It Never Quits -- An Ethane Update -- February 9, 2019

Sometime in the past week or so, I think it was a result of the president's state of the union address, folks got carried away with fact checking the president on whether the US really was a net exporter of energy. Wow, what an incredibly shallow argument. While pundits are arguing over how many angels can dance on the head of a pin (we've had this discussion before -- the answer depends on whether their arms are outstretched or held close to their wings) so much more important stuff is going on.

Until I saw the recent EIA tweet on ethane, I had completely forgotten all about it. During the Bakken boom, "ethane rejection" was a big topic (something I knew nothing about; a reader gently informed me what "ethane rejection" meant).

Since then, it hasn't been something I've thought about much.

I do have a tag, "North Dakota ethane plant."

Since the boom, the US has begun exporting ethane to some extent, and there are now folks worried that the US exporters will deplete our own ethane that is needed for our own feedstock.

This is why they are worried: the Middle East doubled its petrochemical output in the 2000s and now doesn’t have enough ethane for many future projects.

Wow.

It turns out that the US has plenty of ethane and won't run out anytime soon.

It is all because of hydraulic, horizontal fracking, thank you very much. The chemical industry wasn’t prepared for all the ethane that ultimately came from the shale boom. The US is #1 in crude oil production from HHF, and Argentina is #2. Most other western countries, it seems, bans fracking. In fact, some US states ban fracking. Folks sort of forget that more comes out of fracking than just oil. But I digress.

Back to US ethane.

Data points from a 2018 article that updates US ethane data from 2017:

• the petrochemical industry’s initial reaction to this bounty was to convert plants from naphtha to ethane feedstock and launch quick, incremental expansions
• the response ramped up last year (2017) when new crackers from Dow Chemical and Mexichem added a combined 2.0 million metric tons of annual ethylene capacity
• two monster crackers from ExxonMobil and Chevron Phillips Chemical, which combine for 3 million metric tons, are starting up right now
• five more projects will add more than 5.0 million metric tons by 2020
• the new chemical plants will mean an enormous leap in ethane consumption by 2020, going from a market that was consuming 1 million barrels to one that will use 1.8 million bbls
• Now, on to exports:
• almost three crackers' worth of ethane is currently being exported from the US
• because of low prices, producers are rejecting more than 600,000 bpd -- enough to support 10 million metric tons of annual ethylene capacity
• prices are starting to support new fractionation capacity
• Nova Chemicals
• a Canadian company
• recently bought Williams Cos.' ethylene cracker in Geismar, LA
• Nova / Borealis and Total have just okayed an ethylene cracker in Texas
• also using US ethane in Canada
• since 2014, Nova has been piping ethane from North Dakota to Nova's operations in Joffre, Alberta; the company received enough ethane from North Dakota to build a new polyethylene plant
• Nova: North Dakota has a big surplus of ethane and not enough outlets to market
• Nova now wishes they had put in a bigger pipeline from North Dakota to Joffre
• Appalachia
• currently at 800,000 bpd
• should grow to 1.3 million bpd by 2022
• new pipelines to the east coast for ethane export; new ethylene complexes in Pennsylvnai, and a cracker funded by two Asian firms are planned for Belmont, OH, should help soak up that excess
• an Appalachian hub could catalyze $36 billion in investment and 100,000 jobs in the region
• some think the region could support as many as four or five crackers

Much more at the link.

See also this post.

See this superb series on ethane in the Houston Chronicle. I believe I have linked this article before; it was sent to me by a reader some time ago. The Chronicle allows a few free articles each month.

• Part 1. 
• Part 2.
• Part 3. 

More:

• ethane infrastructure squeeze should loosen in 2019, ExxonMobil, November 2, 2018;