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;

The Market And Energy Page, Part 2, T+332 -- December 19, 2017; 7,000 DUCs In The Permian; Another Large US Crude Oil Inventory Draw

For the archives and to look back on this a year from now. Nothing new here; it's been talked about for quite some time. From 24/7 Wall Street, data points:

• between January, 2017 (Trump takes office) and January, 2018 (first year of his presidency): US crude oil production from major shale regions forecast to rise by 1.2 million bopd, to 6.4 million bopd
• next month (January, 2018): the total is expected to rise by almost 100,000 bopd
• December, this month: total production should be 6.314 million bopd, an increase of 220,000 bopd compared to estimated November, 2017, production
• DUCs in the Permian: 7,354! Incredible. Compare to about 1,000 in the Bakken

US crude oil inventories, weekly API report, link here, data points:

• another huge draw: down 5.22 million bbls
• forecast: 3.20 million bbls
• previous draw: 7.382 million bbls
• we'll see the EIA data tomorrow at which time I will post re-balancing data

Drop in inventory, from Bloomberg:

Crude rose in after-hours trading because an oil-industry assessment was said to show a larger-than-expected contraction in U.S. crude stockpiles.

Futures extended gains from the settlement in New York after the American Petroleum Institute was said to have reported domestic oil inventories slid by 5.2 million barrels last week. That exceeded the 3.15 million-barrel decline forecast in a Bloomberg survey. If the drop is confirmed by the government on Wednesday, it will aggravate tightening supply conditions stemming from the shutdown of a key North Sea pipeline.

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Petro-Chemical Plants -- Random Note

At another post, a reader sent this comment:

Inter Pipeline just announced a $3.5 billion propane cracker in Alberta. Wouldn't be surprised if the Ethane pipeline from Tioga is converted to propane, and a ND methane cracker is built.

Link to one source for this story: https://inspectioneering.com/news/2017-12-18/7205/inter-pipeline-to-build-canadas-first-integrated-propane-dehydro

Another link here. 

Making America Great -- It Never Quits -- The Second Wave Of Ethane Crackers Begins -- October 3, 2017

Wow, it never quits! Making America great. The positive ramifications from the shale revolution continue to reverberate through the economy.

A reader sent me this story from the Pittsburgh Business Times about the new ethane cracker being built in Pennsylvania. From the article:

Shell Chemicals' $6 billion ethane cracker being built in Beaver County [Pennsylvania] isn't just important to the tri-state region, it's also playing a big role in the U.S .petrochemical industry.

"That essentially is the beginning of the second wave" of ethane crackers, ...

The Potter Township plant made the list of 13 ethane crackers being built from 2017 until 2021 ...

"You'll see the biggest buildup in the U.S. petrochemical industry we have ever seen," [a spokesman] said. It's part of the estimated $85 billion a year in investment in the domestic petrochemical industry since 2010, a big change since the industry's downturn a decade ago.

What revived the petrochemical industry from stiff foreign competition? The shale boom that has lifted many parts of the country, including southwestern Pennsylvania.

The Shell cracker in Beaver County is scheduled to go online in the second half of 2021. That will come at a good time for the petrochemical industry, which is growing at a rate of about four world-class steam ethane crackers like the Shell plant a year.

Additional data points:

• ethane production has doubled since 2005 and is likely to grow another third by 2020
• already, 318 petrochemical projects worth a total of $185 billion since 2010
• the shale boom is likely to supply enough ethane for a second wave of crackers; will be lead by the Potter Township plant

Comment: it should go without saying that Hillary Clinton promised to do what she could to stop fracking in the US had she been elected president. I am absolutely convinced that she may not have been able to stop the US shale revolution and fracking but she certainly could have slowed it down with executive orders, additional EPA regulations, and the use of the bully pulpit. 

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And In Minnesota, This Beats Solar Panels

Meanwhile in Minnesota, being reported in Minneapolis/St Paul Business Journal:

Emerson Automation Solutions is growing again in Minnesota, investing in plants in Chanhassen and Shakopee as it enjoys renewed strength from oil-industry customers.

The Star Tribune reports that the company will soon embark on a $14 million project in Chanhassen that will add another 80 workers to that location and convert 30,000 square feet of offices into more factory space. That follows a $10 million renovation project in Shakopee, where Emerson has hired 100 new workers.

The company, a division of St. Louis-based Emerson Electric Co., makes pressure, temperature, flow, level and wireless measurement instrumentation. It employs more than 2,400 people in Minnesota.

The company expanded into Shakopee in 2013 with a $70 million, 500-job facility, but work slowed shortly afterward as oil prices tumbled. (Emerson has a big chunk of the market for oil and gas monitoring equipment.) Prices since stabilized again at about $50 a barrel — not boom-era prices but enough to get customers spending on equipment again.

Wow, It Just Never Quits -- June 4, 2016

Updates

July 2, 2016: US exports of propane will soon exceed those of Qatar, Saudi Arabia, Algeria, and Nigeria combined.

July 1, 2016: Chile just gave Cheniere the green light to build another LNG plant. Bloomberg reports:

Chile this week gave Cheniere Energy Inc. a good reason to build another plant to export U.S. natural gas by clearing the final environmental hurdle for a proposed floating import terminal.

Approval was granted for the Penco Lirquen LNG project, which comprises a floating storage and regasification unit.

The 1,200-megawatt Central El Campesino power plant, which will be supplied by the gas import vessel, “should be approved” in July or August.

This approval marks a milestone for Cheniere, which has a 20-year agreement to supply gas to the power plant. Cheniere is also a co-owner of the LNG import project with Biobiogenera, according to Hoegh LNG Holdings Ltd., which is building the terminal.

Success in Chile may help Cheniere find other new buyers needed to sign long-term contracts before it makes a decision on an additional liquefaction plant at its Corpus Christi facility in Texas, according to Energy Aspects Ltd. and Hennessy Funds. 

June 21, 2016: Zacks is reporting -- 

Enterprise Products Partners L.P. intends to build a new cryogenic natural gas processing facility and related natural gas and natural gas liquids (NGL) pipeline infrastructure. This is intended to support the continued growth of NGL-rich natural gas production in the Delaware Basin of West Texas and southeastern New Mexico. 

The new plant is projected to have a nameplate capacity of 300 million cubic feet per day (MMcf/d) and the capability to extract over 40,000 barrels per day of NGL.

Notably, this is the third cryogenic natural gas processing plant announced by Enterprise Products Partners in less than 24 months.

The first cryogenic plant – the South Eddy facility – was brought online earlier this year. The second one is the partnership’s joint venture processing plant at Waha, which is expected to be commissioned in the third quarter of 2016. The partnership expects these efforts to augment the processing capacity in the Delaware Basin to 800 MMcf/d from 40 MMcf/d in 2012.

June 8, 2016: Shell plans to go ahead with huge petrochemical plant in Pennsylvania.
 

Original Post

 

The headline stories seem to be all about keystoned pipelines and derailed CBR but the real business of the oil and gas business keeps going on and on in the US. Another example: LyondellBasell plans third-quarter startup for Corpus Christi ethylene expansion.

LyondellBasell has entered the final phase of construction on an 800 million-lb/year ethylene expansion project currently under way at its complex in Corpus Christi, Tex. (OGJ Online, July 1, 2013).

Final construction work on the major expansion project will occur over the next few months. Once completed, the expansion will increase ethylene capacity at the Corpus Christi plant by 50% from its current production.

The Corpus Christi expansion comes as part of a multiyear growth program the company launched in 2012 that focuses on debottlenecks and cost-effective expansions at its existing plants, all of which were benefitting from rising North American shale gas production.

Alongside the expansion at Corpus Christi, the program also included ethylene expansion projects at LyondellBasell’s La Porte, TX, and Channelview, TX, plants (OGJ Online, May 2, 2014).

The 21st century will be known as the "Century of Energy" and the US will be at the forefront.  There's no stopping it.

800-million lb/year = 2.2 million lbs/day.

From icis, January 16, 2014: An avalanche of petrochemical and polymers capacity is coming in the US, with construction starting in 2014.

The US shale gas boom has brought a renewed competitive advantage to the sector, spurring plans for additional new crackers.

There are now plans announced for a total of 10 new ethane crackers in the US – eight on the US Gulf Coast, and two in the northeast US. This represents around 12.5m tonnes/year of ethylene capacity, according to an analysis by ICIS.

Seven projects are beyond the feasibility stage and six companies have announced capacity figures for seven crackers.

More background here.

Look what "they" were planning back in April, 2013: about 5 new world-class crackers. In the story posted today, the number is up to 10. 

12.5 million tons/10 = 1.25 million tons/year/plant on average.

1.25 x 2,200 lbs = 2,759 million lbs/year on average vs 800-million lb expansion project.

This sounds about right. A press release suggested that three expansions (each about 800-million lbs) would add up to a single new plant, and 3 x 800 = 2,400, which is very close to 2,800 million lbs. So it looks like, in a 30-second soundbite, the average ethylene plant now being constructed in the US has capacity of about 2,800 million lbs/year. Or 3 billion lbs/year, I guess.

NGLs, Petrochemicals and Cracking -- RBN Energy

Link here to RBN Energy, Part I.

Part II.  

Link here to RBN Energy, Part III.  

Part IV. 

Part V.