INEOS looking at Europe cracker options on US ethane supply deal

28 September 2012 15:40  [Source: ICIS news]

By Nigel Davis

A map of the Marcellus ShaleLONDON (ICIS)--Having agreed long-term ethane purchasing and supply deals from the US, INEOS is looking at the options for its gas-fed crackers in the UK and Norway, the company said on Friday.

“These are purchasing and supply agreements that will underpin the competitiveness of the cracker complexes in Europe. Work is ongoing at Grangemouth [in the UK] to look at the potential there given this option,” a spokesman said.

Commenting on the Noretyl cracker at Rafnes in Norway, which already imports ethane, he added: “we will need to look at investment at that site.”

The ethane lifting agreement from the Marcus Hook Facility from 2015 with Range Resources – Appalachia is complementary to INEOS’s existing supply agreements, the company said.

“The supply deal with Range Resources complements our portfolio of feedstock agreements for our European crackers and will strengthen our competitive position as an ethylene producer in Europe for the foreseeable future,” David Thompson, procurement & supply chain director at INEOS olefins & polymers Europe said when the deal and other arrangements for ethane supply were made public on Thursday.

The 15-year ethane purchasing and supply agreements could provide significant quantities of the cracker feedstock.

INEOS is tapping directly into supplies of the gas from US shale deposits. Increasing supplies of ethane are becoming available from shale gas and shale oil drilling and have prompted a wave of new ethylene capacity announcements.

Approximately 70,000 bbl/day of ethane and propane are expected to be transported from Houston, Pennsylvania to the Marcus Hook terminal facilities, also in Pennsylvania, and separated ready for transport.

INEOS said that there would be no announcement on the future of its G4 cracker at Grangemouth in the UK as a result of the ethane procurement and supply agreement. This plant was expected to be closed at some stage largely because of ethane feedstock supply issues.

The G4 plant can crack both gas and light distillate feedstocks, according to INEOS, whereas the KG (Kinneil Gas) unit cracks mainly ethane and propane.

Two years ago INEOS was looking into the potential of cracking more liquefied petroleum gas (LPG) at the 550,000 tone/year Noretyl cracker in Norway. Additional ethane for a proposed 100,000 tonne/year expansion of the unit was not available following the decision by the parties involved not to go ahead with the Skanled pipeline linking to North Sea gas.

At Grangemouth, the company had invested in the small 320,000 tonne/year G4 cracker but had plans to shut it at some stage.

It had also made some investments to crack heavier feeds at the larger KG cracker at the site. These were to be refinery off-gases, mainly butane, which would replace dwindling ethane availability as Britain’s North Sea gas reserves are depleted.

The project to convert the 700,000 tonne/year cracker was about half way through completion when the global financial crisis hit in 2008.

By: Nigel Davis
+44 20 8652 3214

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