Just a few years ago, North American Natural Gas Condensate (NGL) production was not optimistic. However, at present, this situation has been very different. Affected by the shale gas, US NGL production has grown strongly, directly promoting the growth of ethane production. Nexant, a petrochemical industry consulting firm, believes that U.S. natural gas production will continue to grow in the next 10 years, which will continue to drive growth in ethane production. Despite the recent sharp decline in international oil prices, oil prices and natural gas prices will continue to maintain a large spread. Therefore, natural gas producers will continue to give priority to the development of natural gas resources with high liquid content to extract liquefied petroleum gas and related ethane.

However, the demand for ethane in the United States has become saturated. New ethane must be exported to ensure a balance between supply and demand in the country. Therefore, manufacturers are looking for a target market for ethane in the world.

Severe demand saturation

The success of shale gas has given the United States ample supplies of ethane. The United States is building a cracking unit using ethane as raw material, which will further increase the proportion of ethane raw materials used. However, the current demand for ethane in the US petrochemical market is saturated, and the oversupply of ethane is becoming increasingly serious. According to statistics, the current ethane production capacity in the United States is about 1.1 million barrels per day, with a surplus of about 300,000 barrels per day. Most of the current excess of ethane can only be burned.

As new crackers from ExxonMobil, Dow Chemical, and other companies are put into operation by 2020, US ethane consumption will climb to about 1.5 million barrels per day. According to ESAI, U.S. production of ethane will reach 2.5 million barrels per day by 2020; Anne, Wood MacKenzie's natural gas fluid researcher

Keller predicts that the US ethane production will reach 2.1 million barrels per day. People in the industry generally believe that there will be an excess of 600,000 to 1 million barrels per day of ethane in the United States and that exports must be expanded.

Export market has great potential

The influence of shale gas in the United States is spreading to the global market. Ethylene cracking to produce ethylene has the advantages of low cost, high yield, less investment, and less pollution. Compared with cracking devices using naphtha as the raw material, the cracking device using ethane as the raw material in the United States is more economical. Therefore, ethane imported from the United States is also favored by petrochemical enterprises in various countries.

Peter Fasullo, head of energy consultancy EnVantage, said: “The main export market for ethane in the United States is Europe, and then it will expand to South America and Asia. China is currently actively seeking ethane raw materials, as is Southeast Asia. These will all be given to ethane in the United States. Bring a huge market."

At present, the proportion of ethane in the world's ethylene raw material composition has jumped from less than 10% to about 40% from a few years ago, and especially the ethylene refining raw materials in Europe, the Middle East and other regions gradually shift to ethane. With the increase of global ethene ethylene plants, world ethane demand is also increasing.

Large-scale exports still have resistance

Although the export market has great potential, ethane exports in the United States still face many challenges, including policy barriers and shrinking price advantage brought about by the decline in crude oil prices.

Currently, the U.S. Department of Energy is responsible for reviewing applications for natural gas export licenses, and the Federal Energy Regulatory Commission (FERC) is the lead agency for licensing natural gas export facilities such as LNG terminals. These agencies have relatively vague opinions on whether ethane can be exported. Industry sources said that this will affect the United States ethane exports. Some hydrocarbon products with the same composition are obtained from different processing methods, have different names, are treated according to different US laws or are treated differently. This may lead to some uncertainty in the large-scale export of ethane.

Since June last year, international crude oil prices have already fallen, and the future prospects are uncertain. Some analysts said that crude oil prices may remain low for a long period of time. At the same time, natural gas prices fell far less than the drop in crude oil prices. Therefore, the economic gap between the cracker using ethane as a raw material and the cracker using naphtha as a raw material is narrowing. This will have a negative impact on the export of ethane in the United States.