New ethane sources may meet future US ethylene demand

31 March 2009 15:58  [Source: ICIS news]

SAN ANTONIO, Texas (ICIS news)--Increasing supplies of ethane from unconventional natural gas sources could help meet future feedstock needs for the US ethylene industry, a consultant said late on Monday.

As supplies of ethane using new horizontal drilling and fracturing techniques have increased, the price of ethane has disconnected from crude oil and is now more related to natural gas, said Earl Armstrong, managing director of Houston-based consultant DeWitt & Co.

In today’s market of crude oil at $50/bbl, ethane in the past would have been $8/MMBtu, but, instead, it is at $4/MMBtu.

“In today’s environment, this has lowered the cost of producing ethylene from ethane by [15 cents/lb, $331/tonne, €252/tonne],” said Armstrong speaking at the sidelines of the International Petrochemical Conference (IPC), sponsored by the National Petrochemical & Refiners Association (NPRA).

Unconventional gas production could reverse production declines in the US, according to US energy consultants Cambridge Energy Research Associates (CERA).

Technological advances in horizontal drilling and fracturing techniques are reducing the cost of extracting unconventional gas, especially shale gas.

CERA points to the surge in US production, particularly from shale, beginning in 2007. Continued growth in unconventional gas is projected by CERA for the next decade and expected to account for well over half of US production capacity by 2018.

($1 = €0.76)

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By: Peter Taffe
+44 20 8652 3214



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