US ethane supply gains seen trailing demand growth

  • Market: LPG, Petrochemicals
  • 23/05/24

Export and domestic demand growth for US ethane is expected to outpace US supply growth by as much as 72,000 b/d by 2026, according to a recent forecast from consultancy East Daley Analytics.

A surplus of US ethane production, bolstered by gains in natural gas drilling and production to meet growing demand for electricity generation and LNG exports, has led to increasing investments in additional ethane export terminal capacity to provide other outlets for the petrochemical feedstock.

The US Energy Information Administration (EIA) showed US ethane production from natural gas processing rose to a record 2.78mn b/d in October of 2023 and fell to 2.69mn b/d in February, the latest data the agency has available. Those volumes don't take into account ethane that is rejected into the gas stream at processing plants during periods of restrained capacity or when natural gas prices spike on weather-related outages, incentivizing lower ethane recovery.

Mont Belvieu, Texas, EPC ethane's premium relative to its natural gas fuel value at Waha reached a peak of 50.31¢/USG on 6 May, a 16-month high, and has averaged 26.08¢/USG in May so far, according to Argus data. As ethane margins versus natural gas rise, ethane extraction at natural gas processing plants becomes even more profitable, pushing ethane recovery rates higher.

Yet East Daley's forecasts suggest projects to absorb this additional feedstock may quickly outpace production.

The consultancy projects US ethane production will rise by 283,000 b/d by 2026, driven mostly by gains in natural gas production in the Permian and Marcellus basins.

Increased gas takeaway capacity from the completion of maintenance on Kinder Morgan's Permian Highway pipeline (PHP), the Gulf Coast Express (GCX) pipeline, and the Transwestern pipeline at the end of this month, will allow for higher levels of ethane rejection, according to Rob Wilson, East Daley's vice president of analytics, limiting potential gains in ethane production from the additional gas.

Further gas capacity restrictions in the Permian are expected to be mitigated when the 2.5 Bcf/d Matterhorn Express pipeline — which runs from the Waha, Texas, gas hub to Katy, Texas, on the Gulf coast — comes online in the third quarter of this year.

Domestic demand for ethane is projected to rise by 129,000 b/d by 2026 with the addition of Chevron Phillips Chemical's joint venture with QatarEnergy to construct a 2mn t/yr ethane cracker on the Texas Gulf coast that is scheduled to come online in 2026. That joint venture will consume 118,000 b/d of ethane when at full capacity, but will operate at 50pc of capacity when first on line in 2026, according to East Daley.

Increased US ethane cracking will come on top of a 231,000 b/d increase in ethane exports by 2026, driven by demand from Chinese crackers and burgeoning demand from Indian crackers, according to the consultancy. Ethane export expansions at Energy Transfer's Marcus Hook terminal in Pennsylvania and Enterprise Products Partners' new flexible LPG and ethane terminal at Beaumont, Texas, are expected to be complete by 2025 and 2026, respectively.

Combined, these projects add another 360,000 b/d of ethane demand by 2026, outstripping expected supply growth by an estimated 72,000 b/d, according to East Daley's forecast.

By Abby Downing-Beaver


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
24/06/24

Toyo, SCG enhance waste plastics recycling partnership

Toyo, SCG enhance waste plastics recycling partnership

Tokyo, 24 June (Argus) — Japanese engineering firm Toyo Engineering and Thai petrochemical producer SCG Chemicals plan to enhance their partnership in the chemical recycling of waste plastics, aiming to launch an upgraded demonstration plant in Thailand by early 2025. The agreement to co-operate on the future commercialisation of the chemical recycling technology of SCG subsidiary Circular Plas (CirPlas) and the development of a licensing business is a follow-up to the companies' initial deal to study the feasibility of chemical recycling in Thailand in January 2022. CirPlas is 60pc owned by SCG and has developed chemical recycling technology turning mixed plastic wastes into naphtha and then plastic resins. Toyo and SCG plan to add a new unit to the operating pilot plant in south Thailand's Rayong province. The companies are still examining the output capacity of the enhanced pilot plant and future commercial operation. They are unsure when they will start operations of the commercial venture. The circular economy has been a major topic in Japan's petrochemical industry on the back of the country's 2050 decarbonisation goal. Petrochemical producer Mitsui Chemicals in March began using pyrolysis oil , generated from waste plastics, to manufacture petrochemical products at its Osaka naphtha-fed cracker. Sumitomo Chemical plans to begin recycling polymethyl methacrylate in 2025. By Nanami Oki Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Find out more
News

Cirrec aims for 250,000 t/yr PET tray recycling by 2025


21/06/24
News
21/06/24

Cirrec aims for 250,000 t/yr PET tray recycling by 2025

London, 21 June (Argus) — Netherlands-based PET tray-to-tray recycler Cirrec hopes to reach 250,000 t/yr of input capacity by 2025 with new sites in Denmark and Germany anticipated to come online in the next year. Cirrec is owned by the Faerch Group and is one of the largest PET tray-to-tray recyclers in Europe. The company is looking at further sites for expansion after 2025, including in the UK, according to recycling director Aron Damen, in a presentation made at PRSE in Amsterdam. Cirrec has an input capacity of 60,000 t/yr with a site in the Netherlands that opened in 2024. Damen said that action to beat challenges to the PET tray-to-tray recycling market included expanding knowledge in sorting centres to help identify and sort PET tray waste. PET tray waste has more variable levels of PET compared with bottle bales, Damen added. A sentiment shared with PETCORE Thermoforming technical manager Jose-Antonio Alarcon in a recent Q&A with Argus. The average PET tray bale contains 50-80pc of PET compared with a less variable 70-75pc PET for bottle bales. Issues with collection and supply can lead to a loss in terms of feedstock for tray-to-tray recyclers. If the industry wants to achieve full circularity, action needs to be taken across the value chain from consumers to recyclers and eventually end users, Damen added. "In order to achieve full circularity, the tray-to-tray industry needs to stop stealing from the bottle industry," said Damen, highlighting the need for greater sorting and variations in consumer behaviour when it came to recycling PET trays as opposed to bottles. Capacity for PET tray-to-tray recycling is largely driven by feedstock availability, which is likely to limit production in the next few years unless there is more competition on the market, which would incentivise the sale of feedstock, Damen said. By George Barsted Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

US FDA clears Nova rLLDPE for food contact


20/06/24
News
20/06/24

US FDA clears Nova rLLDPE for food contact

Houston, 20 June (Argus) — The US Food and Drug Administration has cleared post-consumer recycled linear-low density polyethylene (rLLDPE) from Nova Chemicals' Connersville, Indiana, recycling plant for use in food packaging. The EPA provided Canada-based Novawith a No Objection Letter (NOL), allowing the recycled plastic to be used in food contact applications. This makes Nova the fourth company to receive food contact permission for rLLDPE in the US. The company received approval for usage of its material with all food types, with acceptable conditions of use including refrigerated, frozen and hot filled food storage. Nova previously received a NOL for its rHDPE from the same facility in 2023. Nova said that high interest from converters, retailers and brand owners motivated its push into FDA-grade rLLDPE, as well as a report from consultant McKinsey that forecast rising demand for recycled plastic. By Zach Kluver Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

EU member states support mass balance approach: EC


20/06/24
News
20/06/24

EU member states support mass balance approach: EC

London, 20 June (Argus) — EU member states are largely in line to support the mass balance accounting fuel-use excluded definition for defining recycled content percentage, and are likely to support these definitions going forwards, according to the team leader on plastics at the European Commission, Werner Bosmans. Bosmans, speaking at the Plastics Recycling Show Europe (PRSE) in Amsterdam, said there will be a public consultation on the definition of mass balance accounting soon, probably in the summer. The definition for mass balance was approved by the EU parliament in April when ministers overturned an objection from the EU environment committee. Most EU member states are now broadly in favour of the definition with third-party verification, Bosmans added. A defined approach for mass balance accounting would help to lend transparency to policy for recyclers. Further investment in the recycling sector was needed, Bosmans said, in order to increase capacity and he said that the commission viewed "mechanical recycling as better than chemical recycling and chemical recycling as better than incineration". While there may be a focus on different types of recycling technology, Bosmans said that focus should be "not about how much of the cake is a certain technology, but the size of the cake overall", when discussing supply in Europe for recycled content. The EC reasoning for this view was that mechanical recycling caused less environmental damage than other methods, Bosmans added. Bosmans said it appeared likely that EU member states would hit 2025 targets set out in the Single Use Plastics Directive (SUPD) legislation for all PET bottles produced to contain 25pc of recycled content, and 2030 targets of 30pc recycled content for PET bottles. Bosmans also spoke of figures that plastic recycling was 13 times more likely to happen when separate collections of waste at a consumer level were implemented, highlighting the importance of collection for the value chain. By George Barsted Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Malaysia's Lotte Titan yet to produce on-spec aromatics


19/06/24
News
19/06/24

Malaysia's Lotte Titan yet to produce on-spec aromatics

Singapore, 19 June (Argus) — Malaysian petrochemical producer Lotte Titan has yet to produce on-specification aromatics after its aromatics unit in Pasir Gudang restarted on 10 June. The unit, which can produce up to 110,000 t/yr of benzene and 60,000 t/yr of toluene, continues to face technical issues after experiencing delays to its restart date earlier this month, with flaring being observed at the Pasir Gudang complex. The company now aims to produce on-specification aromatics products by the end of the week. The associated No.2 naphtha cracker, which also restarted on 10 June, is producing on-specification olefins, although production rates remain unstable. The No.2 cracker has a nameplate capacity of 430,000 t/yr of ethylene and 220,000 t/yr of propylene. By Joonlei Lee Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Generic Hero Banner

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more