First Ethane Exports From Texas -- RBN Energy -- August 1, 2016

Updates

August 4, 2016: see RBN Energy story below regarding first ethane loading from Morgan's Point. It appears that loading has been aborted and that suggests the export terminal is not ready for operations. 

Original Post

RBN Energy: first ethane exports from Texas.

This week the first Gulf Coast ethane export cargo will depart Morgan’s Point, Enterprise Products Partners’ new export terminal on the Houston Ship Channel.  This is a history-making event for at least three reasons. 

First, it inaugurates ethane exports from the Gulf Coast, only five months after the first-ever U.S. overseas ethane exports out of Sunoco Logistics’ Marcus Hook, PA, terminal.  Second, it launches a battle for Mont Belvieu ethane, to be fought between ethane exporters and new ethane-only steam crackers (ethylene plants) that will be coming online along the Texas/Louisiana coast over the next couple of years.  And third, Morgan’s Point is not just another export terminal.  It is a location steeped in Texas history, known in the 1830s as New Washington, with an important role in the Battle of San Jacinto – decisive battle of the Texas Revolution -- and legend has it, inextricably tied to the Texas anthem “The Yellow Rose of Texas.”   In today’s blog we examine the upcoming fight between ethane exporters and U.S. crackers.

We spend a lot of time talking about ethane in the RBN blogosphere, not only because it is a fascinating hydrocarbon market, but also because it will be driving what will happen with all of the natural gas liquids (NGLs) – and, for that matter, “wet” (high-Btu) natural gas –– for years to come. 

That’s because the Shale Revolution led to huge increases in wet natural gas production and, with that, far more ethane than the U.S. petrochemical market was prepared to consume. That, in turn, resulted in massive ethane “rejection” – or leaving ethane in the gas stream and selling ethane at gas prices rather than selling it as a “purity” product for use as a cracker feedstock.  

Oversupply drove ethane prices down, and that inspired petrochemical companies to announce projects to debottleneck/expand/convert existing plants to use more ethane and to build several new multi-billion-dollar ethane only crackers, most of which are expected to come on line over the next two years.  

But others have been eyeing cheap U.S. ethane too – the overseas cracker market.  Six to seven years ago those international players initiated serious discussions with U.S. producers and midstream companies to do what had never been done before – put ships of ethane on the water. That finally happened on March 9, 2016, when the JS Ineos Intrepid departed Sunoco’s Marcus Hook, PA terminal (near Philadelphia) with the first overseas ethane cargo; it arrived at the INEOS petrochemical plant in Rafnes, Norway 10 days later.

Active rigs:

	8/1/2016	08/01/2015	08/01/2014	08/01/2013	08/01/2012
Active Rigs	35	74	193	178	207

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