It Takes Two - U.S. Ethane Exports Rise With International Steam Cracker Demand

The run-up in U.S. production of natural gas liquids over the past 10 years spurred the development of a whole lot of infrastructure. More pipelines to transport mixed NGLs from production areas to NGL storage and fractionation hubs, especially Mont Belvieu, TX. More fractionators to split y-grade into ethane, propane, and other “purity” products. And, specifically for ethane — the lightest, quirkiest, and most plentiful NGL — a number of ethane-only steam crackers were built along the Gulf Coast to take advantage of the new supply abundance, as were ethane-only pipelines, export terminals, and a whole new class of cryogenic ships — Very Large Ethane Carriers, or VLECs — to move the product to markets in Europe and Asia. Today, we begin a new series on the unique nature of overseas ethane exports, including why most incremental export volumes are tied to long-term supply deals with a handful of global ethylene plants designed — or reconfigured — to “crack” ethane.

Given the market dislocations of the past few months, it’s easy to forget how far the U.S. has come on the energy independence front. Since 2011, U.S. production of crude oil and natural gas has soared, even after factoring in COVID-related cutbacks. And with oil and “wet” (high-Btu-content) gas come large volumes of NGLs. As shown in Figure 1, gas processing plants currently are separating out nearly 5.1 MMb/d of mixed NGLs from the raw gas emerging from U.S. wells, including almost 3.1 MMb/d of heavier, “C3+” NGLs (with three or more carbon atoms per molecule) like propane, normal butane, isobutane, and natural gasoline (green layer) and about 2.0 MMb/d of ethane (blue layer); another 1.1 MMb/d of ethane is being “rejected” into the natural gas stream at processing plants (yellow layer) and sold (at the price of gas) for its Btu value (see Turnin’ Natgas into Gold). (Back in 2011, U.S. NGL production from gas processing plants averaged only 2.2 MMb/d; any ethane that could be recovered was.)

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