US ethane supply gains seen trailing demand growth

  • Spanish 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


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18/06/24

Q&A: LGE calls for more EU backing as Congress begins

Q&A: LGE calls for more EU backing as Congress begins

Brussels, 18 June (Argus) — The European Parliament election on 6-9 June is expected to result in centre-right Ursula von der Leyen remaining as president of the European Commission despite an increase in support for far-right groups. The election came just before European LPG association Liquid Gas Europe's (LGE) 2024 Congress in Lyon, France, over 18-20 June. Argus' EU correspondent Dafydd ab Iago spoke with the LGE's general manager, Ewa Abramiuk-Lete, about the election and the EU's climate and energy policies on the eve of the conference: What do you want from the newly constituted parliament and commission? A positive overarching framework from Brussels is needed to drive demand for renewable gases such as bioLPG and renewable and recycled carbon DME in heating and transport. For instance, retrofitting diesel or gasoline engines after 2035 is a potential solution for legacy fleets. But this goal is currently missing at the EU level. Energy taxation is another critical issue, with the current directive unchanged for more than 20 years. It's crucial that revenue from energy taxation is re-invested into the production of renewable fuels to avoid a vicious cycle. Do you expect parliament to push for a clearer future for renewable liquid gas fuels despite plans to phase out ICE [internal combustion engine] vehicles? There's obviously a trend towards electrification. And as set out in the current legislation, the European Commission will come forward with definitions of CO2-neutral fuels. But member states have woken up to the gravity of the ban on ICE vehicles. Legislative solutions need to come really fast. We don't want to wait two more years until the effect of the new CO2 standards for cars fully kicks in. Can a new parliament tweak existing legislation on the EU's 2030 climate and energy goals? The ICE phase-out has intensified scrutiny of the Green Deal, at the member state level and in the European Parliament. But significant changes to the 2030 goals are unlikely as the targets are set for 2030. And Europe remains committed to achieving climate neutrality by 2050. Considerations to be examined include the role of liquid gases, especially in rural areas that account for about 3pc of EU energy demand. They rely on LPG as an off-grid solution. Does the EU need to rethink the 2040 goals? The suggested 2040 strategy set out by the outgoing commission still has to translate into legal proposals for parliament and member states to decide upon. The major question is where the industry will get to in 2040. Achieving 90pc net greenhouse gas savings by 2040, and then climate neutrality by 2050, will require significant investment. We expect an increase in the production of renewable gases by 2030, and a further scale-up towards 2040. But the industry also needs investor security. Some countries such as Italy, the Czech Republic and Spain have mentioned renewable LPG in their national energy and climate plans. That provides some degree of investor security. Will LPG still be part of the EU's heating and transport picture as we move towards 2030 and 2035? Yes, particularly for industrial use as Russian gas is being phased out. Major industries such as steel and ceramics need high heat that was previously supplied by natural gas, which cannot be replaced everywhere with electricity. There is significant interest from energy-intensive industries. For heating and boilers, the commission is developing guidance documents defining fossil boilers, which must outline a future pathway for boilers, especially important for off-grid areas. Those guidance documents need to recognise that boilers can run on both fossil fuels and renewable blends. Is an extension of the ETS [emissions trading system] to transport and heating proceeding smoothly for the LPG sector? The expansion of the ETS is new for many in the sector, requiring firms to establish trading for ETS allowances. While some companies were already under the ETS, the EU-wide extension now includes medium and small-sized firms, which face crucial upcoming deadlines. Companies must estimate their emissions and purchase allowances, adding costs for consumers. And implementation has been challenging for some member states, particularly in identifying relevant companies falling under the ETS, making the process more difficult than anticipated. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Q&A: DCC Energy eyes further LPG and low-carbon growth


18/06/24
18/06/24

Q&A: DCC Energy eyes further LPG and low-carbon growth

London, 18 June (Argus) — Dublin-based DCC Energy continues to expand and diversify, completing 15 acquisitions over the past year that included two in the LPG sector. The company, which owns several LPG retail subsidiaries in Europe, the US and Hong Kong, bought Germany's Progas and the US' San Isabel Services Propane at the same time as it increasingly moves into low-carbon energy markets such as solar, biofuels and energy management services. Argus' Oliver Binks spoke with DCC Energy chief executive Fabian Ziegler about the company's 2023-24 results and its future plans: DCC Energy has been moving into new markets as part of the energy transition. What share of the company does LPG represent? We launched our Cleaner Energy in Your Power strategy last year, aiming to double our profit [and halve carbon emissions] by 2030. We think backwards from the customer, helping them through the energy trilemma, and provide energy solutions consisting of molecules — increasingly green — and often self-generated renewable electrons. We are ahead of schedule. LPG is about half of our profits but only 15pc of our carbon emissions. We believe in LPG's longevity. It is a societally very useful fuel. Like the World LPG Association renaming itself to World Liquid Gas Association, we now move our own definitions from LPG to LG — liquid gas. DCC Energy has said it plans to grow its LPG offering by 50pc by 2030. Which areas geographically and sectorally is the company targeting? Our LG journey took us from Ireland to [the UK], to Europe and to the US. We have just strengthened our position in Germany with the acquisition of Progas. A key growth region is the US. We made a small acquisition there last year. We are currently focused on making our business operationally excellent, namely around serving our customers. For now, the strategy places more emphasis on strengthening in each market rather than expansion into new territory. We like our residential businesses, but we are targeting more growth in the commercial sector, where the case for multi-energy packages is greater. Overall, we aim to grow our LG business, but we need to create more sustainable credibility for LG. We are scaling up biopropane sales across Europe and trialling rDME [renewable DME] in the UK and Sweden, particularly with commercial and industrial customers, to enhance LG's relevance as a long-term low-carbon solution for Europe. DCC Energy's profit rose strongly in the 2023-24 fiscal year ending in March, but overall sales volumes dropped slightly. How much did the LPG segment fare? LG is often a mature market in Europe, however our LG sales volumes increased modestly in the year and we believe they can keep growing. We continue to drive the move from oil to gas for commercial and industrial customers. Many customers really appreciate the ability to make affordable CO2 reductions and having their own energy in a tank reliably supplied by DCC companies. LPG sales in the UK and Ireland came under pressure from a warm winter but still grew on expanding commercial and industrial deliveries. What drove this? Our businesses in Ireland and the UK continue to grow owing to diverse customer segments that are not all weather dependent. Under our Cleaner Energy in Your Power strategy, we act as an energy transition partner. Customers recognise the fiscal and carbon benefits of LG over heavier forms of fuel, driving growth in the transition. And some customers are investing in new off-grid facilities and choosing LG as their fuel sources. And it helps that we can provide broader energy packages entailing electron solutions. We also aim to increase our supply resilience with storage access at Teesside and our Avonmouth terminal project. DCC Energy also reported strong profit growth in Scandinavia driven by LPG. What are your plans in this region? We saw significant LG sales growth [in Scandinavia] last year when natural gas prices skyrocketed and customers wanted security of supply. Our Scandinavian business aims to lead the energy transition, with a focus on understanding our customers' needs and helping them reduce their carbon emissions. We aim to support large-scale production of rDME in Sweden and Norway and to see 50pc of sales coming from a wide range of renewable products by 2030. We have successfully run pilot tests in Sweden with rDME-LG blends at customers' sites, we invested in a rDME-LG blending facility, aiming for first customer deliveries in 2024, and received government funding for replacing LG with 100pc rDME at Bjorneborg Steel. DCC has acquired Germany's Progas and the US' San Isabel Services Propane over the past year. Do you have plans for further takeovers in the LPG sector? We have been one of the most active global buyers of LG businesses for several decades and will continue to pursue attractive acquisitions that strengthen our existing businesses, expand our markets and bring other important capabilities. We see a lot of potential in the US, where our DCC Propane business has achieved significant growth through many acquisitions since we entered that market in 2018. We continue to see many interesting opportunities in the US, which is far more fragmented than most European markets, with the top 20 propane retailers accounting for 40pc of the market and over 4,000 independent [firms accounting for 60pc]. Progas owns the Brunsbuttel and Duisburg LPG terminals in Germany. Given Poland faces a looming supply deficit when EU imports from Russia are banned from December, is DCC Energy looking at supplying Poland from these sites? The Brunsbuttel and Duisburg terminals were welcomed into DCC's portfolio in northwest Europe, where their primary role remains unchanged — to provide supply security to our customers. Spare capacity might be used to support the Polish market. We see the capacity of our existing infrastructure in Germany to be sufficient to support our business there. Earlier this year, we created a central supply and trading team out of Amsterdam, called DCC LPG Procurement, which will look at more infrastructure plays. But we are not in the supply business for the sake of it. Our strategy focuses on our customers and providing them with sustainable solutions. Germany is a good example. Our priority in Germany is a seamless integration of Progas and Tega, [acquired in 2018], that is good for customers and our employees. And building out a leading energy management services business. Flogas recently commissioned the Teesside LPG terminal near to Dimeta's upcoming rDME plant. Does Flogas plan to distribute DME or other renewable gases from the site? Being at an energy hub clearly opens possibilities for sourcing low-carbon energy sources such as rDME that can be unlocked for our customers. With the likelihood that rDME will need to be blended with propane to achieve supply without changing infrastructure and equipment, it will be important for rDME sources to be logistically close to sources of propane. Teesside is well placed to offer this solution. At what stage is the Avonmouth terminal project at? The first 17,000t tank is fully refurbished and two truck racks have been put in place such that Avonmouth terminal now already plays an important role in providing supply security to our customers in southwest England. A further 17,000t tank will be refurbished and a connection will be made to the Bristol port to enable midsize LPG carrier imports. We expect first imports in 2026-27. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Mitsubishi Shipbuilding to build methanol-fuelled ship


18/06/24
18/06/24

Mitsubishi Shipbuilding to build methanol-fuelled ship

Tokyo, 18 June (Argus) — Japan's Mitsubishi Shipbuilding plans to build two methanol-fuelled coastal roll-on roll-off (RoRo) vessels at its Shimonoseki shipyard in west Japan's Yamaguchi prefecture, aiming to deliver them within the April 2027-March 2028 fiscal year. Mitsubishi Shipbuilding, a group company of engineering firm Mitsubishi Heavy Industries, will build two 15,750 gross tonne car carriers with 2,300 vehicle capacity. The RoRo ships, which are equipped with a ferry-type ramp for transport of wheeled cargo such as trucks and trailers, will be delivered to Japanese shipping firms Toyofuji Shipping and Fukuju Shipping. The ships will be equipped with dual-fuel engines, which can burn both methanol and conventional marine fuel. The company expects use of methanol to curb carbon dioxide (CO2) emissions by more than 10pc compared with the use of conventional heavy oil. The ships can also use green methanol to further reduce CO2 emissions in the future. Methanol has emerged as a potential alternative fuel as the marine sector looks to cut its greenhouse gas emissions. Fellow Japanese shipbuilders Imabari Shipbuilding and Japan Marine United, as well as domestic vessel engineering firm Nihon Shipyard, also target to build 209,000dwt methanol-fuelled Capsize bulk carriers , aiming to deliver them to shipping firm NS United Kaiun from 2027. By Nanami Oki Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

EU imposes s-PVC anti-dumping duties on Egypt, US


17/06/24
17/06/24

EU imposes s-PVC anti-dumping duties on Egypt, US

London, 17 June (Argus) — The European Commission has proposed provisional anti-dumping duties on US and Egyptian- origin s-PVC imports following an investigation. The proposed duties are significant, ranging from 74.2pc to 100.1pc depending on the supplier, and would be applied to the cif import price before customs duties, effectively blocking most imports originating from the two countries. Interested parties have three working days to respond to the pre-disclosure information. The latest date for the commission to implement the provisional measures is 12 July. The EU imported an average of 20,000 t/month of PVC from the US and 4,000 t/month from Egypt in the first three months of this year, out of total imports averaging 52,000 t/month. S-PVC accounts for around 90pc of total imports, according to the original complaint that triggered the investigation. The trade complaint was initiated by three European producers which representing nearly half of EU production — Inovyn, Kem One and Vynova. Under their own analysis, the companies estimate a dumping margin of 40-59pc for US-origin s-PVC and 45pc for Egyptian-origin s-PVC between 1 October 2022 and 30 September 2023. The period in question was when the global PVC market was under significant pressure from weak demand. Other countries have initiated investigations covering the same or similar periods for a variety of exporting countries. A similar trade-remedy investigation on s-PVC imports from the US is underway in the UK. India recently implemented anti-dumping duties on e-PVC imports from China, South Korea, Malaysia, Norway, Taiwan and Thailand. India has also launched an investigation into dumping from China, Indonesia, Japan, South Korea, Taiwan, Thailand and the US during October 2022 to September 2023. Protectionist trade initiatives are on the rise in global chemical markets as weak demand and, in some cases, rising capacity have heaped pressure on many existing producers. Producers, particularly in Europe, have noted the burden of investment needed to meet EU sustainability and decarbonisation targets. In April, the European Commission imposed definitive anti-dumping duties on polyethylene terephthalate (PET) from China. By George Barsted and Alex Sands Provisional anti-dumping duties pc Country Company Dumping Margin Injury Margin Provisional anti-dumping duty Egypt Egyptian Petrochemical Company 109.5 100.1 100.1 Egypt TCI Sanmar S.A.E 86.1 74.2 74.2 Egypt All other companies 109.5 100.1 100.1 US Formosa Plastics Corporation 71.1 90.6 71.1 US Westlake Chemicals 58.0 87.2 58.0 US Oxy Vinyls, LP 63.7 88.3 63.7 US Shintech Incorporated 63.7 88.3 63.7 US All other companies 78.5 90.6 78.5 European Commission Europe and US PVC prices $/t EU-27 s-PVC imports 000t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Huge potential for tray-to-tray recycling:PETCORE


17/06/24
17/06/24

Huge potential for tray-to-tray recycling:PETCORE

London, 17 June (Argus) — Ahead of the Petcore Europe Thermoforms Conference in Granada, Spain, on 25-26 June, the technical manager of Petcore Europe's thermoforming working group, Jose-Antonio Alarcon, spoke to Argus about the development and challenges of tray-to-tray recycling in Europe. Why is closing the loop on tray-to-tray packaging important for the European industry? Most of the PET recycling industry has been concentrated on recycling PET bottles, while tray packaging makes up around 25pc of the overall PET market in Europe. For many years, bottle producers were not keen to use recycled content in their packaging, so most recycled PET flakes were going into tray applications. As regulation continues to push up recycled content in bottles, more and more flakes are going to the bottle market, while trays have not followed the same circularity path and recycled content supply has become more competitive. Around 70pc of bottles are collected on average in Europe, but the figure is less than 30pc for trays. Only around 50,000 t/yr of trays are currently recycled in Europe, when more than 1mn t/yr are placed on the market. There is huge potential. Petcore Europe has been pushing for tray-to-tray solutions, and in the thermoforming working group we are working on dealing with barriers to making trays circular, looking at collection, recycling technologies, standardisation and design for recycling, food contact and communication. What are the major obstacles to scaling up tray-to-tray recycling? One is the collection of trays in most countries in Europe. In some countries, such as Italy, trays are collected together with other packaging types. In others — particularly where there is a deposit return system (DRS) for bottles — then trays are not properly collected. Collection is the first challenge, if you are not collecting, you are not sorting, you are not recycling. One country that is very successful in tray collection is Belgium. France is working on it and is doing a good job. And Italy is also carrying out trials, but these have been less successful — finding an appropriate outlet for material was a challenge and improvements need to be made to make this work. It is worth mentioning that, Corepla, the EPR system in Italy, has several industrial schemes to improve tray-to-tray recycling with selected recyclers. But the success story in Belgium really stands out. It is a chicken and egg scenario, why is there not more tray-to-tray recycling? Because it is not collected, sorted, recycled? Or maybe because there is not enough demand? If there is not the demand for inclusion of tray flake, then sorters do not have the critical mass to create a dedicated stream. The technology is advancing, there are sorting technologies capable of identifying PET bottles, PET mono-layer tray, PET multi-trays and there are recyclers today that are leading the market and recycling both mono and multi-layer trays already. No fewer than seven stakeholders in the value chain need to be convinced that tray-to-tray is the right thing to do and makes sense — both environmentally and economically. How do you see tray-to-tray recycling developing in the coming years? Ultimately, the market will determine the value of tray-to-tray recycling. The recycling of trays needs to evolve. Bottle recycling has been in place for more than 20 years, and there is a clear progression from how it looked at the beginning to how the market works today. The tray recycling sector is in its infancy, and it will take time to evolve. It needs to have the right level of interest and demand to progress. At the end of the day if things are not economically viable, they will not progress. The market needs to be self-sustaining. Some companies are already focused on recycling of multi and mono-layer recycling. And there is a learning curve. If you look at the number of players recycling bottles in Europe and compare it with recyclers of trays, it is very different. But it is growing, and most tray-to-tray projects only started in recent years. There will be more solutions — sorting and washing technology will improve, decontamination technology will improve. We need separate sorting, and the value chain and retailers to be aligned and moving in the right direction. Progress is slow, but it is necessarily so for the learning curve. At the same time, we need to put pressure on the market to catalyse this movement. Legislation will play a critical role, but the best action is to drive your own fate. How is regulation supporting the development of tray circularity? There are particular chapters on trays in Packaging and Packaging Waste Regulation (PPWR) in EU regulation 2022/1616 and the Single Use Plastics Directive (SUPD), but there is no specific legislation dedicated to thermoforming packaging just yet. In the SUPD, there is mention of on-the-go packaging that can be related to trays, but it covers all packaging types for single use, not specifically PET trays. Article 6 under EU regulation 2022/1616 mentions the need for separate collection of plastic to be used in food contact applications. This is where we need to work more on the collection and sorting of PET trays and have to push for the trays to be placed in a separate collection stream. While legalisation undoubtedly underpins demand for recycled content, Petcore aims to go above and beyond the minimum requirements set for the tray market. The thermoforming market needs to be circular and needs to be self-reliant, independent of the regulation imposed. Will the development of chemical recycling be in competition with tray-to-tray recycling? The aim of the association is to make the whole PET market circular — my expectation is that in the future there will most probably be some bottle flake going into trays and some tray flake going into bottles. There will also be some claim for chemical recycling, but each sector needs to have its own area, we need to have mechanical and chemical recycling working in harmony. Recycling of trays is not the same as recycling bottles, mechanical properties and composition of the packaging is different. And trays are more complex than bottles, because they have the tray, lidding film, inks, labels, etc. The percentage of multi-layer material is much higher in trays than in bottles and this makes the recycling process more complex. And design for recycling will help, but there is a place for both mechanical and chemical recycling. We need to look for the most conservate and sustainable recycling route — first this is mechanical, but when this is not possibility chemical recycling makes sense. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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