The development of a petrochemicals hub in Appalachia has come at a cost to Enterprise Products’ (EPD) ATEX Pipeline. Ethane supply has taken a hit on the line from the Northeast to the Gulf Coast as a consequence of regional demand growth.
East Daley Analytics covers ethane purity markets in the monthly Ethane Supply & Demand Report. Throughput on ATEX (Appalachia-to-Texas) has declined by 17 Mb/d (-10%) from 2023 to ’24 YTD through September (see figure). The drop comes despite Northeast producers like Antero Resources (AR), Range Resources (RRC) and EQT increasing ethane production by 33 Mb/d (+10%) over the same period.
As EDA has written about, increased local demand (Shell’s Monaca, PA petchem facility) and exports to Canada (NOVA Chem’s Corunna cracker) have pulled in more ethane. The supply has come from increased plant utilization and an expansion project that became fully operational in early ’24.
In a sense, ATEX has become the swing outlet to balance ethane from the Northeast. Based on EDA research, there are at least 95 Mb/d of contractual commitments with AR and Expand Energy (EXE) on ATEX supporting southbound ethane flows. ATEX could incentivize more spot volumes, but the pipeline would need to reduce the tariff rate to offer netback pricing.
AR notes its firm sales contracts are linked 50% to gas and 50% to Mont Belvieu prices in Texas. Range Resources (RRC) discloses its realized ethane price is linked to oil, natural gas and Mont Belvieu. These pricing mechanisms at times provide a slight premium to Gulf Coast markets, but the real hurdle is the ATEX tariff to move ethane south to Mont Belvieu.
The ATEX tariff rate is more than 3x the price to ship ethane to European markets on Energy Transfer’s (ET) Mariner East pipeline. Forward gas and ethane price curves suggest ATEX volumes in 2025 will resemble what we have seen in 2024 more than ’23.
East Daley’s Northeast Ethane S&D product will be available on Energy Data Studio in 1Q25 detailing supply and demand dynamics from wellhead to demand markets. – Rob Wilson, CFA Tickers: AR, EPD, EQT, ET, RRC.
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