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The two saturated C4 hydrocarbons, n-butane and isobutane (2-methylpropane),
are directly obtained from natural gas processing or petroleum refinery operations.
Isobutane is a structural isomer of n-butane. The two isomers have different
chemical and physical properties.
In natural gas processing, butanes are present as a component of the natural
gas from the gas well. The butanes content of a natural gas well varies; however,
an average natural gas stream contains between 1 and 2 mol percent butanes,
with the ratio of n-butane to isobutane varying from 2:1 to 1:2.
The global butanes business is operated by oil and natural gas companies from
the public and private sectors. For most regions of the world, published information
on butanes is usually included as part of statistics on the entire liquefied
petroleum gas (LPG) stream; separate data are not available.
Regulations aimed at reducing emissions of volatile gasoline components into
the environment are expected to become widely adopted (especially in the United
States), thus reducing butanes consumption in the gasoline pool. n-Butane can
be isomerized to isobutane, which is then dehydrogenated to isobutylene. Isobutylene
in turn is used to make methyl tert-butyl ether (MTBE), consumption of which
had been growing strongly until a few years ago. In the United States, most
petroleum companies are expected to phase out MTBE by the summer of 2006. The
ban on MTBE is driven by concern about groundwater contamination. Areas in
the Midwest and California have already switched from MTBE to ethanol. Although
the United States is reducing production and use of MTBE, consumption of MTBE
will continue to grow in other areas of the world. For example, in Europe and
China, MTBE is still viewed as an acceptable way to increase the octane value
of gasoline.
U.S. markets for butanes have changed as a result of the implementation of
the Clean Air Act Amendments. Direct blending in gasoline has declined significantly,
whereas consumption in gasoline alkylate and petrochemicals has increased.
Future energy and environmental policy changes enacted by government, both
national and local, will have significant impacts on butane consumption. The
phaseout of MTBE use and the move toward less gasoline volatility will lead
to a slight decrease in butane demand in the next few years. However, direct
butane consumption will increase as a petrochemical feedstock and as a feedstock
for alkylate.
In Europe, the collapse of the former USSR caused many of the newly formed
republics to experience severe economic downturns from 1990 to 1995. For many
of these countries, economic growth has picked up since. From 1995 to 2004,
LPG demand in Central and Eastern Europe increased by 7% per year. In Poland,
the automotive fuel market for LPG has exhibited extremely strong growth and
may be one of the highest growth sectors in the next ten years. In northern
Europe, the United Kingdom and Ireland are the largest consumers of LPG. Demand
in northern Europe has grown at less than 1% per year.
LPG demand in Japan is expected to grow at an average annual rate of 1.5%
in the next five years, which makes it the fastest growing product in the Japanese
market. Consumption of LPG for petrochemical feedstock will be steady in the
next five years. However, there will be a slight decrease in butane used as
a petrochemical feedstock and a moderate average annual increase in propane
used as a petrochemical feedstock. The use of LPG by theresidential/commercial
sector will rise slowly within the next five years, as will consumption of
LPG by the automotive fuel market.
The following pie chart shows consumption of butanes/LPG by major region:
Supply/demand economics for the various regional butanes markets will continue
to be influenced by two general trends\international LPG (C3/C4) industry
developments and domestic environmental policies, especially regarding gasoline.
Increases in butanefs global market share, particularly as an ethylene feedstock,
will reflect its relative price competitiveness against other natural gas liquids
(NGL) components as well as naphtha and gas oil.
In the Middle East, LPG consumption growth is driven by the petrochemical
sector. Saudi Arabia and Iran are the two largest consuming countries in this
region. Demand for LPG in Saudi Arabia will rise sharply in 2008 because of
an increase in chemical manufacturing facilities being brought on stream. The
Middle East provides LPG exports mainly to Asia and will continue this trend
in the near future.
The LPG market in Latin America continues to exhibit strong growth. Eighty
percent of consumption in this region is by the commercial/residential sector.
There was a decrease in LPG demand in 2002 and 2003 but demand returned to
positive growth in 2004.
In North America, Mexico has the highest per capita use of LPG in the residential
sector compared with countries from the rest of the world. Four out of five
households in Mexico use LPG as their cooking fuel.
In the next five years, global LPG supply will slightly exceed LPG demand.
The LPG market will move from a demand-driven market in the early 2000s to
a supply-driven market by the end of 2010. The projected increase in LPG production
capacity will be used mainly for export. This increase in global export capacity
and growing Asian demand should keep butanes prices competitive.
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