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The role of ethylene production catalysts in China’s cracker wave

Agnes Lim, the Specialty Business Manager in the APR, discusses China’s petrochemical market and SC&T’s catalyst in ethylene production.

By Agnes Lim on Sep 20, 2020

Since 2017, Shell Catalysts & Technologies has been awarded seven C2 front-end (FE) selective hydrogenation catalyst projects in China. To gain insights about the petrochemical market in China and the catalysts’ application in ethylene production, we spoke with Agnes Lim, the Specialty Business Manager in the Asia Pacific Region (APR).

Q: What industry trends are you seeing regarding petrochemical projects in China?

Agnes Lim: In 2017, we saw the first wave of new ethylene production crackers driven mainly by China’s vision of attaining self-sufficiency in ethylene derivatives. The cracker wave was supported by a growing middle class population, the opening up of local refinery/petchem sector to private investment to drive efficiency improvements in state-owned refineries and the availability of cheap liquefied petroleum gas (LPG)/ethane feedstock from the shale gas boom. Additionally, the Made In China 2025 initiative has a substantial effect on the acceleration of local development and self-sufficiency.

Since then, SC&T has gained more than 60% of C2 FE selective hydrogenation projects by capacity in China’s already announced ethylene production crackers. We’ve started up successfully ‘right first time’ in two of China’s world-scale petrochemical plants in Dalian and Zhejiang.

In addition to helping customers improve their operational reliability and opex, our catalyst technology helped minimise flaring and emissions, while meeting specifications within a short period of time. This is important given the tightening of environmental regulations in China when approving projects. Based on recent announcements in China, we expect the next cracker wave to start around 2022 and 2023.

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Customers’ investments in downstream crackers

The cracker wave in China is primarily motivated around the value chain and energy transition. The central government had opened up the market and gave high loans to allow private investors to compete in the oil and gas sector. This kickstarted the wave of investments we are seeing today.1

Oil-to-chemicals (OTC) has emerged in China to increase refining-petchem integration and margins for a variety of company archetypes:

The first archetype

Many new, private owners are polyethylene terephthalate (PET)/purified terephthalic acid (PTA) producers. They are now investing in backward integration; they are building their own upstream crackers, aromatics and refineries as a way to diversify their offerings and increase margins.2 This allows them to capture maximum value from the full value chain. PTA goes into PET bottles while ethylene and propylene from the steam crackers are feedstocks for producing polyethylene (PE) and polypropylene (PP).

The second archetype

Standalone refineries, especially those in the Shandong region, are investing in forward integration to maximise their profitability by repurposing some existing refinery’s streams and upgrading them to propylene and ethylene production, for which demand is still growing with GDP. Separately, we are also observing similar trends in state-owned refineries-petchem plants that are exploring ways to reconfigure their process flow to maximise margins as well as to debottleneck their downstream petchem units to capitalise on efficiency from scale. This will also allow the refinery to make early adaptations and prepare for the future decline in transportation fuel demand.

The third archetype

Given China’s focus on self-sufficiency, they are aiming for everything to be made in China, including technology. This gives rise to the third archetype where customers explore OTC beyond just traditional feedstock such as crude as part of feedstock diversification. There has been quite some work around coal-to-liquids, syngas-to-liquid, alkane dehydrogenation etc. to better manage geopolitical risk and avoid being over-reliant on imported feedstock.

In the past, China used to be a very big paraxylene (PX) importer, in order to support all these PTA plants. Now, based on some market insights regarding these mega petrochemical plants coming up, we are expecting China to be PX sufficient and even potentially becoming a PX exporter in the next few years.3 We believe the ethylene value chain will be next.

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Q: What is distinctive about Shell’s C2 FE selective hydrogenation catalyst?

Essentially, when petrochemical producers want to sell ethylene to their downstream users, they need to ensure that the ethylene production specification is qualified with sufficiently low levels of acetylene formed within the steam cracking process. The acetylene convertor unit ensures that the acetylene found in the ethylene produced are selectively hydrogenated in order to meet downstream specifications. Our customers in China chose the C2 FE selective hydrogenation catalyst due to several factors.

Catalyst’s stability and tolerance to swings in feed carbon monoxide (CO) levels

One important priority in determining a suitable acetylene-convertor technology is to select a C2 FE selective hydrogenation catalyst that exhibits the following traits:

Good stability with a wide operating window

It is of paramount importance to ensure good catalyst stability to minimise the likelihood of excess hydrogenation of ethylene, especially in a C2 FE application, over a wide operating temperature window. In addition, SC&T also sees significance value to develop C2 FE catalysts that exhibit strong tolerance to feed carbon monoxide (CO) level swings, an area of focus in recent years where we do see customers facing challenges constantly with the need to optimise steam cracker feedstocks in order to stay competitive in ethylene production margins.

High tolerance to fluctuations in feed CO levels that commonly occur in a typical petrochemical steam cracker complex

Varying feedstocks as well as routine furnace switch-overs will influence the generation of CO in the steam cracker furnaces, leading to CO swings in the feed to an acetylene convertor. As CO is a temporary poison to the catalyst, without a catalyst that is able to withstand changes in feed CO levels, operators might need to run at higher catalyst temperatures which might lead to sub-optimal operation and lower ethylene selectivity and yield.

In the worst-case scenario, operators might be faced with unstable catalyst operation, leading to potential runaway reactions and unfavorable process safety implications. Uncontrollable runaway operations can result in uneconomical situations arising from unit depressurising and undesirable flaring, incurring significant financial and environmental consequences for customers.

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Strong technical service empowers customers with smoother and faster ‘right first time’ startups

Our customer-centric technical team provides strong technical support to help customers start up the C2 FE hydrogenation unit in a relatively short amount of time. This is of utmost importance because customers usually send the off-spec ethylene product stream to the flare until the catalyst system is started up smoothly to get ethylene product stream on-spec. Considering typical ethylene price spread these days, a general rule of thumb is that 24 hours of flaring costs customers approximately one million U.S. dollars of opportunity product loss per day.

During the startup itself, our technical services team will be on-site to provide supervision and technical advice until the performance test is finished. Subsequently, we provide bi-yearly performance reviews for some customers. We offer convenience and ensure excellent services, because customers only have to contact one focal to resolve their issues.

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Beyond ensuring a smooth and fast startup, it is SC&T’s focus to continuously provide technical expertise to customers in terms of catalyst routine monitoring as well as performance optimisation to improve customer unit margins.

We also provide customers with an end-to-end solution where we consult with our in-house R&D facilities to help with spent catalyst analysis for any root-cause troubleshooting in order to develop customised solutions for the next catalyst cycle run.

In addition, we provide customers with technical safety training, engaging them with conversations to emphasise safety measures to take during unit startups as well as during normal operation.

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Efficiency ensures environmental compliance and lower emissions

There are strong regulations in China from an environmental standpoint around the amount of flaring that is allowed. For operators, the shorter amount of time the unit flares and the faster they get on spec means that they can save from a financial standpoint while ensuring that the plant stays within the regulated amount of emissions they are allowed to emit during startup.

Some customers have to submit their expected emissions to the provincial government for approval before they can start up the plant. Because we are able to ensure that the amount of flaring and emissions are kept low, they are able to gain approval from the government.

Lastly, in terms of catalyst performance, SC&T’s higher-activity catalyst allows customers to operate at relatively lower temperatures, boosting each unit’s long-term energy efficiency.

Furthermore, SC&T offers innovative design in its catalyst shape that provides one of the lowest pressure drops across the reactor, allowing the customer to capture ‘effortless’ energy savings on their cracked gas compressor systems and improving their plants’ Energy Intensity Index (EII).

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Q: What is your five-to-ten year outlook for petrochemical plants in the APR?

As a whole, the APR is seeing a boom in terms of crackers. South Korea in particular will also have seven crackers starting up in the next couple of years. The environment we are working in today is very different than the one just a few years ago when there were significantly fewer cracker startups.

We are also investing one step ahead of the market. We’re seeing how oil products are increasingly being used from producing fuel to producing chemicals as part of OTC.4 Many plants in the APR are repurposing their refineries to mainly produce feedstocks for chemical use such as steam crackers, aromatics etc.

In addition to traditional feedstock from refineries, customers are also exploring various routes such as methanol to olefins via syngas, alkane (propane/butane/ethane) dehydrogenation and heavy cracking to olefin to seek competitive alternatives. SC&T is interested to work with relevant partners to expand our portfolio in these areas.

As part of the wider industry energy transition conversation, we believe there will be an increased focus from customers on CO2 intensity as many explore ways to improve energy efficiencies and reduce the CO2 footprint of their plants. Shell has recently announced their joint development with Dow on electrifying our steam cracker via green and renewable energy.5 The reason to target the steam cracker is because it is one of the largest CO2 contributors in the petchem unit.

Plastic circularity is also an upcoming trend as customers and countries look for ways to recycle plastic and waste back into chemicals to reduce landfills and minimise the scope of emissions. Additionally, our R&D folks at Shell Technology Centre Amsterdam are exploring novel pathways targeting CO2 as a chemical building block by capturing and utilising CO2 in chemicals value chain, to help our customers through the CO2 journey.

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Separately, we also sense that refining is moving towards a new purpose, which is to increasingly prepare feed for chemicals. It’s a part of the motivation behind Shell Global’s strategy to reshape refining efforts towards a smaller, smarter refining portfolio. This presents an opportunity to SC&T in defining the future synergy between refiners and petchem producers.

While our division focuses on catalyst, technology and services in the APR, we also involve other parts of Shell when applicable, whether it is Shell Chemicals or Shell Trading, to help us expand upon the solutions that we can provide. We aim to provide holistic value to the market that is beyond technology.

Download our white paper to learn how to improve pygas hydrogenation reliability