As the second half of 2017 begins, decision time looms closer for the two proposed ethylene export terminals for the U.S. Gulf Coast.
The rival developers are a contrast in capabilities: Odfjell is a global leader in tankers and terminals; Enterprise Products is a dominant midstream and downstream player in North America with vast capital resources. Of the two, Odfjell has been more forthcoming about its plans, intending to make a decision by the end of this year and, if a go, to have the facility in service by year-end 2019.
Early in April, Enterprise said it had “customer commitments supporting two expansion projects that will further develop [our] ethylene infrastructure. Enterprise is repurposing a large, high-capacity ethylene storage well at its Mont Belvieu, Texas, complex. Following completion of the project, which is expected as early as third-quarter 2018, the 5.3-million-barrel cavern will be able to inject/withdraw ethylene at a rate of 2,000 barrels per hour, expandable to 4,000.”
Further supporting its ethylene capabilities, Enterprise is building a new 24-mile, 12-inch diameter ethylene pipeline from Mont Belvieu to Bayport, Texas, with the potential to connect both producing and consuming sites south of the Houston Ship Channel to Mont Belvieu. The ethylene pipeline will be routed through
“We continue to evaluate the possibilities,” said an
Odfjell is less circumspect.
“This is still just a project but it would be one of our largest and we are very much committed to making it happen,” Yann Bigot, director of commercial and business development with Odfjell Terminals in Houston told Hart Energy. “We hope to make a final investment decision in the second half of 2017 and would hope to be shipping ethylene by the end of 2019.”
The economics behind the initiative to export ethylene are simple. With the shale gas bonanza in
To be sure, there is a commensurate boom in derivatives production, notably polyethylene, primarily for export. In recent years there has also been interest in exporting ethane. In addition to Enterprise at Morgan’s Point, there is also a terminal to export ethane and other NGL near Philadelphia that is operated by Sunoco Logistics.
Ineos led the charge by several European olefins and polymers producers to import North American ethane as a lighter cracker feed than the naphtha that is prevalent in
Despite all of that there is still a robust business case for ethylene exports from
“There are four drivers,” said Bigot at Odfjell. “First, cracker operators don’t want to have to curtail operations, they want to run at high efficiency. That means they need options for moving their ethylene and exports provide a safety valve. Second, there is a growing market for those exports. The Middle East is exporting less, and
Given the global consolidation among major olefins and polymers producers, there is also the frequent case that the same parent company could be long ethylene in one region, and short in another, Bigot noted. “Paper swaps with other producers are possible, but there is always the price differential to consider.” That differential in the commercial market is the fourth driver. “There is always the arbitrage,” Bigot stated. “Today it is favorable from the
The proposed Odfjell ethylene terminal would have an annual volume of 750,000 mtpa, and a loading rate of between 600 and 1,000 tons per hour. It would also have a dedicated storage tank to facilitate that quick loading. Although
There is already an existing ethylene export terminal in Galena Park, Texas, on the Houston Ship Channel. It was originally built by Shell and Chevron as an import facility. It is currently operated by Targa Resources and contracted to Mitsubishi Chemical.
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