PetroLogistics plans new PDH plant on US Gulf Coast.

Petrotahlil :The company, backed by energy-focused private equity firm Quantum Energy Partners, has licensed Dow Chemical technology to employ a reactor design based on fluid catalytic cracking, a mainstay in refineries for gasoline production. The technology is expected to ensure lower capital costs and energy consumption as well as better operational reliability, PetroLogistics President Nathan Ticatch said.

"This is using the same basic process of an FCC to make propylene," Ticatch said in an interview. "It's Dow's technology, which we have licensed, and we do believe that it will be more reliable."

In the early years of the US shale production boom, a slew of announcements of new PDH plants emerged alongside major plans for new ethane-fed crackers and derivative resin facilities from 2011 through 2013 and beyond. Ethane-fed crackers produce mostly ethylene, the feedstock for plastic resins, but no propylene.

Cheap ethane is the preferred feedstock for eight new crackers starting up in 2017 through this year and more beyond 2020, so less cracking of propane, butane, naphtha and gasoil has left a gap for PDH units to produce propylene.

But in 2014 and beyond, a combination of a narrowed spread between propane and propylene prices and high refinery rates dampened enthusiasm for new PDH plants, as refineries had traditionally been major sources of propylene as well as crackers that processed feedstocks other than ethane.

Only two new PDH projects moved ahead -- Dow Chemical's 750,000 mt/year plant in Freeport, Texas, and Enterprise Products Partners' 750,000 mt/year plant in the US NGL hub in Mont Belvieu.

Both plants proved challenging. Dow's facility faced stops and starts for about a year before it achieved stable operations in 2015, and Enterprise's plant began commercial production in mid-2017 after a yearlong startup delay.

PetroLogistics built the first US PDH plant in 2010 in Houston and sold the 658,000 mt/year facility to Flint Hills Resources in 2014 for $2.1 billion, Ticatch said.

When built, PetroLogistics' new PDH will be the fourth such plant in the US. Ticatch said the company was scoping two potential locations on the US Gulf Coast, but declined to specify where.

"Our experience back in 2010, we had a pretty good onstream rate our first year, but it was a lot of hard work," Ticatch said.

The company said the new technology is expected to address such startup challenges for PDH plants.

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