US ethane surge may arise and persist until 2016 – consultant

17 April 2012 21:04  [Source: ICIS news]

NEW ORLEANS, Louisiana (ICIS)--The ethane surge from US shale plays could arrive so quickly, it may initially overwhelm demand until new projects are completed in 2016, a consultant said on Tuesday.

“The chronic surplus of ethane will develop due to the drilling of rich hydrocarbons at shale plays,” said Peter Fasullo, principal and owner of consulting firm En*Vantage.

Fasullo made his comments at the Gas Processors Association's annual meeting in New Orleans.

By 2016, Fasullo expects ethane supply and demand to be almost balanced.

However, some short-lived imbalances could occur, which would lead to extreme volatility of spot ethane prices, he said.

Currently, US fractionation capacity is about 2.8m bbl/day, but only 2.3m bbl/day is in use on average, Fasullo said.

He said there are a number of investments being made to absorb the increasing supply of ethane.

Fasullo forecasts 9.5bn cubic feet (bcf) per day of new gas processing capacity by 2015 and another 3.0 bcf/day afterwards.

In 2012, ethane cracking capacity from enhancements at existing plants will increase by 95,000 bbl/day.

By 2015, capacity will be up 258,000 bbl/day, for a total of 1.308m bbl/day, Fasullo said.

There are also five new world-scale ethylene plants under consideration in the US, with completions scheduled between 2016-2019, Fasullo said.

He said of the 13.2bn lb/year (6.0m tonnes/year) of capacity being considered, at least three new plants will be built, representing 238m bbl/day of ethane cracking capability.

In addition, 90,000-100,000 bbl/day of ethane is expected to be exported to Canada, Fasullo said.

Overall, ethane demand in 2015 should reach 1.38m bbl/day, he said. By 2020, it should reach 1.63m bbl/day.

Ethane extraction from the natural gas stream should increase to 1.5m bbl/day by 2020 from 1.0m bbl/day in 2011.

By: Sheena Martin
+1 713 525 2653

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