LyondellBasell CEO Gallogly is long on US ethane

31 January 2014 23:37  [Source: ICIS news]

HOUSTON (ICIS)--LyondellBasell CEO Jim Gallogly remains long on ethane despite the recent spike in prices, he said on Friday.

In January, ethane prices reached 43 cents/lb, the highest since May 2012. Prices have since subsided to 34.5 cents/lb.

The unusually cold winter caused the spike in ethane prices, Gallogly said.  "When you look past this winter-related volatility, industry conditions remain favourable for US petrochemicals."

The US continues to have large supplies of natural gas and natural gas liquids (NGLs), he said.

"Ethane supply is increasing as Marcellus ethane reaches the Gulf Coast," he said. "It looks like ethane is going to be very, very long."

Like many producers with US crackers, LyondellBasell is cracking increasing amounts of ethane because of its cost advantages against oil-based naphtha, which is used as a feedstock in much of the word.

During the fourth quarter, production at LyondellBasell's US crackers was 77% ethane based, a record level, Gallogly said.

In addition to Gallogly, Dow Chemical CEO Andrew Liveris is also long on ethane.

Many factors could lengthen ethane supplies in the upcoming months.

In addition to rising NGL production in Texas, material will also start arriving to the state from the northeast US.

US Enterprise Products has started injecting ethane into the Appalachia-to-Texas Express (ATEX) pipeline.

ATEX will have an initial capacity of 125,000 bbl/day, expandable to at least 265,000 bbl/day.

Kinder Morgan Energy Partners and MarkWest Utica EMG may develop a pipeline to transport natural gas liquids (NGLs) from the northeast US to the Mont Belvieu hub in Texas.

The pipeline will have an initial capacity of 150,000 bbl/day, with the ability to expand up to 400,000 bbl/day with the addition of pump stations.

MarkWest Utica EMB is a joint venture between MarkWest Energy Partners and the Energy and Mineral Group (EMG).

MarkWest has completed several projects in the Marcellus and Utica shales that will increase NGL production in the region.

In the past four months, MarkWest has started operations at five cryogenic processing plants with a total capacity of 1bn cubic feet/day (bcf/day), the company said. In addition, it also started two fractionators with a capacity totalling 98,000 bbl/day of NGLs.

MarkWest has an additional 17 processing and fractionation projects under construction in Ohio, Pennsylvania and West Virginia, it said. These should increase the company's total processing capacity to 4.7 bcf/day. Fractionation capacity should exceed 400,000 bbl/day.

Blue Racer Midstream is already operating its Natrium natural gas processing plant in Marshall County, West Virginia. The plant has a processing capacity of 200,000 bbl/day.

Under the Natrium II project, capacity at the complex will expand to 400 million cubic feet/day (mcf/day) by early March 2014, Blue Racer said.

The company is also building its Berne processing complex in Monroe County in Ohio. It should commission the first plant by the end of the third quarter with a processing capacity of 200 mcf/day, Blue Racer said.

Blue Racer plans to build two more 200 mcf/day processing plants at the Berne complex, bringing total capacity there to 600 mcf/day. No start-up date has been given for this additional capacity.

Regarding fractionation capacity, Blue Racer currently has 46,000 bbl/day at Natrium. Fractionation capacity should reach up to 126,000 bbl/day at the complex by March 2015.

Pennant Midstream has started operations at its Hickory Bend processing plant in Ohio, the company said. The plant has a capacity of up to 200 mcf/day. Pennant is preparing land for two more plants at the site.

Pennant Midstream is a joint venture made up of NiSource Midstream Services and Harvest Pipeline.

Utica East Ohio Midstream has started the first phase of its project in Ohio, which includes a 200 mcf/day processing plant and a 45,000 bbl/day fractionation plant.

When the project is completed, it will have a processing capacity of 800 mcf/day, fractionation capacity of 135,000 bbl/day and NGL storage of 870,000 bbl.

Utica East Ohio Midstream is a joint venture made up of M3 Midstream, Access Midstream and EV Energy Partners.

By: Al Greenwood
+1 713 525 2645

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