Petrochemical Feedstocks, January 1978

PROCESS
ECONOMICS
PROGRAM
SRI INTERNATIONAL
Menlo Park, California
94025

Abstract

Process Economics Program Report No. 121

WORLD PETROCHEMICAL FEEDSTOCKS TO 1985: AVAILABILITY AND VALUE

This study spans a relatively broad scope, including economic

activity, energy supply and demand , petrochemicals supply and demand,
hydrocarbon pricing and values, and process economics of a chemical
refinery.

For examining hydrocarbon price interactions at the energy/petro-

chemical interface, we developed and structured a grass roots chemical
refinery to meet anticipated incremental demand beyond 1985 for each of
three major areas --the United States, Western Europe, and Japan. For
each refinery we estimated capital costs, utilities, operating costs,
overall profitability, and value of each intermediate refinery stream.

A major conclusion of this study is that the sharp discontinuity

in crude oil prices is expected to accelerate the use of hydrocarbons
for chemicals relative to their use as fuel. It is expected that the
long run reduction in the rate of growth of chemical demand will be less
than that for fuels products. The processing consequence of this should
be a gradual acceleration in the share of the barrel of crude oil that
is used for chemicals.
 Petrochemical Feedstocks, January 1978

Report No. 121

WORLD PETROCHEMICAL FEEDSTOCKS

to 1985: AVAILABILITY and VALUE

by STANFORD FIELD

I I January 1978

0
(‘2

m A private report by the

PROCESS ECONOMICS PROGRAM

Menlo Park, California 94025

 Petrochemical Feedstocks, January 1978

For detailed marketing data and information, the reader is

referred to one of the SRI programs specializing in marketing
research. T’he CHEMICAL
ECONOMICS
HANDBOOK
Program covers
most major chemicals and chemical products produced in the
United States and the WORLDHYDROCARBONS
Program covers major
hydrocarbons and their derivatives on a worldwide basis. In
addition, the SRI DIRECTORY OF CHEMICAL PRODUCERS services
provide detailed lists of chemical producers by company,
product, and plant for the United States and Western Europe.
 Petrochemical Feedstocks, January 1978

CONTENTS

1 INTRODUCTION. . . . . . . . . . . . . . . . . . . . . , . . 1

2 SUMMARY . . . . . . . . . . , . . . . . . . . . . . . . . . 3

3 ANECONOMIC SYSTEM. . . . . . . . . . . . . . . . . . . . . 17

4 WORLD OIL AND GAS AVAILABILITY ............... 21

Crude Oil ......................... 21
Natural Gas ........................ 33

5 BASES FOR HYDROCARBON PRICES AND VALUES . , . . . . . . . . 43

Crude Oil Composition, Price History, and Forecasts . . . . 43
Refinery Streams and Cost Indices . . . . . . . . . . . . . 50

l
-
6 UNITED STATES .......................
Economic Activity and Energy Use ..............
59
59
U.S. Oil and Gas Availability ............... 63
Petroleum Products Demand ................. 75
Basic Petrochemicals Supply and Demand ........... 84
Ethylene ......................... 84
Propylene ........................ 87
Butadiene ........................ 91
Benzene ......................... 91
U.S. Grass Roots Chemical Refinery ............. 95

7 WESTERN EUROPE ....................... 137

Economic Activity and Energy Use .............. 137
l The Naphtha Situation ...................
Basic Petrochemicals Supply and Demand ...........
137
146
Ethylene ......................... 146
Propylene ........................ 146
Benzene ......................... 152
Western European Grass Roots Chemical Refinery ....... 152

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 Petrochemical Feedstocks, January 1978

CONTENTS

8 JAPAN ............................ 193

Economic Activity and Energy Use .............. 193

Petroleum Products Demand .................. 197
Basic Petrochemicals Supply and Demand ........... 202
Ethylene ......................... 204
Propylene ......................... 204
Benzene .......................... 204
Japanese Grass Roots Chemical Refinery ........... 209

9 PROCESS INFORMATION
Crude Oil .......................... 241
Catalytic Reforming ..................... 241
Steam Cracking ....................... 247
Alkylation for Gasoline ................... 247
Delayed Coking ........................ 253

CITED REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . 255

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 Petrochemical Feedstocks, January 1978

ILLUSTRATIONS

2.1 International Comparisons of Economic Output per Employee . 5

3.1 An Economic System . . . . . , . . . . . . . . . . . . . . . 18

4.1 World Crude Oil

Annual Additions to Proven Reserves . . . . , . . . . . . . 23

4.2 World Crude Oil

Cumulative Production . . . . . . . . . . . . . . . . . . . 26

4.3 World Crude Oil

Production Rate in Terms of Barrels per Year . . . . . . . . 27
4.4 World Crude Oil
Production Rate in Terms of Barrels per Calendar Day . . . . 28

4.5 World Petroleum Production Rate and Petroleum Refining

Capacity.......................... 32
4.6 World Natural Gas
Cumulative Marketed Production . . . . . . . . . . . . . . . 36
4.7 World Natural Gas
Marketed Production Rate . . . . . . . . . . . . . . . . . . 37

a- 5.1 World Crude Oils--Residuum Sulfur Content Versus

Naphtha Aromaticity . . . . . . . . . . . . . . . . . . . . 46
5.2 Historical and Projected Sales Prices of Nigerian and
Saudi Arabian Crude Oils . . . . . . . . . . . . . . . . . . 49
5.3 Estimated Crude Oil Tanker Transportation Costs in 1977 . . 51
5.4 Clear Research Octane Value of Gasoline or its Components,
U.S. Gulf Coast, 1977 . . . . . . . . . . . . . . . . . . . 52
5.5 Approximate 1977 Incremental Octane Costs, U.S. Gulf Coast . 53
R+M
5.6 Clear - Octane Value of Gasoline or its Components,
U.S. Gulf Coast, 1977 . . . . . . . . . . . . . . . . . . . 55

- 5.7 Residual Fuel Oil Price as a Function of Sulfur

Content, 1977 . . . . . . . . . . . . . . . . . . . . . . . 56
5.8 PEP Construction Cost Index and U.S. GDP Deflator . . . . . 57
6.1 U.S. Crude Oil Reserves and Production . . . . . . . . . . . 64
6.2 Historical and Projected U.S. Petroleum Supply . . . . . . . 65
0- 6.3 Historical and Projected U.S. Crude Oil Refining
Capacity and Runs . . . . . . . . . . . . . . . . . . . . . 68
6.4 U.S. Natural Gas Reserves and Production . . . . . . . . . . 72
6.5 LPG and Light Fuel Oil Prices, U.S. Gulf Coast . . . . . . . 74

0 ix
 Petrochemical Feedstocks, January 1978

ILLUSTRATIONS

6.6 Effect of Compression Ratio on Gasoline Consumption . . . . 77

6.7 U.S. Gasoline Demand . . . . . . . . . . . . . . . . . . . 80
6.8 U.S. Gulf Coast Refinery Gate Gasoline Prices, 1977 . . . . 81
6.9 Research Octane Number and Lead Content of Average
U.S. Gasolines . . . . . . . . . . . . . . . . . . . . . . 83

6.10 Estimated Average Petroleum Coke Price as a Function of

Sulfur Content, U.S. Gulf Coast, 1977 . . . . . . . . . . . a5
6.11 U.S. Ethylene Demand as a Function of Economic Activity . . 86
6.12 U.S. Chemical Propylene Demand as a Function of -
Economic Activity . . . . . . . . . . . . . . . . . . . . . 88
6.13 Estimated Relationship Between Propylene Demand and
Propylene Price in the United States . . . . . . . . . . . 92
6.14 U.S. Chemical Benzene Demand as a Function of
Economic Activity . . . . . . . . . . . . . . . . . . . . . 94
6.15 U.S. Grass Roots Chemical Refinery--Block Flow Diagram . . 259
6.16 U.S. Grass Roots Chemical Refinery-Comparison of
"Investor's" and DCF Return on Investment . . . . . . . . . 108
6.17 U.S. Grass Roots Chemical Refinery Return on Investment
as a Function of Crude Oil Price . . . . . . . . . . . . . 109

7.1 Historical and Projected Crude Oil Usage in

Western Europe . . . . . . . . . . . . . . . . . . . . . . 142

7.2 Estimated Virgin Naphtha Balance, Western Europe, 1975 . . 144

7.3 Ethylene Production as a Function of Economic Activity
in an Aggregate of Western European Countries . . . . . . . 148
7.4 Chemical Propylene Production as a Function of
Economic Activity in an Aggregate of Western European
Countries . . . . . . . . . . . . . . . . . . . . . . . . . 151
7.5 Chemical Benzene Production as a Function of
Economic Activity in an Aggregate of Western European
Countries . . . . . . . . . . . . . . . . . . . . . . . . . 154
7.6 Western European Grass Roots Chemical Refinery
Block Flow Diagram . . . . . . . . . . . . . . . . . . . . 261
8.1 Approximate Balance of Primary Energy Use in Japan
in 1970........................................... . . 195
8.2 Historical and Projected Domestic Demand for
Petroleum Products in Japan . . . . . . . . . . . . . . . . 198
8.3 Historical and Projected Average Sulfur Content of
Residual Fuel Oil in Japan . . . . . . . . . . . . . . . . 200

X
 Petrochemical Feedstocks, January 1978

ILLUSTRATIONS

8.4 Fuel Oil Desulfurization Capacity in Japan ........ 201

8.5 Ethylene Demand as a Function of Economic Activity

in Japan ......................... 205

8.6 Propylene Demand as a Function of Economic Activity

in Japan ......................... 206

8.7 Benzene Demand as a Function of Economic Activity

in Japan ......................... 208

8.8 Japanese Grass Roots Chemical Refinery

Block Flow Diagram .................... 263

9.1 Catalytic Reforming

Effect of Naphtha Quality on Yield-Octane Relationship . . 243

9.2 Catalytic Reformate Octane Number as a Function of

Aromatics Concentration ................. 244

9.3 Low Pressure Catalytic Reforming of

160°-280'F Arabian Light SRN--Yield Structure ...... 245

9.4 Catalytic Reforming of 169'-325'F Sahara Naphtha

Saturates Concentration in C8 Aromatics Range
Versus Severity .... . .. ..... ......... 246

9.5 Aromatics Processing with High Severity Catalytic

Reforming ........................ 248

9.6 Typical Steam Cracker Yield Structure .......... 250

9.7 Carbon Atom Distribution in Gasoline Alkylate ...... 252

I
9.8 Delayed Coking
Coke Sulfur as a Function of Feed Sulfur . . . . . . . . . 254

a-

a-

0 xi
 Petrochemical Feedstocks, January 1978

TABLES

l 2.1 Summary of Crude Oil Usage in Grass Roots Chemical

Refinery Examples .................. . . . 3

2.2 Economic Activity Comparison ............ . . . 6

2.3 World Energy Demand ................. . . . 7

2.4 Ethylene Supply and Demand, United States, Western

Europe, and Japan .................. . . . 8
2.5 Chemical Propylene Demand, United States, Western
Europe, and Japan .................. . . . 9

2.6 Chemical Benzene Supply and Demand, United States,

Western Europe, and Japan .............. . . . 10

2.7 Estimated Petroleum Refining and Petrochemical Plant

Capacities and Utilization ............. . . . 11

2.8 Estimated Growth Rates for Refinery and Petrochemical

Plant Capacities, 1977-85 .............. . . . 12

2.9 Selected Crude Oil Prices .............. . . . 12

a 2.10

2.11
Summary of Estimated Average Hydrocarbon Prices
and Values in 1977 and 1985 .............
Estimated 1977 Value of Butanes ...........
. .

. . .
. 14
15

4.1 World Crude Oil Proven Reserves and Production ... . . . 22

4.2 Estimated World Crude Oil Reserves (1973) ...... . . . 24

4.3 Summary of Historical and Projected World Crude Oil

Availability .................... . . . 25

4.4 World Petroleum Production ............. . . . 29

4.5 Estimated World Petroleum Products Demand, 1976 ... . . . 30

4.6 World Petroleum Refining Capacity .......... . . . 31

a- 4.7
4.8
Expected Incremental Refining Capacity
World Natural Gas Proven Reserves and Marketed
........ . . . 33

Production ..................... . . . 34

4.9 Summary of Historical and Projected World Natural

Gas Availability .................. . . . 35

a- 4.10 Estimated World Natural Gas Production and Reserves,

1976 ........................ . . . 38
4.11 Estimated World Natural Gas Liquids Production, 1973 . . . 39
4.12 Projected World LPG Supply and Demand ........ . . . 40

0 xiii
 Petrochemical Feedstocks, January 1978

TABLES

4.13 LPG Exports from OPEC .................. 41

5.1 Crude Oil Compositions, Price History and Forecasts ... 44

5.2 Estimated Pricing of Arabian Light Crude Oil, 1977 ... 47

5.3 Estimated Cost of Desulfurizing Arabian Light Crude

Oil, U.S. Gulf Coast, 1977 ............... 47

5.4 Historical and Projected Sales Prices of Nigerian

and Saudi Arabian Crude Oils .............. 48

5.5 Typical Octane Numbers of Gasoline Components ...... 54

5.6 1977 Average Utility Costs ............... 58

6.1 U.S. GDP and Energy Projections ............. 60

6.2 U.S. Demand for Primary Energy ............. 61

6.3 U.S. Supply of Primary Energy .............. 62

6.4 Projected U.S. Incremental Energy Supply (1976-85) ... 63

6.5 U.S. Petroleum Supply .................. 66

6.6 1975 Major U.S. Crude Oil Imports by Sulfur Content ... 66

6.7 Very-Low-Sulfur Crude Oil Imports by the United

States in 1975 ..................... 67

6.8 Estimated 1977 Average U.S. Crude Oil Price ....... 69

6.9 Average Wellhead Price of U.S. Crude Oil and

Natural Gas, by Year ... .' .............. 70

6.10 U.S. Natural Gas Liquids Supply and Demand ....... 73

6.11 Estimated U.S. Gasoline Demand ............. 76
6.12 U.S. Petroleum Products Demand ............. 78
6.13 Yield Distribution from U.S. Refineries ......... 79
6.14 Estimated Gasoline Pump Prices ............. 82
6.15 U.S. Gasoline Pool, Octane Number and Lead Content ... 82
6.16 U.S. Ethylene Supply and Demand ............. 87
6.17 Estimated Propylene Supply and Demand in the
U.S. .......................... 89
6.18 U.S. Chemical Propylene Demand ............. 90
6.19 U.S. Butadiene Supply and Demand ............ 93
6.20 U.S. Chemical Benzene Supply and Demand ......... 95

6.21 Summary of Hydrocarbon Properties, Prices, and

Values in the United States ............... 98

xiv
 Petrochemical Feedstocks, January 1978

TABLES

6.22 U.S. Grass Roots Chemical Refinery, Process

Unit Capacities ...................... 100

6.23 U.S. Grass Roots Chemical Refinery, Estimated Total

Facilities Investment ................... 101

6.24 U.S. Grass Roots Chemical Refinery, Estimated

Utilities Requirements .................. 102

6.25 U.S. Grass Roots Chemical Refinery, Estimated

Utility, Catalyst, and Chemicals Cost ........... 103

6.26 U.S. Grass Roots Chemical Refinery,

Bases for Capital Charges Estimate ............ 104

6.27 U.S. Grass Roots Chemical Refinery,

Estimated Processing Costs ................ 105

6.28 U.S. Grass Roots Chemical Refinery,

Product Slate and Annual Gross Revenue .......... 106

6.29 U.S. Grass Roots Chemical Refinery,

Economic Analysis, 1977 .................. 107

6.30 U.S. Grass Roots Chemical Refinery,

Effect of Throughput on Profitability ........... 111

7.1 Economic Variables and Energy Growth Rates of

Selected Western European Countries ............ 138

7.2 Gross Domestic Product of Selected Western

European Countries .................... 139

7.3 Historical and Projected Primary Energy Use in

Selected Western European Countries ............ 140

7,4 Historical and Projected Primary Energy Use in

OECD Europe ........................ 141

7.5 Estimated Virgin Naphtha Supply and Demand in

Western Europe ...................... 143

7.6 Ethylene Production in Selected Western European

Countries ......................... 147

7.7 Western European Ethylene Supply and Demand ........ 149

7.8 Chemical Propylene Production in Selected Western

European Countries .................... 150

7.9 Western Europe Chemical Propylene Demand ......... 152

7.10 Chemical Benzene Production in Selected Western

European Countries .................... 153

7.11 Western Europe Chemical Benzene Supply and Demand ..... 155

7.12 Summary of Hydrocarbon Properties, Prices, and

Values in Western Europe ................. 158

xv
 Petrochemical Feedstocks, January 1978

TABLES

7.13 Western European Grass Roots Chemical Refinery

Process Unit Capacities .................. 160

7.14 Western European Grass Roots Chemical Refinery

Estimated Total Facilities Investment ........... 161

7.15 Western European Grass Roots Chemical Refinery

Estimated Utility Requirements .............. 162

7.16 Western European Grass Roots Chemical Refinery

Estimated Utility, Catalyst, and Chemical Costs ...... 163

7.17 Western European Grass Roots Chemical Refinery

Bases for Capital Charges Estimate ............ 164

7.18 Western European Grass Roots Chemical Refinery

Estimated Processing Costs ................ 165

7.19 Western European Grass Roots Chemical Refinery

Product Slate and Annual Gross Revenue .......... 166

7.20 Western European Grass Roots Chemical Refinery

Economic Analysis, 1977 .................. 167
7.21 Western European Grass Roots Chemical Refinery
Effect of Throughput on Profitability ........... 168

8.1 Economic Variables and Energy Use in Japan ........ 194

8.2 Historical and Projected Primary Energy a

Use in Japan ....................... 196
8.3 Major Imports of Crude Oil to Japan in Early 1977 ..... 197
8.4 Demand for Petroleum Products in Japan .......... 202

8.5 Estimated Naphtha Situation in Japan ........... 203

8.6 Demand for Primary Petrochemicals in Japan ........ 203

8.7 Japanese Ethylene Supply and Demand ............ 207

8.8 Japanese Chemical Propylene Demand ............ 207

8.9 Japanese Chemical Benzene Supply and Demand ........ 209
8.10 Effect of Monetary Exchange Rate on Price of
Japanese Benzene ..................... 210
a
8.11 Summary of Hydrocarbon Properties, Prices, and
Values in Japan ...................... 212
8.12 Japanese Grass Roots Chemical Refinery
Process Unit Capacities .................. 214
a
8.13 Japanese Grass Roots Chemical Refinery
Estimated Total Facilities Investment ........... 215

8.14 Japanese Grass Roots Chemical Refinery

Estimated Utility Requirements .............. 216

xvi
 Petrochemical Feedstocks, January 1978

TABLES

8.15 Japanese Grass Roots Chemical Refinery

Estimated Utility, Catalyst, and Chemicals Cost . . . . . . 217
8.16 Japanese Grass Roots Chemical Refinery
Bases for Capital Charges Estimate . . . . . . . . . . . . 218
8.17 Japanese Grass Roots Chemical Refinery
Estimated Processing Costs . . . . . . . . . . . . . . . . 219
8.18 Japanese Grass Roots Chemical Refinery
Product Slate and Annual Gross Revenue . . . . . . . . . . 220
8.19 Japanese Grass Roots Chemical Refinery
Economic Analysis, 1977 . . . . . . . . . . . . . . . . . . 221

8.20 Japanese Grass Roots Chemical Refinery

Effect of Throughput on Profitability . . . . . . . . . . . 222

9.1 Arabian Light Crude Oil Composition . . . . . . . . . . . . 242

9.2 Typical Steam Cracker Yield Structure . . . . . . . . . . . 249

9.3 Effect of Feedstock on the Ratio of Propylene

to Ethylene from a Steam Cracker . . . . . . . . . . . . . 251

9.4 Comparison of C4 Stream Compositions

Catalytic Cracker Versus Steam Cracker . . . . . . . . . . 251

0 xvii