US ethane supply should ultimately meet demand - consultant

10 December 2011 03:03  [Source: ICIS news]

HOUSTON (ICIS)--US demand for ethane is starting to outstrip supply, but the outlook for the ethylene feedstock points to a balanced market because ethane production will continue to grow in the coming years, a consultant said on Friday.

US crackers could be cracking around 1m bbl/day of ethane, which is above what is being produced at the moment, said Peter Fasullo, co-owner and principal at US-based energy investment company En*Vantage, during an industry event.

Fasullo was the key speaker at the Northeast Chemical Association (NECA) Christmas luncheon in New York City.

Ethane demand will continue to grow but so will output, the consultant said, predicting ethane production will grow to 1.25m bbl/day over the next three years.

The US now produces around 900,000 bbl/day of ethane, virtually all of it being used as a cracker feedstock for ethylene.

Cracker demand for ethane will keep up with production growth in the next three years, Fasullo estimated, citing planned expansions by Westlake and a feedstock flexibility project by BASF/Total at its jointly owned cracker in Port Arthur, Texas.

The naphtha-based unit is scheduled to go down in April for a 50-day turnaround during which BASF Total joint venture will convert some of the furnaces at the site to crack ethane.

The US will also export ethane to Canada, the consultant said, adding that 100,000 bbl/day could be shipped into Canada from the Marcellus and Bakken fields in the US.

Fasullo said ethane is likely to remain competitive as an ethylene feedstock in the coming years, provided crude oil prices do not collapse or the global economy does not go through another major downturn.

The risk of having an oversupply of ethane is also minimal as long as natural gas remains priced below crude oil, he said.

For more on ethylene visit ICIS chemical intelligence

By: William Lemos
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