US mid-continent ethane glut not to ease until 2014-15 - consultant

17 April 2012 21:24  [Source: ICIS news]

NEW ORLEANS, Louisiana (ICIS)--An ethane glut for the US midwest natural gas liquids hub is likely to continue until 2014-2015, a consultant said on Tuesday.

The glut is a result of mid-continent and east coast drilling of shale basins, said Peter Fasullo of consulting company En*Vantage.

The Conway natural gas liquids (NGL) market in Kansas does not have enough takeaway capacity, which is pressuring mid-continent prices, Fasullo said at the Gas Processors Association annual meeting in New Orleans.

Conway cannot separate ethane from the natural gas stream, so the market stores and trades an ethane/propane mix.

The ethane/propane mix traded at 15 cents/gal on Monday, about 35 cents/gal less than purity ethane at Mont Belvieu, Texas.

The ethane/propane mix usually trades at a 5-10 cent/gal discount to ethane because the end-user still needs to separate the products, but the discount varies.

The proposed Kinder Morgan Cochin EP project will ease some of the surplus. The project was scheduled to be in service on 1 April, Fasullo said, but permits have delayed the start–up date.

Kinder Morgan spent $30m (€23m) to upgrade the Cochin pipeline for transportation of 10,000–40,000 bbl/day of ethane/propane mix from Conway to Sarnia, Canada.
NOVA Chemical will use the ethane/propane mix at its cracker in Sarnia.

Fasullo said the surplus will continue to be a problem until 2014-2015, when other takeaway projects come online.

The Mariner-West project will move 50,000 bbl/day of ethane out of the Marcellus region to Sarnia, and the Enterprise Appalachia to Texas Express Pipeline (ATEX) will carry 190,000 bbl/day from the Marcellus to Mont Belvieu.

The Vantage Pipeline will carry 40,000-50,000 bbl/day of NGL from the Bakken to Alberta, Canada.

In addition, there is about 543,000-660,000 bbl/day of NGL pipeline capacity planned to move mid-continent supply to the US Gulf.

When the projects come online, ethane/propane mix should be about 13 cents/gal under Mont Belvieu ethane prices, instead of 35 cents/gal, he said.

By: Sheena Martin
+1 713 525 2653

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