Is cheaper plastics feedstock on the horizon?

[Jan van Eck + 7,558]

With the price of natural gas now busting below $2.00, latest quote being $1.985, and no sign that this is a fluke, one overlooked result of this lowered price is a possible increase in the substitution of various plastics for metals.   The largest plastic material out there is polyethylene  (PE), both in "low density" (LDPE) and "high density" (HDPE) variants.  PE can be made from either oil or gas, if from oil, the feedstock is naptha, and if from gas, then ethane is used from wet gas.  The ethane is first cracked into ethylene, then that goes into the final plant for conversion into one of hundreds of grades of PE, in solid form as strands that are then cut into pellets.  The industry jargon for the pellets is "resin." 

Costwise, the feedstock can be as much as 70% of the price of the final product.  Thus the price of PE, and its main variants LDPE and HDPE, march in tandem to the price of natural gas.  At two bucks there is a major incentive to expand the manufacture and use of PE grades, in competition with its alternatives, paper and metal.  Even rudimentary products such as the prosaic shipping pallet are sensitive to these price swings.  The typical pallet is built up of wood.  But it is also possible to manufacture as an injection-molded part of HDPE.   The choice is in large part a function of price.  Wood is not decreasing in cost, and inside the USA is increasing, as Canadian lumber is facing tariffs.   And you have a parallel situation with drums, typically made of metal.  The same drum can be blow-molded of PE if the cost of the resin gets low enough. 

While large amounts of gas are used for power generation and for space heating, don't overlook the new demands that come from price decreases, in the manufacture of plastics.  I see increases in demand coming, for all that take-away gas that is getting flared off.  There is money to be made. 

Edited January 20, 2020 by Jan van Eck
typing error

[Enthalpic + 1,496]

Petrochemicals are great -so many uses- and anything that curtails burning of the stuff is great.

Ultra-premium synthetic motor oils are now being made from natural gas; not much dirt to filter out if you start with a gas...

https://www.pennzoil.com/en_ca/products/full-synthetic-motor-oils/pennzoil-platinum.html

 

https://www.prnewswire.com/news-releases/first-of-its-kind-synthetic-motor-oil-made-from-natural-gas-255519821.html

Edited January 19, 2020 by Enthalpic

[NickW + 2,714]

16 hours ago, Enthalpic said:

Petrochemicals are great -so many uses- and anything that curtails burning of the stuff is great.

Ultra-premium synthetic motor oils are now being made from natural gas; not much dirt to filter out if you start with a gas...

https://www.pennzoil.com/en_ca/products/full-synthetic-motor-oils/pennzoil-platinum.html

 

https://www.prnewswire.com/news-releases/first-of-its-kind-synthetic-motor-oil-made-from-natural-gas-255519821.html

In the  late 1980's my Chemistry teacher joked that in 300 years time, should man still exist,  in regard to burning oil they will say....

THEY DID WHAT WITH IT? 

[0R0 + 6,251]

You need longer chain and phenyl/vinyl monomers with ester or amide or amine connectors to obtain good temperature and dimensional stability and strong mechanical properties for replacing metals. You can get them from the NG cracker.  I don't know that we can produce benzenes from cracking NG. Of course, we can make lots of Delrin resin from cheap enough NG. ery nice for moving parts. 

PE is not that useful in automotive parts except volume shapes.You generally go to polyprop and stronger. PE is not a body or frame material.

[Enthalpic + 1,496]

1 minute ago, 0R0 said:

You need longer chain and phenyl/vinyl monomers with ester or amide or amine connectors to obtain good temperature and dimensional stability and strong mechanical properties for replacing metals. You can get them from the NG cracker.  I don't know that we can produce benzenes from cracking NG. Of course, we can make lots of Delrin resin from cheap enough NG. ery nice for moving parts. 

PE is not that useful in automotive parts except volume shapes.You generally go to polyprop and stronger. PE is not a body or frame material.

Low density PE isn't great, HDPE is much better and has more applications.

https://en.wikipedia.org/wiki/High-density_polyethylene

[0R0 + 6,251]

2 minutes ago, Enthalpic said:

Low density PE isn't great, HDPE is much better and has more applications.

https://en.wikipedia.org/wiki/High-density_polyethylene

Perhaps you could. I just don't think it is good enough for the big parts, which are structural. 

[Enthalpic + 1,496]

4 minutes ago, 0R0 said:

Perhaps you could. I just don't think it is good enough for the big parts, which are structural. 

Yeah, I'm not driving a plastic unibody car unless there is some carbon fibre or nanotubes mixed in that!

I have a carbon fibre reinforced plastic (not PE) bike - it's great.

Edited February 10, 2020 by Enthalpic

[Gerry Maddoux + 3,627]

On 1/19/2020 at 1:56 PM, Jan van Eck said:

While large amounts of gas are used for power generation and for space heating, don't overlook the new demands that come from price decreases, in the manufacture of plastics.  I see increases in demand coming, for all that take-away gas that is getting flared off.

Great point! 

I agree with you: low natural gas prices are very likely a longterm prospect. Probably <$2. And everyone has to get rid of it. I just saw that Total turned down China's declaration of force majeure; they had absolutely no other place under the sun to offload their LNG tanker.

This is going to crash at some point. Right now NG is being bought for nothing, run through ever-more-efficient purification and liquefaction trains, and enough profit has been coming from the water's edge offloading of LNG that it was a money-making proposition. Now, however, what with the world economy slowing down from this China virus, contracts for future delivery are going to be carefully prepared . . . especially if a company like Total won't recognize force majeure (not that I'm blaming them).

I really wouldn't be all that surprised to see pipeline gas fall as low as a buck. There's just so much of it, and it has to be moved in order to get at the oil. One-buck-Chuck will definitely put most of the pure gas plays out of business (for now).

My pet peeve is all this venting and flaring. Gas has become such an unwanted by-product that, with persistently deflated oil prices, drillers just want to get rid of it so they can get at more oil. This horrible glut could be mitigated in one month-----if the state regulatory agencies would just do their jobs. Statewide Rule 32 in the Texas Railroad Commission guidelines says that venting can be performed for 24 hours and flaring for 10 days. ND has a similar mandate. The Texas RRC thinks it is doing small operators a favor--by allowing companies that can't afford to reserve pipeline space an opportunity to just throw their gas into the wind. What they're doing, instead, is further glutting both oil and gas markets by promoting aggressive drilling, in the process promulgating horrible images of flaring captured in nighttime satellite images. 

Surely to God, with this virus causing hardship and rock-bottom prices, some one in the commission will discover the concept that tough love now is better than dealing with a total demolition of the oil and gas market later. This will eventually get resolved, but at what cost? Postponing bankruptcies is not within the rulebook purview of the regulatory agencies.

THIS PRACTICE IS ABSOLUTELY DESTROYING THE OIL AND GAS BUSINESS!

[0R0 + 6,251]

Yes, NG and particularly NGLs are a cheaper source for plastics. Hence the US has resumed production around the Appalachian gas fields in Pittsburgh region and the Ohio valley. 40% market share. Other production around the Permian and Eagle Ford Shale is coming, assuming that the China market is not permanently shot.  

[Coffeeguyzz + 454]

A couple of observations for you folks keeping an eye on this natgas topic ...

Now that a few upstream boys are releasing 4Q 2019 presentations, some interesting scenarios seem to be unfolding.

Specific to the Appalachian Basin,  NFG - aka Seneca - and CNX have given their quarterly 'best face forward' data and the determination to operate in a $2/HH world is paramount in their objectives.

I believe several E&Ps will achieve this, while several others may not.

A second cracker from PTT seems to be in the offing at Dilles Bottom, Ohio, with Exxon supposedly looking to set up a cracker in the region. Even Shell has been rumored to be contemplating a second cracker in the area while their first one is set to be operational in the coming year or 2.

Feedstock is rock bottom with Antero producing ~100,000 bbld ethane and rejecting a similar amount day after day.

Article in Oilprice today from Irina Slav regarding LNG/CNG for transportstion fuel omits an astoundingly huge aspect ... one that I feel will upend the energy world as much as this Shale Revolution has already done.

This will be the adoption of CNG worldwide through the adsorbtion ('d' not 'b') process.

The September 4, 2019 article in "Asian Scientist" magazine describes that the technoligical breakthrough has already taken place.

Under 10 years time will show households fueling their CNG vehicles - including their easy-to-convert presently owned cars/trucks - right from their residences.

An empty F-150 can be topped up for about 45 bucks a tankful.

[Gerry Maddoux + 3,627]

39 minutes ago, Coffeeguyzz said:

Article in Oilprice today from Irina Slav regarding LNG/CNG for transportstion fuel omits an astoundingly huge aspect ... one that I feel will upend the energy world as much as this Shale Revolution has already done.

I was struck by the same thing when I read the article. This is a massive market--basically the entire land transportation fleet, worldwide, as well as the small-bed pickup workforce. 

There is a narrow band of opportunity to get that infrastructure in place. It has to be efficient (short fueling time), inexpensive, and easy (everywhere along shipping lanes). 

This chunk of the market would use up a massive amount of the excess NG currently streaming onto the market. 

I may be wrong, but I don't think battery/electric can compete with this.

[Coffeeguyzz + 454]

Mr. Maddoux 

A link in Ms. Slav's article notes the near 30 million vehicles now globally fueled by natgas ... which is about 7 times more than electric vehicles.

Wading through some of this data over the years, I have found that some people claim that about half this ~ 30 million number are 2 wheelers.

I have not gotten into the weeds on this topic, but I will say this ... India, Pakistan, Iran are just a few of the countries that have now - or will shortly have - enormous amounts of exceptionally cheap fuel in some form of natgas.

I have no doubt that economic and entrepreneurial motivations will spur an adaption of natgas for vehicular use sooner rather than later.

 

In the field of adsorbtion ...

I had thought that MOFs (Metal Organic Frameworks) would lead the way, but - if I underetand this correctly  - COFs (Covalent Organic Frameworks) -  will be the ultimate winner.

Cutting edge MOFs - slightly bigger than a sugar cube - contain equivalent surface area of 2 football fields (~10,000 square yards).

Apparently this new flexible polymer far exceeds even that.

The production cost of under 50 cents/pound will be the game changer.

 

Companies have already been working with the activated carbon boys to produce storage tanks for vehicles that can be form-fitted into existing vehicles with sub 1,000 psi pressures.

Achieving the Holy Grail threshold of sub 500 psi carries astonishingly widespread, powerful ramifications.

At this relatively low a pressure, not only will the economics be favored, but the entire logistical chain - aka fueling stations - can be bypassed by any of the 50 million plus US households currently supplied with natgas as residential fueling (right in your driveway)  will be easily done.The Electric Vehicle fan boys will go nuts, as will the present gasoline(petrol)/diesel universe.