Itasca, Ill. — The U.S. shale petrochemical revolution helps make polyethylene a lower-cost alternative for caps and closures than polypropylene, a resin consultant said during the Caps and Closures Conference, put on by Plastics News.
Shale-related production has grown quickly, using horizontal drilling and hydraulic fracturing, known as fracking. James Ray, a senior consultant with the firm ICIS, called shale oil and natural gas “a game changer.”
“There's been a major increase in oil in the U.S, between 2010 and 2014. It's totally changed the petrochemical market,” he said during the conference held in Itasca, outside of Chicago.
Ethane, which in the United States is made from cracking natural gas, is used to produce polyethylene. Propylene, for polypropylene, comes from naphtha, a byproduct of oil.
Ray said fracking gives light crude oil, and therefore sends a lighter feed to crackers, so less propylene is being produced. PE, from gas, is the preferred product now, he said.
Another factor, Ray said: Ethane-based PE has high profit margins, which is driving capacity expansions.
“I think PP's going for some time period to be a higher-cost option per pound” than PE, Ray said.