Commentary: Infrastructure builds

As the US shale gas revolution is spurring the construction of six new crackers and derivative facilities, with more projects on the table, the infrastructure to accommodate this is being rapidly built – from natural gas processing plants to fractionators to pipelines. And yes, even export terminals to ship US natural gas liquids (NGLs) abroad.

This trend, along with the scenario of abundant US ethane feedstock, were highlighted at investment bank Cowen & Co’s First Chemicals Summit in New York.

“While our esteemed panelists came from a variety of backgrounds, there was a consensus that long US ethane is here to stay and there is a place for ethane exports in the market, though not without risks,” said Cowen analyst Charles Neivert.

Rex Features Pipelines are being laid for NGL volumes

Midstream firm Enterprise Products is in the process of building out its Aegis ethane pipeline from Corpus Christi, Texas to Louisiana by the end of 2015, said senior vice president Tony Chovanec at the Summit. The pipeline has a capacity of 175,000 bbl/day, expandable up to 400,000 bbl/day and already has commitments in excess of 275,000 bbl/day, he noted. “This exhibits the strength of downstream demand growth with a number of US Gulf Coast crackers coming online in the next 2-3 years,” said Neivert.

On 8 June, Energy Transfer Partners announced plans to build a gas processing plant in Pennsylvania, called Revolution, to be in service by Q2 2017. The NGLs will be shipped through Mariner East, a 70,000 bbl/day pipeline being built by Sunoco Logistics. That will connect to Sunoco’s Marcus Hook facility in the state, where Energy Transfer plans to build a fractionator by Q2 2017. Sunoco plans to expand pipeline capacity by 275,000 bbl/day, to a total of 345,000 bbl/day by the end of 2016. An export terminal there by Sunoco and MarkWest should begin shipping ethane overseas this year.

“While exporting ethane is nothing new, we are finally seeing a place for it in the market at a larger scale supported by the high level of ethane rejection in the US, the future outlook for long ethane supply and the wide differential between oil and natural gas pricing,” said Neivert. And on the Houston Shipping Channel, Enterprise Products’ ethane export terminal is expected to start up in Q3 2016. From the shipping perspective, contracts are already in place to build the additional vessels to support this export capacity, said Reidar Sundvor, partner at Norwegian shipping analytics firm ViaMar, at the Summit.