Infrastructure: East Daley has identified at least 95 Mb/d of firm ethane capacity on the ATEX pipeline that faces recontracting risk in 2028, equivalent to roughly 50% of nameplate capacity.
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Exports: NGL exports fell 9.5% W-o-W for the week ending Aug. 7, with both ethane and LPG exports decreasing slightly.
Rigs: The total US rig increased to 589 the week of Aug. 8. Liquids-driven basins increased to 456, up 4 rigs W-o-W.
Infrastructure:
ATEX (Appalachia-to-Texas Express) is a 1,230-mile ethane pipeline connecting Marcellus and Utica supply to Enterprise Products’ (EPD) ethane distribution system in Mont Belvieu. The pipeline has 190 Mb/d of capacity and typically moves around 160 Mb/d, although flows periodically exceeded nameplate capacity, including spikes above 200 Mb/d in 3Q25.
Despite strong utilization, ATEX is approaching a significant commercial test.
On its 2Q26 earnings call, EPD highlighted recontracting risk on ATEX, noting that the tariffs currently in place can exceed the value of the ethane being transported. ATEX transportation rates range from roughly $0.20/gal on the low end to as high as $0.25/gal. Mont Belvieu ethane is currently priced near $0.24/gal, meaning the highest ATEX tariffs already exceed the value of the commodity. When ethane prices fell to roughly $0.20/gal in May 2026, essentially the entire tariff range was at or above the value of the ethane being transported.
Management also said it is working with customers to determine the “highest use of the pipeline,” suggesting that options beyond the existing ethane service are being evaluated.
The issue is less about current utilization, and more about several legacy transportation contracts signed around the time ATEX entered service in 2014.
East Daley is aware of four major commercial commitments on the system. The largest is a 75 Mb/d contract originally signed by Chesapeake Energy, now Expand Energy (EXE), that expires in 2028. Antero Resources (AR) holds another 20 Mb/d contract that also expires in 2028. Range Resources (RRC) entered into a 20 Mb/d agreement in 2014. Assuming an original 10-year term, that contract may have already been renewed or could currently be under renegotiation.
Shell also holds ~30 Mb/d of ATEX capacity, which provides optionality if operations are disrupted at the Monaca ethane cracker in southwestern Pennsylvania. Assuming that contract began when Monaca entered service in 2022 and carries a 10-year term, it could extend through 2032.
Based on the contracts East Daley can identify, at least 95 Mb/d of firm ethane capacity faces direct recontracting risk in 2028, equivalent to roughly 50% of ATEX nameplate capacity.
A complete conversion away from ethane service, however, appears unlikely.
Energy Transfer (ET) had previously contemplated more than 70 Mb/d of incremental ethane export capacity at Marcus Hook around 2027, close to the timing of the ATEX contract expirations. That expansion was later reduced to 20 Mb/d. East Daley believes difficulty securing sufficient firm ethane supply may have contributed to the smaller project. At the same time, a 20 Mb/d expansion could still provide an incremental Northeast outlet potentially supported by producers such as RRC or AR.
Shell’s position provides another reason for ATEX to retain ethane service beyond 2028. The pipeline remains an important source of operational flexibility for Monaca, giving Shell an alternative outlet for ethane supply during cracker disruptions.
EPD’s reference to the “highest use” of ATEX nevertheless raises the question of what else the system could become.
A conversion to natural gas service appears technically possible but economically difficult. ATEX is ~1,230 miles long, meaning pump stations across the system would need to be converted to compressor stations. With a 16-inch pipe, East Daley estimates gas capacity would likely be limited to roughly 300 MMcf/d. Given the significant conversion capital required relative to the resulting capacity, we view a full gas conversion as unlikely.
A broader liquids service could be more plausible. ATEX could potentially provide incremental Gulf Coast egress for other Northeast purity products, such as propane and butane, while retaining some role in ethane transportation. That option would likely require substantially less capital than converting the entire system to natural gas service, although limited purity product storage in the Northeast would make batching and operational flexibility more difficult.
The more likely outcome is therefore not the disappearance of ATEX ethane service, but a commercial reset. With nearly half of the pipeline’s capacity potentially exposed to recontracting in 2028, EPD may need to lower transportation rates, restructure contracts, or find additional liquids services that improve the economics of the system.
Exports:
NGL exports decreased 9.5% W-o-W for the week ending Aug. 7, with both ethane and LPG showing slight decreases.
LPG exports fell 4.7%, led by a 50% decline at Marcus Hook.
Ethane exports decreased 20.7% W-o-W, driven by a 56.9% decline in EPD Neches River.
Rigs:
The total US rig count increased to 589 the week of Aug. 8. Liquids-driven basins increased to 456, up 4 rigs W-o-W.
- Bakken (+2): Continental Resources, KODA Resources
- DJ (+1): Rangeview Resources Operating
- Permian (+1):
- Delaware (+2): Continental Resources, Matador Resources
- Midland (-1): ExxonMobil
