The $160-Billion Bet on Petrochemicals

Shale NGLs are providing low-cost feedstock for booming ethane and propane industries

January 23, 2017

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NGL fractionation plants, such as this one owned by Keyera in Alberta’s Industrial Heartland, are pouring shale-derived feedstock into North America’s booming petrochemical industry
Photograph Paul Swanson

That’s how much money is currently being invested in North American petrochemical production, with more still pending.

Shale NGLs are flooding the continent with low-cost feedstock, sparking a petrochemical renaissance that is working in tandem with soaring Asian demand. At a crude price per barrel to natural gas price per MBtu ratio above seven-to-one, ethane crackers beat out refinery-derived naphtha—currently this ratio is above 20. And oil prices look set to rise.

Ethane has taken center stage with six new ethylene crackers and eight expansions underway that will boost North America’s production capacity by 12.5 million tons—38 percent—from 2010 to 2020. The U.S. is leading this ethylene output drive, while Canada is focusing on cracking propane into propylene, with further conversion into polypropylene plastic pellets for export by rail from Alberta. Inter Pipeline and Pembina Pipeline are expected to make final investment decisions on their planned plants in 2017.

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