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$295-430/tonne ethylene for ethane-based production (with the US on the high side of the range), about $755/tonne ethylene for naphtha crackers to $940/tonne ethylene for gas oil-based production (Gielen et al., 1996). The variation in production costs are caused by differences in e.g. investment costs, labor costs, feedstock and energy prices, ethylene yield (per unit of feedstock). Heavier feedstocks will result in by-products, generating additional revenues. Investment costs for flexible crackers (able to use different types of feedstock) are generally higher than dedicated crackers (designed for one particular feedstock). However, flexible crackers have the opportunity to choose a different (cheaper) type of feedstock if feedstock prices change Overall profitability of flexible crackers versus dedicated crackers depends on the price developments in different feedstocks and different products (ethylene versus propylene, butadiene and aromatics). In August 1998 cash margins for liquid-based crackers were higher than for ethane-based crackers (see Table 10) (Bonner & Moore, 1998b). Table 10. Cash margins for ethylene production for different feedstocks during August 1998 (Bonner & Moore, 1998b). Feedstock Ethane Propane Butane Naphtha Gas oil Cash margin (cents per kg)1 11.3-11.8 13.3-14.0 14.2-14.7 14.2-14.9 16.4-18.2 Note: Includes feedstock costs, co-product credits, variable costs, fixed costs and ethylene price Purchased energy costs in North America in 1995 for the production of ethylene amounted to $2.11/GJ ($2.23/MBtu), compared to $3.90/GJ ($4.11/MBtu) for Europe and $6.02/GJ ($6.35/Mbtu) for Asia (Solomon, 1995). Between 1993 and 1995 energy costs in North America decreased 20%, while in the same time energy costs in Europe rose by 3%. Differences in energy prices are caused by the indigenous availability of energy resources, tax levels and competition of specific energy carriers for other applications (e.g. the application of fuels for space heating). Import/export U.S. ethylene net imports amounted to 230,000 tonnes in 1995 (equal to about 1% of U.S. production). Since then net imports have been decreasing to 5,000 tonnes in 1997 and as of 1998 the U.S. is expected to be a net exporter (Bonner & Moore, 1998). Exports, however, are limited (less than 1% of total production). In general, transport costs will be too high to allow large-scale exports over long distances. As an example, the transportation costs for ethylene from the U.S. to India (excluding tariffs and import taxes) have been estimated at 1.5-2.5 times the U.S. production costs per tonne of ethylene (Chemistry & Industry, 1996). This implies that the risk of U.S. companies relocating because of rising energy prices to supply the U.S. market from abroad is limited. In Europe and Asia energy prices are considerably higher. In the Middle East energy prices are lower, but capital costs are higher because of a lack of sufficient infrastructure and skilled labor (Gielen et al., 1996). The same is expected to be valid for Latin America. In 1993, the only countries/regions producing ethylene at significantly lower costs (20-40% lower) than the U.S. were Canada, Venezuela and (ethane-based capacity in) the Middle East (Hydrocarbon Processing, 1994). It seems likely that transportation costs (of both feedstock from the Gulf coast to the production site and of products to the U.S. market) and unstable political and economic climate (in the case of the Middle East and Latin America) will limit the relocation of U.S. production facilities. 11 1PDF Image | Energy use and energy intensity
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