US ethane production, forecast to reach 2.5 million barrels per day (b/d) by 2024, will cause supply to exceed domestic demand, making exports “imminent,” according to a report from Bentek Energy, an analytics and forecasting unit of Platts.
The forecast 2024 level is twice that of the 1.2 million b/d produced in 2013, according Bentek’s new report “Adrift in a Sea of Ethane: Will Exports Solve the US Ethane Oversupply?”
“While domestic ethane demand will rise by about by about 0.8 million b/d to 1.8 million b/d in 2024, production will grow much faster,” said Jennifer Van Dinter, Bentek analyst and co-author of the report. “This dynamic will dramatically change the local and global nature of the ethane market, similar to what we’ve seen with surging North American oil and natural gas production.”
Ethane is recovered out of the natural gas stream at processing plants and used solely as a petrochemical feedstock. Its supplies have grown as a result of advanced drilling and extraction techniques used to remove oil and natural gas from shale plays, especially in the Marcellus and Utica plays, where ethane production could rise from zero in 2012 to 590,000 b/d by the end of the decade.
As a result, domestic petrochemicals companies will have more than enough ethane and other natural gas liquids to keep their plants running, prompting the industry to prepare for exports as early as next year. Several US-based companies have confirmed plans to build waterborne export terminals, and ethylene producers in Europe and Asia have signed contracts to supply their steam crackers with low-priced, US-sourced ethane.
Bentek is currently tracking more than 10 major projects to build steam crackers and eight to expand existing ethylene production capacity in the US. Three companies have proposed world-scale crackers, and three others have already secured the necessary environmental permits for construction.