Firm agrees to supply ethane for American Ethane's new US terminal

Source: ICIS News

2018/03/19

HOUSTON (ICIS)--Private-equity firm Energy & Minerals Group (EMG) will create a portfolio company to supply up to 480,000 bbl/day of ethane to a terminal project being developed by American Ethane Co (AEC), the company said on Monday.

Under the agreement, EMG will create a portfolio company that will source the ethane from midstream companies in the US, AEC said. EMG will also build new export facilities or create partnerships with other operators to expand existing facilities and the infrastructure needed to supply them with ethane.

Altogether, EMG's supply and financial investment will support three 20-year agreements that American Ethane will execute on its end to supply feedstock to three crackers being built in China, AEC said. Those three agreements would account for 7.2m tonnes/year of the 10m tonne/year ethane terminal.

Previously, AEC had said construction on the terminal should start early this year and end in 2020. The company has not specified where on the Gulf Coast it will build the terminal.

So far, two ethane supply agreements have been announced.

In November, AEC announced a $26bn agreement to deliver 2.6m tonnes/year of ethane to a 2m tonne/year cracker being built by Nanshan Group.

The cracker will be part of a new chemical industry economic zone that Nanshan Group is developing in Shandong province.

AEC has also agreed to supply ethane to a new cracker that China’s Ganergy Heavy Industry Group (GNG) plans to build at Jinzhou in Liaoning province.

Under this agreement, AEC will deliver around 2.6m tonnes/year of ethane to the 2m tonne/year cracker.

Back in November, American Ethane's CEO said the company has more than 10 potential petrochemical customers in China. Each are willing to take more than 1m tonnes/year of ethane.

American Ethane has been considering terminals for years, but the destination of those shipments has changed. In 2014, the company was considering a terminal in Shady Grove, Louisiana state, that would export ethane to Jamaica, which would be burned as a fuel to power an alumina plant.

Since that announcement, American Ethane has shifted its focus to the Chinese market.

Another company, Energy Transfer Partners, is also developing a China-focused ethane terminal under a joint venture with Satellite Petrochemical USA.

The joint venture, called Orbit, will build the terminal on the Gulf Coast. The plans call for an 800,000 bbl refrigerated ethane storage tank and a 175,000 bbl/day ethane refrigeration facility.

Additional reporting by Fanny Zhang

US Enterprise Products and Switzerland-based INEOS announced in September 2016 the first cargo of ethane from Enterprise's new Morgan's Point terminal in the Houston Ship Channel has been loaded. (Source: INEOS)