Ethylene Ethylene, Prettiest margin I ever seen
Two weeks ago we took a deep dive into the great 2012-18 ethane debate. Will we make too much of the stuff? Or not? Over the next five years, billions will be spend by the petrochemical industry chasing what promises to be huge margins for conversion of ethane to ethylene. But it will take time to bring most of that capacity online. What happens in the meantime? NGL production from wet shale plays is growing fast. If the ethane cut exceeds the ethylene industry’s capacity to consume the feedstock, then the excess ethane will be ‘rejected’ back into the natural gas stream. When and if this happens, the price of ethane in Mont Belvieu will drop to something near fuel value at the gas processing plant. The debate is whether or not this is likely to happen.
