Charting the Future of Ethylene Industry: Outlook 2024 - Navigating Energy Shifts, Feedstock Trends, and Sustainable Pathways

As we approach the end of this year, I would like to share a summary of my thoughts on the outlook for the ethylene (light olefins) industry.
Energy Shifts

• Renewable power share is increasing, albeit at a somewhat slower pace than needed to meet transition targets.
• Coal is still a significant source of power generation driven by multiple factors – including energy security, affordability, competitiveness, self-reliance, etc.
• Oil demand is now expected to peak in the next 5-8 years, later than previously anticipated in transition scenarios.
• The cost of batteries for power storage is declining significantly, thus helping renewable power.

The slower shift will likely have an impact on electrification efforts in the petrochemicals sector.
Feedstock Trends

• Oil-producing countries in the Middle East and major petrochemical demand/growth regions are investing heavily in Crude-to-Chemicals production approaches.
• Ethane exports from the US are expected to increase over the next 5 years.
• Industry continues to look for renewable feed sources – penetration is expected to be limited to some regions and will be slow, and challenges remain about competition with other applications, landmass utilization, infrastructure, etc.
• Ethane feedstock is expected to remain advantageous feedstock in North America and the Middle East. Crude Oil prices are expected to stay at elevated levels in the foreseeable future.

Light olefins are experiencing low utilization rates, and the margins will remain under pressure during 2024. The oversupply situation is dampening investments in North America, while Asia and the Middle East are continuing to add capacity.
Sustainable Pathways
The petrochemical industry has started to invest in its journey toward NetZero targets at a somewhat slower pace, however, uncertainty and risks remain. The industry is making progress in some of the pathways towards sustainability as below:

1. Some of the technologies that are currently under development and/or in the demonstration stage include:
   1. Electrical cracking furnace
   2. Shock wave reactor concepts (e.g. RotoDynamic Reactor) driven by electrical power
   3. Converting carbon dioxide to ethylene
2. Carbon capture applications include:
   1. Some of the crackers are moving forward with pre-combustion carbon capture applications using the auto-thermal reforming concept to produce blue hydrogen as a source of heat for cracking furnaces.
   2. Many companies are evaluating post-combustion carbon capture technologies.
3. Some companies are evaluating green hydrogen as a source of heat; however, current economics pose a challenge. Many companies are looking at external blue hydrogen supply.
4. Some companies are evaluating options for using Small Modular Reactor concepts using nuclear energy for generating power and steam.
5. Circularity:
   1. Many companies have made commitments for advanced recycling facilities (multiple technologies) to replace fresh hydrocarbon feeds. However, challenges remain due to lower carbon efficiency and high energy intensity as well as contaminants in the recycled feed.
   2. Companies are working on concepts to develop circular approaches that can help keep materials in use and at their highest possible value throughout their life.

Keeping the energy transition efforts focused, efficient, and effective requires a great deal of abstract and impartial thinking based on breadth and depth of experience, industry insights, and knowledge. Apex PetroConsultants can help by bringing the value of strategic thinking, specific industry insights, knowledge, and a depth of experience.