First US ethane shipment docks at INEOS Rafnes complex

Source: ICIS News

2016/03/23

INEOS Rafnes siteRAFNES, NORWAY (ICIS)--The first shipment of US shale ethane arrived in Europe on Wednesday at the INEOS’ Rafnes, Norway complex.

The JS INEOS Intrepid docked at the site at 11:05 local time, carrying ethane gas from the Marcus Hook, US, terminal run by Sunoco Logistics.

The shipment is the first along the company’s ‘virtual pipeline’ that will bring lower-priced ethane to Rafnes and, later, Grangemouth in the UK, from the US.

The shipment represents the culmination of years of development for INEOS, which saw the Switzerland-headquartered chemicals producer source long-term gas supply agreements in the US, contract the construction of a fleet of special-purpose transport vessels, and invest in storage tanks and ethane processing capacity in Europe.

The INEOS Intrepid is one of four specially designed Dragon class ships that will form part of a fleet of eight of the world’s largest ethane capable carriers. (Source: INEOS)
Source: INEOS

The Rafnes cracker has been expanded to 620,000 tonnes/year with the installation of a new furnace last December. Surplus ethylene from Rafnes is sent to INEOS’s storage tank at Antwerp which is connected to the ARG ethylene pipeline.

The JS INEOS Intrepid carries 27,500 cubic metres of ethane, equivalent to 14,500 tonnes. It is anticipated that four ships will deliver a cargo of ethane each week to the complex. 

Rafnes will continue to receive supplies from the Sunoco Logistics Pennsylvania terminal, while the Grangemouth complex will be supplied by an Enterprise Products terminal currently under construction in Morgan’s Point, Texas. The $1bn fleet was built in China for liquefied gas and petrochemicals carrier Evergas.

“We are nearing the end of a hugely ambitious project that has taken us five years,” INEOS chief Jim Ratcliffe said at the time of the Intrepid leaving dock on 9 March.

When plans to import US ethane to Rafnes and Grangemouth were announced in late 2013, INEOS claimed that ethylene production costs at the site would be under half the average for European naphtha-derived product.

Oil prices have fallen sharply since then, and the gap between European naphtha and US ethane costs has narrowed.

However, price differentials still support the import of US ethane to Europe, INEOS director Tom Crotty said this week, and it is currently impossible to source sufficient feedstock supplies to run the Grangemouth cracker profitably.

“In Europe, the price differentials in gas still support importing US ethane. And in Grangemouth, the choice is clear. We simply cannot physically get enough ethane there locally. We are running at 40% capacity there,” Crotty said, speaking on the sidelines of the International Petrochemical Conference (IPC).

Aside from raising capacity utilisation at Grangemouth, the shipments will allow the supply of ethane to an ExxonMobil/Shell joint venture cracker in nearby Mossmorran, Scotland, under a supply agreement that begins in mid-2017.

Evergas will build eight ships of 27,500 cubic metres of capacity and a further four of 32,000 cubic metres of capacity. Eight of these ships will be dedicated to transporting ethane for INEOS. These ships are multi-gas carriers also capable of transporting LNG, LPGs, ethylene, ammonia and vinyl chloride monomer.

The Sunoco Marcus Hook terminal is also expected to supply ethane to a Borealis cracker in Stenungsund, Sweden, and SABIC is also looking to import shale gas for its Wilton, UK, cracker in future.

Additional reporting by Nigel Davis and Joseph Chang in Dallas, and Tom Brown in London