Methanol to Olefins

A Pillar of Capacity Additions in China,

but Does MTO have a Role in India?

IOCL Conclave
February 7, 2014

UOP LLC
Des Plaines, Illinois, USA

2014 UOP LLC. All rights reserved.

Topics

1. UOP MTO Technology

2. MTO Projects in China

3. MTO / GTO / CTO Analysis

UOP 5614D-2
Advanced MTO Technology
Regen Gas
MTO Process Integrated with
Olefin Cracking Process (OCP)

Light Ethylene
MTO DME
Recovery Olefin
Recovery
Propylene

C4+
Air Water
OCP
Sep
Methanol Section

By-products
 Yield Benefits from OCP Integration

100 2.6 tons of Methanol consumed per ton

Other high value products of light olefin produced
90
Ethylene
80

Light Olefin Carbon Yields, wt-%

Propylene 100
70
Carbon yield %

60
50
90
40
30
20
10 80
0

70
1.0 1.2 1.4 1.6 1.8 2.0
Propylene/Ethylene (P/E) Product Ratio, wt.

A little more ethylene, a lot more propylene, and a lot less C4+ by-product
OCP integration increases light olefin yields by 20%
 Scale-up Progression

~1 kg/day of MeOH feed ~1,000 kg/day (maximum) ~10,000 kg/day (10t/d)

Multiple grades/sources of MeOH feed of MeOH feed
of feed Multiple grades/sources Fully integrated
Reactor and regenerator of feed Advanced MTO Process
configuration Reactor and regenerator configuration
configuration

UOP Pilot Plant Total Process

INEOS Demo Unit Demonstration Unit
Operation

1988 1995 2009

Wison Nanjing MTO Plant Construction July 2012

Wison Engineering Ltd.

Wison Nanjing MTO Plant Construction July 2013

Wison Engineering Ltd.

Commercialization Status
The following projects in China have disclosed the
selection of the UOP / HYDRO MTOTM Process:

LO Capacity
Owner Location Scope On-Stream
MTA

Wison (Nanjing) Clean Nanjing,

MTO / OCP 295,000 Sept 2013
Energy Company, Ltd. Jiangsu

Jiutai Energy (Zhungeer) Ordos, Inner

MTO 600,000 Exp 2014
Company, Ltd. Mongolia

Shandong Yangmei
Linyi,
Hengtong Chemicals MTO / OCP 295,000 Exp 2014
Shandong
Company, Ltd.

Jiangsu Sailboat Lianyungang,

MTO / OCP 833,000 Exp 2015
Petrochemical Co. Ltd. Jiangsu
Topics

1. UOP MTO Technology

2. MTO Projects in China

3. MTO / GTO / CTO Analysis

UOP 5614D-9
China Perspective
1) Domestic olefin capacity based on refinery FCC (DCC)
and naphtha cracking. Oil price increased from $40/BBL in
2000 to more than $100/BBL in 2008.
2) Oil self-sufficiency ratio fell from 70% in 2000 to less
than 40% by 2013.
3) Gas is relatively scarce but coal is abundant.
4) Government support for technology development,
demonstration, and pilot projects for conversion of coal into
materials that substitute for oil.
Coal gasification
Direct and indirect CTL
Methanol to chemicals (olefins, DME, MEG, etc.)
 Methanol-Based LO Production

10
Approximately 20 methanol-based light
olefin projects in China are in operation,
Ethylene plus Propylene, Million MTA

8 under construction, or in detailed design

and procurement as of 1Q 2014 5.5
3.8

6
One MTP and 3 MTO technologies have
been commercialized as of 1Q 2014

0
2009 2010 2011 2012 2013 2014 2015 2016
Two Types of MTO Projects in China

Type 1 MTO (CTO) Projects

Coal Gasification Inland Locations (near mines)
Mega-sites / Often State Sector
Coal Mine Methanol / MTO
Raw Material Driven
LO Derivates Large Capacity Projects
Mostly PE / PP

Coal Based Type 2 MTO Projects

Methanol Open Coastal Locations
Market
MTO
Often Private Sector
LO Derivates
LO Derivative Driven
Gas Based Wide Range in Capacities
Methanol Wide Range of Derivatives
Status of MTO in China
General
Domestic and imported methanol, and more recently imported propane
(for propane dehydrogenation projects), are displacing naphtha as the
preferred feedstock for domestic light olefin capacity additions.
Type-I MTO Projects
1) Coal to chemicals (CTC) projects provide good financial returns to
the owners, and significant industrial development and employment
benefits to local and provincial governments when compared to electric
power projects.
2) The CO2 footprint for CTO is large. Coal-derived synthesis gas
requires H2/CO adjustment (more H2) via water-gas shift reaction
(additional CO2 created).
3) Chinas coal deposits are generally located where water is scarce
and the environment is fragile. Every new project is closely scrutinized
by all levels of government, and project approvals are difficult to
achieve.
Coal Chemicals in China
Type-II Projects
1) MTO projects are a good way for private sector companies in China
to secure light olefins, and thereby gain access to attractive olefin
derivative markets.
2) MTO projects in China have proven to be viable for light olefin
capacities as small as 300 KMTA.
3) Merchant methanol markets are volatile, which creates considerable
risk for any project based solely on spot market or short-term contract
pricing. Chinese companies are securing long-term access to methanol
made from lower-cost gas located outside of China.
Topics

1. UOP MTO Technology

2. MTO Projects in China

3. MTO / GTO / CTO Analysis

UOP 5614D-15
 MTO Project Returns
1.0 MM MTA 600 KMTA 300 KMTA
35

30

25
Project IRR, %

20

15

10

0
350 375 400 425 450
Methanol, $/MT
$1,300/MT transfer price for light olefin products
 MTO Project NPVs
1.0 MM MTA 600 KMTA 300 KMTA
2.5

2.0
Project NPV, Billion $

1.5

1.0

0.5

0.0
350 375 400 425 450
Methanol, $/MT
$1,300/MT transfer price for light olefin products
Methanol Price History
1,000

900

800

700

600
$/MT

500

400

300

200

100
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Source: CMAI
N America W Europe N Asia S Asia
Average quarterly prices
Adjusted to constant 2013 US $
 GTO Project Returns
1.0 MM MTA 600 KMTA 300 KMTA
40

35

30
Project IRR, %

25

20

15

10

0
2 4 6 8 10 12
Natural Gas, $/MM Btu
$1,300/MT transfer price for light olefin products
 GTO Project NPVs
1.0 MM MTA 600 KMTA 300 KMTA
7.0

6.0
Project NPV, Billion $

5.0

4.0

3.0

2.0

1.0

0.0
2 4 6 8 10 12
Natural Gas, $/MM Btu
$1,300/MT transfer price for light olefin products
North American Energy Prices
Gas and coal valuations have decoupled from oil in North America
24

22

20

18

16

14

12
$ / Million Btu

10

0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Source: CMAI WTI Crude Natural Gas Illinois Coal

Average quarterly prices
Adjusted to constant 2013 US $
 CTO Project Returns
1.0 MM MTA 600 KMTA 300 KMTA
30

25
Project IRR, %

20

15

10

0
20 60 100 140 180 220
Coal, $/MT
Coal energy content = 27.9 GJ/MT (26.4 MM Btu/MT)
 CTO Project NPVs
1.0 MM MTA 600 KMTA 300 KMTA
6.0

5.0
Project NPV, Billion $

4.0

3.0

2.0

1.0

0.0
20 60 100 140 180 220
Coal, $/MT
$1,300/MT transfer price for light olefin products
Capital Cost and CCOP
1 Million MTA Light Olefin Capacity
3.5 1,400

3.0 1,200

LO Cash Cost of Production $

$400/MT
Capital Budget, Billion $

Methanol
2.5 1,000

2.0 $6 per
800
MM Btu
Gas
1.5 600
$60/MT
Coal
1.0 400

0.5 200

0.0 0
MTO GTO CTO
Capital Budget CCOP
Does MTO Have Any Role in India?

1) Domestic oil, gas, and coal reserves / trade balances.

2) Suitability of Indian coal for methanol production.

3) Availability of petcoke as a feedstock.

4) CO2 emissions / access to water near coal deposits.

5) Offshore gas discoveries / shale gas production.

6) JV projects to access lower-cost gas outside of India.