U.S. Ethane Production Set for Solid Growth as Demand Grows for Ethylene, Exports

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Researched by Industrial Info Resources (Sugar Land, Texas)--Ethane production across the U.S. is set to resume its growth as the U.S. petrochemical sector emerges from the COVID-19 pandemic with strengthening domestic demand and more ethane exports to petrochemical plants abroad, according to the U.S. Energy Information Administration (EIA). Industrial Info is tracking more than $5.3 billion worth of U.S.-based projects related to ethane production, storage and transportation, about $2.2 billion of which is under construction.

U.S. ethane production is expected to reach 2.6 million barrels per day (BBL/d) by fourth-quarter 2022, according to the EIA, which cited capacity expansions at ethylene-production facilities as a major driver. The petrochemical industry uses ethane as a feedstock for ethylene, a key ingredient in the production of plastics and resins. Domestic production of ethane nearly doubled from 950,000 BBL/d in first-quarter 2013 to 1.85 million BBL/d in first-quarter 2021.

Click on the image at right for a graph detailing active U.S. ethane projects, by plant parent company.

Bayport Polymers LLC, a partnership between Total S.A. (NYSE:TOT) (Paris, France) and Borealis AG (Vienna, Austria), is at work on one of the largest ethylene-production projects under construction in the U.S.: an ethane cracker and related outside battery limits (OSBL) features at its refining and petrochemical complex in Port Arthur, Texas. The cracker, which has been under construction since the summer of 2017, is expected to produce about 1 million metric tons per year of ethylene upon its completion, which is scheduled for this summer. Commissioning and startup were pushed back from earlier this year due to the pandemic. Subscribers to Industrial Info's Global Market Intelligence (GMI) Chemical Processing Project Database can read detailed project reports on the ethane cracker and the OSBL features.

The EIA further predicts U.S. demand for ethane as a feedstock will grow from 1.5 million BBL/d in first-quarter 2021 to 2.1 million BBL/d by fourth-quarter 2022, due to the startup of crackers at Port Arthur and other facilities in the gas-rich states of Texas and Pennsylvania. The resulting need for additional transportation capacity is driving several pipeline projects, such as Shell Midstream Partners' (NYSE:SHLX) (Houston, Texas) Falcon Ethane Pipeline System, which is nearing completion. The 97-mile project will connect three major ethane source points in the Marcellus and Utica shale plays and run through three states:

• $100 million Ohio portion; subscribers can click here for details
• $15 million West Virginia portion; subscribers can click here for details
• $90 million Pennsylvania portion; subscribers can click here for details

The Falcon Pipeline will connect a plant in Cadiz, Ohio, to a cracker in Monaca, Pennsylvania. The Cadiz plant is owned by MarkWest Energy Partners LP, a subsidiary of MPLX LP (NYSE:MPLX) (Findlay, Ohio).

However, the project has come under scrutiny in recent months after an official for Pennsylvania's Department of Environmental Protection (DEP) told the U.S. Pipeline Hazardous Materials Safety Administration (PHMSA) that the DEP had received "credible information that sections of Shell's Falcon Pipeline project in western Pennsylvania, developed for the transportation of ethane liquid, may have been constructed with defective corrosion coating protection," according to Ohio's Harrison News-Herald. Some of the pipeline's opponents also have alleged Shell has not been upfront about possible threats to public health, including water contamination. Shell denies the allegations, insisting three on-site audits found no issues with installed coatings, according to the News-Herald.

Texas and Pennsylvania also are seeing an uptick in demand for ethane storage. Enterprise Products Partners LP (NYSE:EPD) (Houston) is proposing a third unit at its Morgan's Point Ethane & Ethylene Export Terminal in La Porte, Texas, which would increase the facility's loading rate from 120,000 BBL/d to 180,000 BBL/d. Sunoco Logistics Partners LP (Midland, Texas), a subsidiary of Energy Transfer LP (NYSE:ET) (Dallas, Texas), is proposing an expansion of its natural gas liquids (NGL) export terminal in Marcus Hook, Pennsylvania, which would include a 70,000-BBL/d ethane refrigeration train and a pair of 600,000-barrel ethane storage tanks. Subscribers can read Industrial Info's detailed reports on the Morgan's Point and Marcus Hook projects.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.