EIA Sees U.S. Ethane Exports Dropping Due to New Licensing Requirements

Researched by Industrial Info Resources (Sugar Land, Texas)--The U.S. Energy Information Administration (EIA) expects domestic ethane exports will drop sharply this year and next due to new licensing requirements for exporting the commodity to China, which is the largest destination for U.S. ethane exports.

In its June Short-Term Energy Outlook the EIA forecast ethane exports will drop by 80,000 barrels per day (BBL/d) this year and 177,000 BBL/d in 2026; ethane exports averaged 492,000 BBL/d in 2024, according to the agency, an increase of 21,000 BBL/d compared with the previous record set in 2023.

U.S. ethane exports to China come from two terminals on the U.S. Gulf Coast: Enterprise Products Partners LP's (Houston, Texas) Morgan's Point terminal in La Porte, Texas, and Energy Transfer LP's (Dallas, Texas) terminal in Nederland, Texas.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Terminals Plant Database can read detailed plant profiles on the Morgan's Point and Nederland terminals.

In late May, the U.S. Department of Commerce, through its Bureau of Industry and Security (BIS), told U.S. companies it would immediately require them to receive special licenses to export "ethane and butane, saturated, having a purity of 95% or more by volume" to China because of the "unacceptable risk" they could be utilized for a "military end use."

After that, Enterprise made emergency requests to the BIS to ship three ethane cargoes designated for China, which the BIS denied, totaling about 2.2 million barrels. On June 4, Enterprise said it had 20 days to respond to the denial.

Both Enterprise and Energy Transfer have indicated they intend to apply for a new export license.

The last shipment of U.S. ethane to China left May 23 from Energy Transfer's terminal.

For more information on the new licensing requirements, see June 4, 2025, article - U.S. Restrictions on Ethane, Butane Exports Could Disrupt Oil Markets and June 6, 2025, article - Enterprise Products: U.S. Plans to Deny Request to Ship Ethane to China.

China accounted for 47% of U.S. ethane exports in 2024, according to the EIA, or 227,000 BBL/d.

"Holding back ethane is a tool to bring China back to the table," Shane Mullins, Industrial Info's vice president of Energy Market Solutions, said. "The U.S. is a major producer and exporter of ethane, a natural gas liquid crucial for China's petrochemical industry, particularly for producing ethylene used in plastics. China relies heavily on U.S. ethane exports, making it a point of leverage for the U.S."

The EIA on June 18 cited data from oil analytics firm Vortexa that seven very large ethane carriers (VLECs) were stalled along the U.S. Gulf Coast.

Two stalled VLECs were carrying nearly 1 million barrels of ethane each. "Typically, these loaded VLECs would be headed to China through the Panama Canal, indicating that they were likely loaded before the export licenses were denied," the EIA said.

In addition, three VLECs that typically go to China were empty and moored off the U.S. Gulf Coast. Two vessels that typically carry ethane from the U.S. Gulf Coast to China on long-term agreements have been diverted to ethane crackers in Dahej, India, according to recent reporting from Reuters.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).