The supply of petrochemical feedstock ethane should remain in firm supply in the US in the near term, even with exports starting to flow to Europe, LyondellBasell CEO Bob Patel said Friday.
Planned US Gulf Coast steam crackers also represent an anticipated pull on ethane supply.
"Ethane demand over time will be met with more supply," Patel said.
Ethane demand will slow during a turnaround season in the second quarter, with additional turnarounds in the third quarter also impacting demand, he said.
Supply should remain available with US Gulf Coast petrochemicals producers able to access cost-effective supply from the Barnett, Eagle Ford, and Haynesville shales. It will become a matter of the degree of the feedstock advantage for US olefins producers, he said.
A "second wave" of US Gulf Coast steam crackers will increase ethane demand, but the growth in petrochemical demand does not represent a great concern for Patel. Natural gas players can move forward with gas treatment investments in a shorter time frame than is required for steam cracker projects, he said.
Non-LST purity ethane, assessed by Platts on Friday at 20 cents/gal, has seen higher recovery rates since peak rejection in July 2015, when Bentek Energy, a unit of Platts, estimated that 633,000 b/d were being rejected. Recovery has been gradually increasing since then with rejection rates expected at 463,000 b/d in April, according to Bentek models. In rejecting ethane, it is left in the natural gas stream instead of being extracted.
Ethane exports started to flow to Europe from the US late last month. Ineos received its first US ethane export on March 23. The cargo came from Marcus Hook, Pennsylvania, on the JS Ineos Intrepid, one of the first vessels built to transport ethane. Patel said he did not expect ethane to become a price setter in Europe.
"We're not expecting rationalization of naphtha crackers in Europe and Asia," Patel said, adding that it has already likely occurred over the last decade.
Enterprise Products' 200,000 b/d ethane export terminal at Morgan's Point, Texas, is expected to come online next quarter, with the capacity to load up to 10,000 barrels/hour of fully refrigerated ethane.
In markets, Platts assessed US spot ethylene Friday at 24.875-25.375 cents/lb FD USG for April and 25.00-25.50 cents/lb FD USG for May.
