Just a few years ago, the possibility of overseas ethane exports was almost incomprehensible. Lack of infrastructure, high handling costs, no suitable ships and minimal market demand made ethane exports seem extremely unlikely. But then the shale gas boom transformed the ethane market. Now U.S. ethane production greatly exceeds demand and each day hundreds of thousands of barrels of ethane are being rejected into the natural gas stream. Consequently a few pioneers are hammering through the challenges associated with overseas ethane exports, including the construction of specialized tankage, loading facilities, ships and unloading facilities. And international chemical companies are spending hundreds of millions of dollars to modify olefin crackers to use the cheap feedstock. Now the first of those pioneers has made it to the new ethane frontier. In today's blog we examine the impact of imminent ethane exports from the Energy Transfer/Sunoco Terminal at Marcus Hook, PA.
We’ve posted many blogs about the shale gas boom and the implications of ethane production greatly exceeding demand. Back in 2013 we covered the growing supply of ethane in aggregate across the U.S. and the economic implications in The Ethane Asylum: Big Time Ethane Rejection In The Shale Gas World along with the specific challenges created by the growing supply of ethane in the Northeast (No Particular Place To Go? What Will Happen To The Tsunami Of Marcellus/Utica Ethane Production?). We’ve also covered the growing list of projects developed to soak up all of the cheap ethane; from expansions and debottlenecks at existing petrochemical facilities to new-build ethane-only world-scale crackers and the first inkling of ethane exports in Changes In Longitudes—Ethane Exports To Europe. That turned into a series of ethane export blogs, covering the challenges associated with exporting ethane on the water and the barriers that needed to be overcome for ethane exports to work in significant volumes including: (1) loading and unloading terminal infrastructure, (2) shipping, (3) pricing, and (4) petrochemical demand. See Changes In Longitudes — The Four Barriers To Ethane Export and Changes In Longitudes — More Barriers To Ethane Exports for additional details on the obstacles that had to be overcome for today’s advancement to be possible.
Now the day has finally arrived. Or pretty close to it. The infrastructure needed to move Marcellus/Utica ethane to offshore markets is in place. Mariner East 1 pipeline is moving a mixed ethane/propane stream from West Virginia, Ohio and Western Pennsylvania producers to the Marcus Hook Terminal, about 20 miles west of Philadelphia, PA on the Delaware River. There it is processed in a deethanizer to separate ethane from propane and then the ethane is stored in a 300,000-barrel cryogenic (super cold) ethane storage tank before loading on ships. Those ships are ready and waiting for their first ethane voyages. Chemical company Ineos contracted with ship owner Evergas for 8 Dragon Class ships tailored to meet the specific needs of this project. They are some of the most flexible and advanced multi-gas carriers yet to be built at 27,500 cbm. Click here to see a great Evergas video about the building of the first of these ethane carriers. The vessels will provide Ineos with a flexible solution for their ethane supplies with the option of transporting LNG, LPG as well as petrochemical gases including ethylene. Four of these vessels, JS Ineos Insight, JS Ineos Intrepid, JS Ineos Ingenuity, and JS Ineos Inspiration are already on the water moving propane and butane. The other four tankers are scheduled for delivery through mid-2017. According to press announcements, either the JS Ineos Inspiration or the JS Ineos Intrepid (picture below) will have the honors of lifting the first ethane cargo from Marcus Hook. According to MarineTraffic.com, a tanker tracking site, the Intrepid has been at the dock and waiting for several days. You can check out the vessel position at the MarineTraffic site. The first INEOS ethane cargo is expected to go to the Ineos plant in Rafnes, Norway.