Global demand for plastics continues to rapidly change US ethane markets in a way that is not reflected in the forward price curve. Most ethane demand growth will come from new ethylene steam-crackers like the INEOS and Sinopec facility in Tianjin, China, the Project One INEOS cracker in Antwerp, and Q-Chem in Qatar, to name a few.
Ethylene crackers produce the building blocks for plastics using ethane or petroleum-based naphtha. Many new crackers are built to use ethane because it’s often the cheaper of the two feedstocks.
India’s Reliance Industries regularly notes the economic benefits of its light-feed crackers given lower ethane prices vs naphtha. Reliance is a committed counterparty with Enterprise Products (EPD) for ethane shipments from its Morgan’s Point terminal on the Texas Gulf Coast. Likewise, INEOS is a contracted buyer of ethane from EPD’s Morgan’s Point and Energy Transfer’s (ET) Marcus Hook ethane export dock near Philadelphia, PA.
Global investment in ethylene steam crackers has set the table for growth through both docks. EPD recently announced 450 Mb/d of total ethane commitments for existing and new facilities, implying growth of 270 Mb/d in ethane exports at the company’s new Neches River dock. Located north of Morgan’s Point, Neches River will enter service in two phases in 2H25 and 1H26. The 165 Mb/d of PADD 3 ethane exports that East Daley Analytics forecasts from 2023-26 (see figure) will be discussed more in our NGL 2Q24 webinar on May 22.
ET is also in discussions to expand refrigeration, storage and export capacity at its Marcus Hook facility. The ET pipeline that takes Marcellus and Utica NGL production to Marcus Hook has 250 Mb/d of capacity, but exports have averaged much less over the past year (about 70 Mb/d) due to refrigeration and storage constraints. An expansion project would only up the ante for US producers and midstream companies to supply enough ethane growth to keep the market in balance.
Based on EDA’s Ethane Supply and Demand Outlook, the US will be short supply by 2026. There are a few levers that could mitigate price risk to the upside, including more ethane extraction and storage, as we do not believe the forward curve is accounting for all the ethane demand from abroad. We will break down the ethane outlook in our NGL webinar on May 22 – Rob Wilson Tickers: EPD, ET.
Join our NGL webinar – Neches River Ethane Exports & Price
East Daley will host a webinar on May 22 for a review of ethane, including an in-depth look at the Neches River export project. We will review ethane exports, demand, and the potential for price upside. Join us May 22 to learn more.
Available Now: Ethane Supply & Demand Report + Data Set
The new Ethane Supply & Demand Report + Data Set is a comprehensive data file and report providing valuable insights into historical and forecasted supply and demand components for ethane. The report covers crucial metrics such as ethane supply from US gas processing plants, and demand from domestic ethylene steam crackers and ethane exports. Learn more about the Ethane Supply & Demand Report and Data Set.
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