Midstream operators are upbeat about the prospects of continued ethane export demand growth as Mideast Gulf disruption continues, writes Joseph Barbour
US midstream firms have announced further investments in ethane infrastructure in their latest first-quarter results releases in the wake of strengthening international demand for the petrochemical feedstock given a tighter LPG export market.
Energy Transfer plans to build a 3mn bl (169,000t) ethane storage cavern at its Mont Belvieu NGL storage and fractionation hub in Texas, the company said on 5 May. Completion of the cavern is scheduled for 2027. This announcement comes as the firm extends most of its existing long-term ethane contracts out to 2041 and considers whether to further expand its Nederland LPG and ethane export facility on the Gulf coast, where it launched 182,000 b/d (3.8mn t/yr) of capacity in 2021.
"There's between 500,000 and 750,000 b/d of ethane interest around the world from new [ethane-fed] crackers," co-chief executive Marshall McCrea said earlier this month. Energy Transfer is also expanding its Marcus Hook LPG and ethane terminal to ship 20,000 b/d more ethane, which is on track for completion in the third quarter of next year.
Enterprise Products — the only other US midstream firm that exports ethane — is also aiming to increase its ethane shipments overseas. The company began loading propane from its Neches River terminal near Beaumont, Texas, in April, which was originally built to ship 120,000 b/d of ethane and ethylene, following an upgrade that allows it to export a further 180,000 b/d of ethane or 360,000 b/d of propane, or a reduced combination of the two. Enterprise expects to begin loading ethane from the expanded capacity this month, although it says it will be prioritised for propane contracts before 300,000 b/d of LPG capacity at the company's Houston LPG terminal comes on line later this year.
The planned expansions to US ethane infrastructure are happening alongside a growing pull on LPG exports. Energy Transfer and Enterprise reported record NGL exports during the first quarter, most of which was LPG — the latter shipping 1.1mn b/d of NGLs, up 10pc on the year, and the former shipping 19pc more without disclosing the volume. Demand for US LPG and ethane continues to be bolstered by the US-Israel war with Iran, which has effectively shut off Mideast Gulf LPG supply. The impacts from Middle Eastern supply disruption are likely to extend well into the future, Enterprise said.
The winds of war
Other midstream firms in the US NGL space are similarly upbeat on export demand. The current environment "will continue to [provide strong] tailwinds for Gulf coast exports", Phillips 66 vice-president Don Baldridge said on 29 April, adding that the firm's Freeport LPG terminal should benefit from this. The facility in Texas shipped a record-high 319,000 b/d (2.5mn t) during the first quarter, Kpler data show — the company did not provide an estimate.
Targa Resources declared force majeure on LPG loadingsat its 175,000 b/d Galena Park LPG terminal in Texas in March, yet it expects loading to reach a new high at the facility in the second quarter. The company's planned expansion of Galena Park to 625,000 b/d is on track for completion in the third quarter of 2027 and will be "much needed when it comes on line", Targa said in early May.
The midstream operators reported other NGL operational records in January-March. Enterprise, Energy Transfer and Targa posted quarterly highs in NGL fractionation — at 1.9mn b/d, 1.21mn b/d and 1.15mn b/d, respectively. Targa's 150,000 b/d fractionator 11 in Mont Belvieu, Texas, came on line in April, with its same-sized 12 and 13 fractionators due to start up in early 2027 and 2028, respectively. Energy Transfer's 165,000 b/d fractionator IX in Mont Belvieu is scheduled to open in the fourth quarter. And Enterprise and Energy Transfer achieved record NGL pipeline transportation volumes of 4.88mn b/d and 2.43mn b/d, respectively.
