Methanol to Olefins

A Pillar of Capacity Additions in China,but Does MTO have a Role in India?

© 2014 UOP LLC. All rights reserved.

IOCL ConclaveFebruary 7, 2014

UOP LLC

Des Plaines, Illinois, USA

Topics

1. UOP MTO Technology

2. MTO Projects in China

3. MTO / GTO / CTO Analysis

UOP 5614D-2

Regen Gas

Air

Methanol

Water

DMERecovery

Ethylene

C4+

Propylene

By-products

MTO Process Integrated withOlefin Cracking Process (OCP)

Sep Section

OCP

MTOLight Olefin

Recovery

Advanced MTO Technology

Yield Benefits from OCP Integration

0

10

20

30

40

50

60

70

80

90

100

Ca

rbo

n y

ield

%

Other high value products

Ethylene

Propylene

70

80

90

100

1.0 1.2 1.4 1.6 1.8 2.0Lig

ht

Ole

fin

Ca

rbo

n Y

ield

s, w

t-%

Propylene/Ethylene (P/E) Product Ratio, wt.

2.6 tons of Methanol consumed per ton

of light olefin produced

A little more ethylene, a lot more propylene, and a lot less C4+ by-product

OCP integration increases light olefin yields by 20%

Total Process Demonstration Unit

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

Fully integrated Advanced MTO Process configuration

2009

INEOS Demo Unit

1995

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

Multiple grades/sources of feed

Reactor and regenerator configuration

~1 kg/day of MeOH feed

Multiple grades/sources of feed

Reactor and regenerator configuration

UOP Pilot Plant –Operation

1988

Scale-up Progression

Wison Engineering Ltd.

Wison Nanjing MTO Plant Construction – July 2012

Wison Engineering Ltd.

Wison Nanjing MTO Plant Construction – July 2013

Commercialization Status

Owner Location ScopeLO Capacity

MTAOn-Stream

Wison (Nanjing) Clean

Energy Company, Ltd.

Nanjing, Jiangsu

MTO / OCP 295,000 Sept 2013

Jiutai Energy (Zhungeer)

Company, Ltd.

Ordos, Inner Mongolia

MTO 600,000 Exp 2014

Shandong Yangmei

Hengtong Chemicals

Company, Ltd.

Linyi, Shandong

MTO / OCP 295,000 Exp 2014

Jiangsu Sailboat

Petrochemical Co. Ltd.

Lianyungang,

JiangsuMTO / OCP 833,000 Exp 2015

The following projects in China have disclosed the

selection of the UOP / HYDRO MTOTM Process:

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.)

3.8 Ă5.5 Ă

Methanol-Based LO Production

0

2

4

6

8

10

2009 2010 2011 2012 2013 2014 2015 2016

Eth

yle

ne p

lus P

ropyle

ne,

Mill

ion M

TA

Approximately 20 methanol-based light

olefin projects in China are in operation,

under construction, or in detailed design

and procurement as of 1Q 2014

One MTP and 3 MTO technologies have

been commercialized as of 1Q 2014

Two Types of MTO Projects in China

Coal Gasification

Methanol / MTO

LO Derivates

Type 1 – MTO (CTO) Projects

Inland Locations (near mines)

Mega-sites / Often State Sector

Raw Material Driven

Large Capacity Projects

Mostly PE / PP

Coal Mine

MTO

LO Derivates

Coal Based

Methanol

Gas Based

Methanol

Open

Market

Type 2 – MTO Projects

Coastal Locations

Often Private Sector

LO Derivative Driven

Wide Range in Capacities

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) China’s 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

0

5

10

15

20

25

30

35

350 375 400 425 450

1.0 MM MTA 600 KMTA 300 KMTA

Methanol, $/MT

Pro

ject

IRR

, %

$1,300/MT transfer price for light olefin products

MTO Project NPVs

0.0

0.5

1.0

1.5

2.0

2.5

350 375 400 425 450

1.0 MM MTA 600 KMTA 300 KMTA

Methanol, $/MT

Pro

ject N

PV

, B

illio

n $

$1,300/MT transfer price for light olefin products

Methanol Price History

100

200

300

400

500

600

700

800

900

1,000

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

$/M

T

N America W Europe N Asia S AsiaSource: CMAI

Average quarterly prices

Adjusted to constant 2013 US $

GTO Project Returns

0

5

10

15

20

25

30

35

40

2 4 6 8 10 12

1.0 MM MTA 600 KMTA 300 KMTA

Natural Gas, $/MM Btu

Pro

ject

IRR

, %

$1,300/MT transfer price for light olefin products

GTO Project NPVs

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2 4 6 8 10 12

1.0 MM MTA 600 KMTA 300 KMTA

Natural Gas, $/MM Btu

Pro

ject N

PV

, B

illio

n $

$1,300/MT transfer price for light olefin products

North American Energy Prices

0

2

4

6

8

10

12

14

16

18

20

22

24

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

$ / M

illio

n B

tu

WTI Crude Natural Gas Illinois CoalSource: CMAI

Average quarterly prices

Adjusted to constant 2013 US $

Gas and coal valuations have decoupled from oil in North America

CTO Project Returns

0

5

10

15

20

25

30

20 60 100 140 180 220

1.0 MM MTA 600 KMTA 300 KMTA

Coal, $/MT

Pro

ject

IRR

, %

Coal energy content = 27.9 GJ/MT (26.4 MM Btu/MT)

CTO Project NPVs

0.0

1.0

2.0

3.0

4.0

5.0

6.0

20 60 100 140 180 220

1.0 MM MTA 600 KMTA 300 KMTA

Coal, $/MT

Pro

ject N

PV

, B

illio

n $

$1,300/MT transfer price for light olefin products

0

200

400

600

800

1,000

1,200

1,400

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Capital Budget CCOP

Capital Cost and CCOPC

ap

ita

l B

ud

ge

t, B

illio

n $

LO

Ca

sh

Co

st o

f Pro

du

ctio

n $

1 Million MTA Light Olefin Capacity

MTO GTO CTO

$400/MT

Methanol

$6 per

MM Btu

Gas

$60/MT

Coal

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.