BUSINESS
MTBE Strengthens Hold On Octane Booster Market "MTBE (methyl tert-butyl ether) is the winner and new champion ox ygenated octane component of the world." That's not exactly what the heavily ethanol-oriented audience at the 1986 National Conference of Fuel Ethanol & Gasoline Additives wanted to hear, but William Ludlow, vice president for oxygenates at DeWitt & Co., made a very strong case for MTBE nonetheless. After outlining the shortcomings of tert-butyl alcohol (TBA), ethanol, and Oxinol (a 50-50 blend of TBA arid methanol, marketed by Arco Chemical), Ludlow went on to ex plain why he considers MTBE the octane enhancer of choice for gaso line. It has a lot going for it. There now are 30 plants produc ing MTBE throughout the world and an additional 20 plants are planned. Can you think of any other chemi cal with this growth posture, asks Ludlow. MTBE consumption has been growing at an astounding 40% per year and it could be limited in the future only by supply. Virtually all refiners in the U.S. and most of those in Europe have accepted MTBE as an octane en hancer. It blends like a hydrocar bon and doesn't have the handling problems that alcohols do. It can also solve refiners' octane problems without requiring huge, additional capital investments. Fueled by a gradual phaseout of lead additives in gasoline in both the U.S. and Europe, MTBE demand and the capacity to meet it has grown—and will continue to g r o w rapidly. In the U.S., for instance, capacity will triple, from a little more than 30,000 barrels per day last year to about 90,000 bbl per day in 1988. Capacity growth in Europe, although substantial, will be less impressive. Outside the U.S., much of the MTBE capacity increase will occur in other parts of the world, 8
October 13, 1986 C&EN
where it will be based on isobutylene produced from plentiful and i n e x p e n s i v e field b u t a n e s , says Ludlow. Significantly, this impressive MTBE g r o w t h has been accom plished without having to cut prices. Just the opposite is true, says Lud low. In both the U.S. and Europe, the ratio of spot MTBE prices to gasoline prices is increasing. Ludlow believes that the "real world" of lead phasedown is just beginning and that refiners who were reluc tant to admit that they needed out side octane resources are paying higher prices for MTBE. Last year, for instance, spot MTBE prices in the U.S. were about 1.2 to 1.3 times the price of regular unleaded gaso line. Today, says Ludlow, refiners think nothing of paying 1.5 to 1.6 times the gasoline price. Refiners' appreciation of MTBE is growing in both the U.S. and Eu rope. Ludlow says that all major U.S. refiners now use at least some MTBE. If the trend toward premi um unleaded gasoline continues, they will start using more. It is the
U.S. consumption of MTBE will be restricted by supply Thousands of bblper day 1601 ν — - . :
Current MTBE > , expansion plans H
1986
1987
1988
a Estimated. Source: DeWitt & Co.
1989
1990
only way that they can quickly up grade their octane, Ludlow says. The primary problem facing MTBE producers is a shortage of raw ma terial i s o b u t y l e n e . As a result, Ludlow believes that the next gen eration of MTBE plants will be built where there is isobutylene avail able from a plentiful, price-stable source. Field butanes, he says, are that source. The first such plant now is being built in Saudi Arabia and probably will be on stream in early 1988. Potential producers in other parts of the world are considering simi lar units even though they are ex pensive compared to a convention al isobutylene unit. Fueling the future g r o w t h in MTBE demand will be lead phasedown, which is proceeding rapidly in the U.S. and in Europe. Unlead ed gasoline is increasing its share of the U.S. market. Premium unleaded is becoming more popular in the U.S. Some esti mates put its market share at 20% already, and it could rise to 30% by 1990. That alone will place a strain on MTBE capacity. All the MTBE scheduled for production will be sold, says Ludlow. In the U.S., the octane lost to lead phasedown will require about 300,000 bbl per day of MTBE if MTBE were to make up all the loss. Refiners have other options, of course, and Ludlow thinks that about 150,000 bbl per day of MTBE will be used. Announced MTBE ex pansions are not high enough to meet that demand, he adds. Ludlow figures that the octane loss in Europe can be made up with MTBE and Oxinol. This octane short fall could increase to an equivalent of more than 200,000 bbl per day of oxygenates. Ludlow concedes that this is a rather high estimate, but if oxygenate demand in Europe grows anywhere near the rate that it will in the U.S., it will still outstrip the new MTBE capacity planned there. This situation puts MTBE produc ers in a strong position to raise prices. Meanwhile, Ludlow expects that the MTBE market in the U.S. will switch from primarily a spot market to a contract market, which it already is in Europe. Earl Anderson, New York
