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Honeywell recently unveiled a new technology that could have far-reaching effects beyond the $150 billion plastics industry: a commercially viable one-step process to convert methane into ethylene, one of plastic's ?ber building blocks.
No longer just a colorless, odorless gas
Before Honeywell's news hit the Internet, the growing gap between oil and ethane prices already had many domestic ethylene producers switching feedstocks. For example, Dow Chemical, riding what appears to be a long-term trend, recently announced its decision to build a new $1.7 billion ethane-based chemical plant in Freeport, Texas. Even if natural gas settles closer to the $4.50 futures price from spot lows of $1.98, Honeywell's new technology should accelerate this national buildout. No longer a dry, colorless, under-achiever, methane is suddenly acting much wetter, and its new versatility could help to ease the current shale gas glut by eventually goosing gas prices for companies like Chesapeake Energy (which is furiously shedding and selling assets to adapt to cratering prices), while also lowering the cost of a wide range of consumer products. This could become a dizzying synergistic trifecta for energy companies, chemical companies, and consumers - rivaling iPad-onomics - the cost reductions usually associated with Moore's Law, semiconductors, and Chinese prison labor.
Honeywell's proof-of-concept
"Commercially viable" gas-to-ethylene conversion is the industry's "holy grail," Gotz Veser, a professor of chemical engineering at the University of Pittsburgh, explained to Businessweek:
"The industry has been looking for efficient ways to turn methane into higher hydrocarbons directly for decades," said Veser, who has written more than three dozen papers on the subject. "Nobody has been able to come up with an economical process."
Honeywell's just completed proof-of-concept has produced good results. "For the first time, this will basically take natural gas and directly convert it to a chemical, not through a multistage process," said UOP CEO Rajeev Gautam. Along with other companies, Dow Chemical has sought hard over the years to directly convert methane. "If they are announcing that, then I think that is a significant step forward for our industry," said Carol A. Williams, executive vice president executive vice president of manufacturing and engineering at Dow, told Bloomberg. She hasn't seen Honeywell's technology yet, but she knows from personal experience that, "Lots of people have worked on
it and they have worked on it many different ways." In an ironic twist, Honeywell bought UOP from Dow in 2005. If the technology can be scaled successfully in a planned pilot plant, UOP's process would save about 40 percent from the cost of ethane-based ethylene production at current prices. Honeywell's Gautam said the new technology would be cost effective even if natural gas prices rise much higher. It could become a polymer supply-and-value-chain-reaction. Click to see the entire Bloomberg article or the Businessweek rewrite.