US Ethane and the Death of Gasoline

abarrelfullabarrelfull wrote on 14 May 2014 12:18
Tags: ethane gasoline refinery usa

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Last week, the EIA had an interesting blog article about a new form of US export, Ethane:

Mistral Energy confirmed on Friday, May 2, that it has received exports of purity ethane in an inaugural shipment along the Vantage pipeline from the Williston basin in North Dakota, to connect with the Alberta Ethane Gathering System (AEGS) near Empress, Alberta, in Canada.

We already have seen that shale gas has turned the US petrochemical sector on its head. Rising supply of ethane from natural gas, has led to a big change in petrochemical feed stocks and a slew of new investments.

Yet even this will not be enough to utilise all of the new ethane production. So we are seeing investments in export capability. A pipeline to Canada is a fairly simply one, but some companies Enterprise Products to Build Ethane Export Facility on Texas Gulf Coast are even more ambitious.

Enterprise Products Partners L.P. announced today that it plans to build a fully refrigerated ethane export facility on the Texas Gulf Coast.

So ethane exports will be possible to anywhere that has an import capability, and there will be a lot of ethane to export:

We estimate U.S. ethane production capacity currently exceeds U.S. demand by 300 MBPD and could exceed demand by up to 700 MBPD by 2020, after considering the estimated incremental demand from new ethylene facilities that have been announced

So we can expect to see more of these type of investments

There has already been an important project announced for export of ethane to Europe. Ineos, a company with many petrochemical plants in Europe and elsewhere, is one of the partners.

CONSOL Energy Inc. announced today that it has entered into agreement with Ineos Europe AG, part of the Ineos Group, to export ethane via Sunoco Logistics' Mariner East infrastructure and the Marcus Hook Delaware River port for use in Ineos' European cracker complexes.

So what is this going to do to the Naphtha market?

Extracting ethane and exporting it will help gas producers in the US and pet-chem producers in Europe. The one group that will be hurt by this is naphtha producers. Given that Europe is already long on gasoline, and it now faces a new substitute in the gasoline pool, I think we can safely say that this is one more nail in the coffin for Europe's gasoline producers.

As if Shale Oil were not bad enough Shale gas is blowing a typhoon through the world of refining as well.

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