Changing composition of the world's motor fuels will spur rapid growth in oxygenates demand in the 1990s.
Paced by the drive to reformulate gasoline in the U.S. under new air quality goals, the change will mean new markets and increased demand for petrochemical products. Leading that growth will be methyl tertiary butyl ether.However, MTBE market growth may be constrained by limits in capacity of methanol feedstock.
Those are among conclusions of new industry studies in the U.S. and U.K.
U.S. GASOLINE POOL
By Nov. 1, 1992, almost 30% of the winter gasoline pool will be reformulated or require oxygenates as a result of Clean Air Act amendments, says Information Resources Inc., Washington.
By 1995, that level will rise to almost 50%.
By 2000, the volume of gasoline affected by federal and local clean air programs will jump to more than 5 million b/d.
To meet 1995 CAA requirements, U.S. refiners will need more than 230,000 b/d of MTBE and 120,000 b/d of ethanol, IRI estimates.
By 2000, the demand by U.S. refiners for total oxygenates will be about 540,000 b/d.
World MTBE capacity by 2000 is expected to increase 62% beyond projects now under study, IRI says. There is more than 200,000 b/d of MTBE capacity worldwide. Another 440,000 b/d is under construction or planning/engineering.
U.S. oxygenates capacity will fall short of domestic demand by more than 250,000 b/d if new plants are not added beyond those planned, IRI predicts.
Part of the U.S. oxygenates demand will be met by new tertiary amyl methyl ether capacity. IRI estimates as much as 60,000-80,000 b/d of TAME capacity will be added in U.S. refineries by 2000.
MTBE GROWTH
The fastest growth in petrochemical demand in the early 1990S will occur in MTBE markets, says DeWitt & Co. Inc., Houston.
DeWitt estimates world capacity of MTBE will about triple by 1995, to 677,378 b/d from 225,568 b/d in 1990. All available MTBE capacity will be needed.
MTBE capacity in Asia and the Middle East will increase fivefold by 1995, to 131,488 b/d from 24,508 b/d in 1990, the consultant estimates.
To meet oxygenates demand year round in the U.S., companies will have to produce MTBE all year long, then store it to serve seasonal peaks, DeWitt says. In western Europe, lead phase-down in gasoline will pace increased MTBE demand.
Competition between U.S. and European markets for MTBE supplies will keep prices relatively high, DeWitt predicts.
DeWitt says the fastest regional growth in MTBE capacity will occur in Canada, where capacity will leap to 53,740 b/d in 1995 from only 3,740 b/d in 1990. During the same period, MTBE capacity in eastern Europe will soar to 58,780 b/d from 6,930 b/d in 1990, MTBE capacity in western Europe will jump to 94,270 b/d from 63,040 b/d, DeWitt says. While retaining the lead in MTBE capacity, the U.S. will register slowest regional growth, increasing to 339,100 b/d in 1995 from 127,350 b/d in 1990.
METHANOL CONSTRAINTS?
MTBE's potential for growth during 1990-95 may be constrained by tightness expected in methanol markets, contends Tecnon (U.K.) Ltd., London.
The consulting firm believes methanol supply will be tight for the next 2-3 years. So construction of added capacity needs to start now to prevent a severe shortage in the mid-1990s.
Tecnon estimates growth in world methanol consumption at 4%/year in that period if added capacity is installed in time to meet increasing demand. Four major new plants or plant expansions are included in the capacity forecasts: in Saudi Arabia, New Zealand, Trinidad and Tobago, and Venezuela.
Even allowing for this new capacity, Tecnon forecasts a shortfall of 1.85 million tons/year-or the equivalent of three worldscale plants-assuming a capacity utilization rate of 87.6%. Increasing utilization to 90% would trim the shortfall to 1.26 million tons/year or two worldscale plants equivalent.
Tecnon expects all four projects to be built eventually but notes questions currently hang over each. There have been no completely firm indications financing is fully in place to begin construction of a plant in Venezuela or Trinidad and Tobago, and there are two competing projects in each country.
The New Zealand expansion is on stream, but its economic viability hinges partly on international prices for premium gasoline, Tecnon says. Construction of the new Saudi unit has started but will almost certainly be delayed in the wake of the Persian Gulf war. Of other new methanol projects being considered around the world, none can be considered to be definite at present, Tecnon says.
MTBE GROWTH TO LAG?
Tightness in methanol supply is one reason Tecnon takes a conservative view of growth in MTBE production in the early 1990s, although this still will be substantial at an average 13%/year during 1989-95.
Tecnon thinks CAA implementation may proceed rather slowly at first while the petroleum and petrochemical industries adjust to the new situation. More than any other methanol derivative, MTBE is affected by legislation and politics, the consultant says.
Methanol supply may not be the only limiting factor for MTBE projects in North America. They may find themselves at the end of a waiting list for required equipment, Tecnon says. It forecasts MTBE will jump its share of world methanol consumption to 20% in 1995 from 8% in 1986. Formaldehyde will remain the largest single outlet for methanol to 1995, but its share of that market will slide to 36% from 41% in 1986.
Tecnon contends methanol price instability of the last few years is partly a function of how methanol production has moved away from consuming areas in the U.S., western Europe, and Japan to remote, low feedstock cost sites and away from established, large diversified petrochemical companies to new ventures-some highly leveraged-typically with only a single product: methanol.
REGIONAL CHANGES
The U.S., western Europe, and Japan will remain the largest consumers and largest importers of methanol to 1995, Tecnon says.
Production in Europe and Japan will remain largely static to 1995, while methanol imports will increase by about 500,000 tons/year in Europe and 200,000 tons/year in Japan. Despite an increase in production of about 550,000 tons/year in the U.S., methanol import requirements will jump by about 1 million tons/year, due mainly to a big increase in MTBE production.
Methanol import requirements in eastern Asia-notably Taiwan and Korea-will increase by more than 300,000 tons/year. China remains very much an unknown quantity but is not expected to become a major exporter or be more than a small importer to 1995.
Without new capacity to meet the forecast deficit, only the Middle East and South Asia and Southeast Asia will increase exports. Increased domestic consumption will trim the level of exports from Canada and, despite new capacity, from Central America and South America.
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