- Ethane export margins by terminal and destination through to 2020
- Ethane export costs
- Production forecasts and export volume estimates
- Ethane export volumes, logistics and infrastructure
- Ten year commodity pricing forecasts for ethane
U.S. Market Innovations in oil and gas drilling have led to lower production costs for crude oil and natural gas in the US, leading to surpluses of ethane and ethylene supplies. Surplus ethane output is expected to reach nearly 700,000 barrels per day by 2020, even after the commissioning of new ethylene production capacity. The new additional ethylene production capacity planned by 2020 is projected atmore than 10 million metric tons.
In the same time frame over 8 million metric tons of new additional polyethylene production capacity is announced to come online. However, to date, few U.S. firms have marketed significant amounts of ethane or ethylene to international buyers other than Canada or Mexico, to whom export is made via pipeline. Lack of infrastructure in maritime transport for these commodities has been a key barrier to international buyers, but logistics infrastructure is being constructed near-term to overcome this barrier. The first ever significant volume U.S. ethane-export terminals are scheduled to operational within two years. Sunoco Logistics is commissioning their first phase new terminal at Marcus Hook, PA, at the end of 2015 with a throughput capacity of exporting 800,000 tons of ethane per year.
They will commission a second train in this facility in the 4th quarter 2016 increasing capacity to a total of 1.4 million tons per year. Enterprise Products Partners plans to commission a second ethane export terminal at Morgan’s Point, TX, in 3rd quarter 2016 with a capacity of 4.1 million tons per year. Both facilities are located so as to capitalize on the considerable shale gas production resources and the ethane supply glut is estimated to exceed 5 million barrels per day surplus between 2016 and 2020. Ethane maritime shipping and global markets are currently in their infancy, analogous to liquid natural gas markets 15 to 20 years ago. This study reveals there are both challenges and opportunities for U.S. ethane export.
he supply of ethane is tight outside the U.S., particularly in the Middle East, and no ethane export projects have been announced outside the U.S. The North Sea gas production volume is declining, and gas production in the Norway region will begin to follow suit, declining by an aggregated 6% by 2019. Output in the U.K. is in decline with total oil and gas output currently at a third of 2009’s output. The U.K. petrochemical industry imports close to 600,000 tons of ethane/year from Norway and has already contracted ethane supply from the new U.S. terminals.
To enable import of U.S. ethane, infrastructure upgrades and expansion of sea terminals at Grangemouth and Tees have occurred. This study projects the logistics costs for the U.S. ethane supply. Beginning in 2016, INEOS and SABIC will commence import of U.S. ethane into northwest Europe. Both INEOS and SABIC are converting steam crackers from naphtha to ethane feedstock. Borealis is continuing with ethane crackers, but installing ethane import terminals to support their ethane supply versus the decline in ethane production from the North Sea production.
Reliance Industries is establishing U.S. ethane supply capability to steam crackers in India. INEOS, SABIC, and Reliance will be primary shippers out of Enterprise Products’ Morgan’s Point facility. An estimated 85% of Enterprises’ announced capacity is reported as already under firm take or pay contracts.