INEOS sees opportunities in developing global ethane trade

PITTSBURGH, Pennsylvania (ICIS)–INEOS will take full advantage of a developing ethane market in the US, Europe and globally, CEO of INEOS Trading & Shipping, David Thompson said late on Thursday.

Thompson told ICIS he is particularly excited about north/south trade in the US with pricing out of Mont Belvieu.

He was speaking on the sidelines of an INEOS-sponsored event showcasing the developing energy picture in Philadelphia where the hydraulic fracturing of shale, or fracking, has boosted the economy of the southwest of the state.

A wider ethane market will develop, he suggested as exports have begun to Europe.

INEOS has started shipping ethane from terminals at Marcus Hook in Pennsylvania and Morgan’s Point in Texas, to feeds its gas crackers in Norway and Scotland. The ethane originates from the Marcellus and Utica shale deposits in Pennsylvania and Ohio and other shale plays in the southwest of the country.

The opportunities to trade the feedstock will become more apparent as the INEOS ‘virtual pipeline’ to Europe fills and as other players enter the market.

Thompson sees trade potentially developing further as ethane is shipped to India, firstly by Reliance for its crackers on India’s west coast.

INEOS is believed to have up to five suppliers of ethane in the US, although Thompson would not confirm that number.

The company says it has invested $2bn in the connection of the Marcellus fields to Europe via eight specially designed ‘dragon ships’ and the 300-mile Mariner East pipeline to the Marcus Hook deep water terminal.

The first of these ships to travel to the INEOS cracker at Grangemouth in Scotland will set sail later this month.

The dynamics of US ethane trade are changing fast as exports begin and as local demand in the Marcellus is expected to increase following Shell’s decision to go ahead with its cracker project in Pennsylvania.

Large crackers will come onstream on the US Gulf Coast over the next few years shifting the ethane supply/demand picture.