Surging ethane extraction capability in US shale plays has given it a price advantage relative to naphtha and made it a viable export commodity.
According to Peter Fasullo of En*Vantage Inc., Houston, US ethane extraction capacity has increased 69% since 2006 to 1.23 million b/d, and he projects it to reach 2.2 million b/d by 2020. Ethane rejection, however, continued at 250,000-350,000 b/d, led by Appalachia, where 87% of the ethane capable of being recovered was being rejected as of January due to transportation contraints.1
RBN Energy forecasts ethane exports to reach 150,000-200,000 b/d in the next 5-6 years, with four or five European crackers shifting some capacity from naphtha to ethane. Even with planned US-based cracker construction, RBN sees ethane production outstripping demand and rejection remaining part of the future.2
Simmons and Co. International's models show propane supply of 1.4 million b/d in 2012 increasing by 269,000 b/d by yearend, with LPG exports growing 272,000 b/d by early 2015 (OGJ Online, Sept. 17, 2013).
Pipelines
Oneok Partners LP has completed its 193,000-b/d Sterling III pipeline, running 540 miles from Medford, Okla., to Mont Belvieu (OGJ Online, Apr. 23, 2014). Oneok can expand the pipeline to 250,000 b/d if needed. Oneok also plans to increase capacity on its Bakken NGL pipeline to 160,000 b/d from 135,000 b/d during first-half 2016 (OGJ Online, Nov. 20, 2013).
Enterprise Products Partners (EPP) has placed the 82,500-b/d Rocky Mountain expansion of its Mid-America Pipeline system into service, looping the existing system with 265 miles of 16-in. OD pipeline and modifying pump stations to move new Uinta, Piceance, and Great Green River basin liquids production to Mont Belvieu. Also last year, it started its 583-mile Texas Express NGL pipeline at an initial capacity of 280,000 b/d, expandable to 400,000 b/d (OGJ Online, Oct. 31, 2013).
Meritage Midstream subsidiary Thunder Creek NGL Pipeline LLC plans to build a 196-mile, 10-in. OD line to transport 40,000 b/d of unfractionated NGLs from the Powder River basin in Wyoming to delivery points near the Colorado-Wyoming border on Oneok's Overland Pass Pipeline and near Lucerne, Colo., on the DCP Midstream Partners-Anadarko Petroleum Corp.-EPP joint venture Front Range Pipeline. Meritage expects Thunder Creek to begin operations second-quarter 2015.
Williams Cos. and Boardwalk Pipeline Partners LP have suspended capital investment on their proposed joint-venture NGL pipeline system from the Marcellus and Utica shales to US Gulf Coast petrochemical and export markets (OGJ Online, Apr. 29, 2014). The companies had expected the 200,000-b/d Bluegrass Pipeline to enter service second-half 2015.
Sunoco Logistics Partners LP and MarkWest Energy Partners LP's expect propane deliveries on the 70,000-b/d Mariner East pipeline to begin later this year, with full propane and ethane operation following in first-half 2015, moving as much as 40,000 b/d of ethane for export from Sunoco's Marcus Hook, Pa., terminal. The line's capacity is expandable if demand grows (OGJ, Feb. 3, 2014, p. 93).
Plans by Sunoco to build a second pipeline in the same right-of-way (Pennsylvania Pipeline) have encountered community resistance.
The Vantage pipeline, commissioned last quarter, will move 40,000-60,000 b/d of ethane to Edmonton-Fort Saskatchewan from the Bakken shale and delivered its first barrels May 2. The Aegis Ethane Header System will start moving supplies from Texas to Louisiana in third quarter.
Kinder Morgan Cochin LLC, meanwhile, has proposed a 50,000-75,000 b/d ethane-propane pipeline from the Marcellus-Utica shales to Windsor, Ont., by mid-2017. The 210-mile, 10-in. OD Utica to Ontario Pipeline Access (Utopia) line would run from fractionation in Harrison County, Ohio, to an interconnect with Cochin near Riga, Mich., for continued shipment to Windsor (OGJ Online, Dec. 18, 2013).
Utica East Ohio Midstream and MarkWest each has fractionators operating or planned in Harrison County.
Exports
Two-thirds of all US LPG exports are to Latin America, with Occidental Petroleum Corp. expecting regional demand to continue outpacing supply growth and stimulating US exports.3 Ineos, meanwhile, has arranged to begin shipping ethane to Europe starting next year.
Occidental plans to build a fractionator and propane export terminal at its Oxy Ingleside Energy Center near Corpus Christi, Tex., supplied by Eagle Ford shale liquids. The company expects it to begin operations in January 2015 with a design capacity of 110,000 b/d, a ship-loading rate of 2,500 bbl/hr, and 80,000 bbl of propane storage.
EPP will further expand its LPG export terminal on the Houston Ship Channel, increasing its ability to load fully refrigerated, low-ethane propane by 1.5-million bbl/month. EPP will enhance the terminal's refrigeration to increase total design capacity to about 9 million bbl/month upon first-quarter 2015 project completion (OGJ Online, Sept. 25, 2013).
The terminal currently loads more than 8 million bbl/month. EPP expects it to continue to perform at this level, citing increased production of NGLs from domestic shale plays and growing demand for propane as a feedstock for global ethylene crackers.
EPP also plans to build a fully refrigerated ethane export plant on the Texas Gulf Coast. The company has executed 10-year or longer contracts based off the Mont Belvieu ethane price4 to support the development, designed for an aggregate loading rate of about 10,000 bbl/hr, or as much as 240,000 b/d. EPP expects the plant to begin operations in third-quarter 2016 (OGJ Online, Apr. 22, 2014).
Sunoco, an affiliate of Energy Transfer Partners LP (ETP), and Lone Star NGL LLC, a joint venture between ETP and Regency Energy Partners LP, in May 2013 reached a long-term, fee-based agreement with Shell Trading US Co. to continue development of the Mariner South LPG export-import terminal, with Shell as an anchor customer.
Mariner South will have an initial capacity of 6 million bbl/month and be designed to load 550,000-bbl LPG carriers. The companies expect Mariner South to enter service first-quarter 2015.
Phillips 66 plans to develop a 4.4-million bbl/month LPG export terminal in Freeport, Tex., at the site of its existing marine terminal and using its midstream, transportation, and storage infrastructure. The terminal would be supplied with LPG from both Mont Belvieu and Phillips 66's Sweeny complex, including Sweeny Fractionator One, expected to begin operations by second-half 2015. Phillips expects the terminal to enter service by mid-2016.
Using the Mariner East pipeline, Sunoco plans to begin 25,000 b/d of propane exports from Marcus Hook in third-quarter 2014. Ineos Europe AG earlier this year signed a purchase agreement with Consul Energy Inc. for ethane shipped starting in 2015 to Marcus Hook through Mariner East (OGJ Online, Feb. 17, 2014). Ineos has contracted Evergas to build 150,000-200,000-bbl vessels and plans to spend $500 million to revamp its Grangemouth, UK, plant and build an ethane import site.1
References
1. Fasullo, P., "Outlook for US Ethane Exports," GPA Convention, Dallas, Apr. 15, 2014.
2. Carr, H., "Changes in Longitudes—More Barriers to Ethane Exports," RBN Energy LLC, Apr. 9, 2014.
3. Occidental Petroleum Corp., "A New LPG Export Terminal in the US," Mar. 24, 2014.
4. McCafferty, M., "Enterprise Offers More Details on Texas Gulf Coast Ethane Export Facility," Platts, May 1, 2014.