Houston-based Next Wave Energy Partners LP on Wednesday sanctioned a 28,000 b/d capacity alkylate production facility near Houston that would be fueled by domestic natural gas liquids (NGL).
Sponsored with private equity financing by Energy Capital Partners and Next Wave’s senior management, Project Traveler would be underpinned by long-term customer contracts for most of the nameplate capacity and sited adjacent to the Houston Ship Channel (HSC) on a 53-acre site in Pasadena.
Project Traveler is expected to consume more than 1.2 billion pounds/year of ethylene feedstock, which would be delivered to the site by multiple pipelines.
“Project Traveler was conceived to benefit from two important trends in our industry -- growing demand for additional octane and abundant domestic supplies of natural gas liquids and their derivatives,” said Executive Chairman Patrick Diamond.
According to the Energy Information Administration (EIA), alkylate is a high-octane gasoline component used in petroleum refineries. The alkylation process “combines an unsaturated light hydrocarbon (propylene, also known as propene, or butylenes, also known as butene) with isobutane to produce alkylate.”
Alkylate typically comprises 11-13% of the overall gasoline pool in the United States, according to Next Wave, whose product is marketed under the trade name Optimate. Next Wave said it plans to convert a portion of ethylene supply to alkylate by using licensed and commercially proven process technologies, with initial production set for mid-2022.
“By starting with a chemically pure feedstock and thereby avoiding the feedstock constraints typically found in refinery alkylation, our facility will produce one of the highest-quality alkylate products available in North America, which is particularly attractive for blending the cleaner-burning gasoline required by the high performance engines of today and tomorrow,” Diamond said.
“Our technical team has invested considerable time and effort in the design of the facility, which includes the built-in ability to cost-effectively expand production capacity in the future,” CEO Michael Bloesch said.
“Working with potential suppliers and offtake partners, we have already commenced engineering for a second alkylation unit at our Pasadena site to capitalize on incremental demand for our services.” The location near the HSC would provide customers with “connectivity to feedstock supply, product offtake and gasoline blending and distribution infrastructure.”
The EIA forecast in its 2019 Annual Energy Outlook issued earlier this year that U.S. NGL production would increase by roughly 40% to 6 million b/d through 2030, primarily because of natural gas production growth in the Appalachian and Permian basins.
Using more Lower 48 NGLs could help a glutted market that has trampled prices. Without more pipeline and fractionation capacity, domestic NGL pricing could remain under pressure for up to four years, analysts with Moody’s Investors Service said in June.
Next Wave’s Optimate product is to be delivered from Project Traveler via direct-connection pipelines to gasoline blending terminals in Pasadena, which have dock access to marine movements through the HSC, as well as connections to refined product distribution pipelines. The facility also is being designed to receive feedstock and deliver product by rail.
Project Traveler is expected to create up to 750 jobs during construction, and once completed it is forecast to provide around 30 direct permanent jobs.