INEOS secures US ethane supplies to Europe from CONSOL Energy

13 February 2014 15:20 Source:ICIS News

LONDON (ICIS)--INEOS has reached an agreement with US natural gas and coal producer CONSOL Energy for the supply of ethane stocks from the US to Europe, beginning in 2015, the Switzerland-headquartered chemicals firm said on Thursday.

The deal will see US ethane stocks transported from the Marcellus shale gas fields in Pennsylvania via the Mariner East pipeline system to Marcus Hook, from where it will be imported by sea for use in INEOS’ European crackers, the company said. The amount of ethane to be supplied in the deal was not disclosed.

INEOS has arrangements with US oil and gas giant Sunoco for capacity on Mariner East, and has enlisted Evergas to construct new vessels for the transportation of shale ethane from the US to Europe.

“This contract adds to our supply portfolio providing for long-term sourcing of advantageously priced US ethane for our European crackers. It will allow us to continue to consolidate the competitiveness of INEOS’ ethylene production in Europe,” said INEOS procurement and supply chain director David Thompson.

“We are excited about our new business relationship with CONSOL Energy and look forward to future opportunities between our companies,” he added.

The deal is the latest step in the company’s move to increase the competitiveness of its European operations by investing in infrastructure to bring cheaper US ethane to its European plants. INEOS also inked a deal with Range Resources in late 2013 for the provision of 400,000 tonnes/year of shale ethane to its plant in Rafnes, Norway.

TGE Engineering is currently constructing a 17,000 tonne gas tank at the site to allow for the ramp-up of shale ethane supplies, bringing the site’s total storage capacity to 30,000 tonnes, while the facility’s cracker is being repositioned to solely frack ethane.

The measures are expected to bring ethylene production costs at the site to a little over $500/tonne by 2015, according to the company.

INEOS is also considering the construction of a 33,000 tonne gas storage tank at its Grangemouth, UK, facility. The design phase of the tank is expected to be completed by the end of the first quarter of 2014, with TGE Engineering and Babcock International fielding rival front-end engineering and design (FEED) tenders.

If the green light is given to proceed with the project, the unit could be complete by 2016.

By Tom Brown