built?

-2000

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

China India Other Asia Middle East Europe/CIS Africa North America

Ethane Other NGL Mixed Naphtha Other

World Ethylene Capacity Changes: 2017-2022

Source: IHS Markit © 2018 IHS Markit Thousand Metric Tons
Confidential. © 2018 IHS MarkitTM. All Rights Reserved.

Energy and chemical exports from 

North America will continue to rise • Natural gas in North America remains 

advantaged versus crude

• North America will remain an attractive 

region for capital investments in base 

chemicals, derivatives, and feedstocks

• Ethane to China can work - capital 

versus operating cost dynamics and 

supply risk tolerance will determine 

how much is built

• Second wave of ethane crackers will 

come – but in US or China?

•, 

19
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