ethane pipelines

Over the past few years — and with a big boost from Permian production growth — the South Texas coast has transformed itself into a top-tier hub for hydrocarbons. Crude oil exports stand out, of course, with marine terminals in Corpus Christi/Ingleside accounting for 60% of U.S. export volumes in 2022. But Corpus also is home to the nation’s second-largest LNG export terminal (which is now being expanded), as well as a half-dozen refineries, and the broader region has the Agua Dulce natural gas hub, nine NGL fractionation plants, and four massive, NGL-consuming ethylene plants, including ExxonMobil/SABIC’s giant new steam cracker in San Patricio County. All of these assets are interconnected by a maze of crude oil, natural gas, NGL, “purity product,” and ethylene pipelines. And the region is well-positioned for additional growth as crude, gas, and NGL production in Texas continues to increase. In today’s RBN blog, we discuss our latest product: a digital, interactive map that helps makes sense of a spaghetti bowl of pipelines, plants and related assets in South Texas.

After several years of development, Shell’s $6 billion Pennsylvania Petrochemicals Complex — the first of its kind in the Marcellus/Utica shale play — is really taking shape about 30 miles northwest of Pittsburgh. The facility, which will consist of a 3.3-billion-lb/year ethylene plant and three polyethylene units, is in its final stages of construction, as is a pipeline that will supply regionally sourced ethane to the steam cracker. When the Falcon Pipeline and the PPC comes online, possibly as soon as 2022, they will provide a new and important outlet for the vast amounts of ethane that is now either “rejected” into natural gas for its Btu value or piped to Canada, the Gulf Coast, or the Marcus Hook export terminal near Philadelphia. Today, we discuss progress on the Marcellus/Utica’s first world-class petrochemical complex and what it will mean for the play’s NGL market.

The U.S. is by far the world’s largest ethane producer, and exports one-seventh of what it produces, with most of the exported volumes tied to long-term contracts to supply ethane-consuming steam crackers. Canada is the #1 importer of U.S. ethane, receiving its volumes via three pipelines. As for U.S. exports by ship, India is on top, followed by the UK and Norway. But watch out! China, which started importing U.S. ethane a year or so ago, is poised to buy a heck of lot more, with most of the incremental volumes to be shipped out of a new ethane export terminal about to come online in Nederland, TX. Today, we continue our series with a look at the Orbit Ethane Export Terminal, which is being jointly developed by Energy Transfer and Satellite Petrochemical, the U.S. subsidiary of a Chinese petrochemical company.

Taken together, the ethane-related infrastructure projects developed in the U.S. over the past several years serve as a reliable feedstock-delivery network for a number of steam crackers in Europe, Asia, and Latin America. NGL pipelines transport y-grade to fractionation hubs, fractionators split the mixed NGLs into ethane and other “purity” products, ethane pipelines move the feedstock to export terminals fitted with the special storage and loading facilities that ethane requires, and a class of cryogenic ships — Very Large Ethane Carriers, or VLECs — sails ethane to mostly long-term customers in distant lands. The end results of all this development are virtual ethane pipelines between, say, the Marcellus/Utica and Scotland, or the Permian and India. Today, we continue our series on ethane exports with a look at the two existing export terminals, the ethane volumes they have been handling, and where all that ethane has been headed.

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.

After years in the doldrums, ethane prices are increasing, not so much in absolute terms, but where it counts — relative to the price of natural gas. That means less ethane will be rejected — sold as natural gas — and more will be recovered as liquid ethane and sold as a petrochemical plant feedstock. As still more new ethane-only petrochemical plants come online over the next couple of years, ethane demand will increase, boosting ethane prices and resulting in still less ethane rejection. Does that mean ethane rejection will be a thing of the past? No, not even close. U.S. natural gas production, especially gas with a high ethane content, is growing so fast that ethane supply will continue to outstrip demand for the foreseeable future, with important consequences for ethane prices. Today, we continue our review of NGL market developments.

Midstream giant Enterprise Products Partners, with a market capitalization of $57 billion, has attracted significant investor interest because of its simplified structure, 51 consecutive quarters of dividend growth and strong distribution coverage — $2.7 billion in retained cash in the last three years. The company has continued to build out its large integrated midstream network despite the plunge in commodity prices, investing almost $18 billion in organic growth projects and acquisitions in 2014-16. Enterprise (NYSE: EPD) is now connected to every major U.S. shale basin, every U.S. ethylene cracker and 90% of the refineries east of the Rocky Mountains. As a result, it is well positioned to benefit from the recovery in crude oil and natural gas production, especially in the Permian and the Eagle Ford; continuing NGL and crude oil exports; and the impending growth of the U.S. petrochemical industry. Today we discuss highlights from the first part of our new Spotlight analysis of EPD, which focuses on the company’s NGL Pipelines & Services segment.