Energy and natural resources
Feedstock
The raw material fed into a process, such as naphtha or ethane for a chemical plant.
Facts checked against sources onWhat does Feedstock mean?
Feedstock is the basic raw material a plant turns into products: crude oil for a refinery, naphtha, ethane, propane or coal for petrochemicals, and natural gas for ammonia and methanol. In commodity chemicals it is often the largest cost, so cheap feedstock is a lasting competitive advantage. Plants in the Gulf and the United States that crack cheap ethane have had lower costs than many naphtha-based plants in Europe and Asia. Example: if ethylene costs 400 a tonne to make from ethane but 800 from naphtha, a 1.5 million tonne plant using ethane saves 600 million a year.
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Related terms
- Steam crackerA plant that breaks hydrocarbons into ethylene and other building-block chemicals using steam and heat.
- Commodity versus specialty chemicalsHigh-volume standard chemicals sold on price versus smaller-volume chemicals sold on performance.
- Cost curve (industry supply curve)All producers ranked from lowest to highest cost, showing who is the marginal producer.
- Competitive advantageWhat lets a firm earn more than its rivals over time.
- Barrel of oil equivalent (boe)A unit that converts gas into barrels of oil by energy content, so oil and gas can be added together.
- Lifting costThe cost of producing oil or gas from wells that already exist, per barrel.
- Full-cycle breakevenThe oil price a project needs to cover all its costs, including building it, and earn its required return.
- Fiscal breakeven oil priceThe oil price a government needs to balance its budget.
Learn it in context
See Feedstock at work in a lesson from Chemicals, with checks as you go.
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