INEOS confirms Enterprise shale ethane supply deal

(updates with INEOS comment in paragraphs 1-5)

LONDON (ICIS)–INEOS confirmed on Wednesday that it has inked a deal with US producer Enterprise Products Partners for the supply of shale ethane from the planned ethane mega terminal it is developing.

Additional ethane from the planned 240,000bbl/day terminal, to be constructed in Houston, Texas, will be shipped to the Switzerland-headquartered chemicals producer’s operations in Europe.

The terminal is set to be the world’s largest when it comes onstream in the third quarter of 2016

The main contractual partner for that project had not been officially identified but was widely believed to have been INEOS. The terminal’s location had also not been confirmed.

Shipping company Evergas also confirmed earlier on Wednesday that it has agreed with INEOS to expand to six the number of vessels that will be used to carry ethane from the US to Europe to feed the chemical company’s gas crackers in Rafnes, Norway and Grangemouth in the UK.

The shipping firm earlier had a 15-year agreement with INEOS to transport ethane from the US Mariner East project in Marcus Hook, Pennsylvania. That was the world’s first US ethane export contract with start-up from 2015, Evergas said.

Two vessels to support that agreement are currently under construction by Sinopacific Offshore & Engineering in China. The company will build all six vessels.

“These vessels are the largest, most flexible and advanced multigas carriers yet to be built, securing INEOS with a highly flexible solution for their ethane supplies, yet at the same time providing the benefit of transporting LNG [liquefied natural gas], LPG [liquefied petroleum gas] as well as petrochemical gases including ethylene,” Evergas said.

“We are very confident that these vessels will provide long term security and competitiveness of our feedstock supplies,” said David Thompson, chief operating officer for INEOS Trading & Shipping.

The vessels will be dual-fuelled the shipping company said and use LNG in ‘tier III’ engines to meet current and future know emissions regulations and to reduce fuel costs.

“A relentless increase in the world’s demand for energy and with gas rapidly replacing other fossil fuels in the global energy mix the demand growth for marine gas transportation is expected to be strong in the years ahead,” the company added.

“Demand growth is further spurred by significant expected changes in demand for shale gas driven transportation, demand for gas as a marine fuel and development of short-haul marine redistribution networks.”

Additional reporting by Tom Brown