What to do with all the ethane? The problem may take care of itself in the next few years, according to a newly released white paper published by London-based Petrochemical Update, a unit of FC Business Intelligence Ltd.

The U.S. will take a growing share of the world’s substantial trade in polyethylene through 2020 because of its abundant NGL production and the cost advantages of cracking ethane rather than naphtha, the study said.

“The increased production of U.S. ethylene and the associated investment in new U.S. polyethylene capacity will increase North American polyethylene production to over 54 billion pounds per year by 2020, up from 44 billion pounds as of the end of 2014,” according to the white paper. “This increase assumes 75% of the announced polyethylene projects are actually built and commissioned by 2020.”

That’s an ambitious increase in cracking capacity—but the numbers actually may be conservative, it added. “In addition, industry sources cite the potential addition of another 2 billion pounds of capacity over this time frame. The significant U.S. ethylene supply and U.S. ethylene feedstock cost advantages will increase U.S. polyethylene production beyond domestic demand and support export volumes over the period.”

And domestic markets will only be able to absorb so many shampoo bottles, cell phone protectors and soft drink cups, so much of that new production will seek markets abroad.

“Excess North American polyethylene production available for export will be 6-9 billion pounds within the 2016-2020 time frame,” again assuming that three out of four announced projects actually enter service, Petrochemical Update added. That will build on a long-term trend. The report said international trade of the plastic nearly doubled to 50 million tons per year in 2014 from 26 million tons in 2001.

“China is the largest polyethylene importer, receiving more than 10 million tons in 2014, equivalent to around 20% of all internationally traded polyethylene,” the report added. “India and Singapore are the two strongest growing import markets, increasing from nearly no imports 10 years ago to 1.8 million tons and 1.4 million tons in 2014, respectively.

“As new U.S. polyethylene capacity comes online … the U.S. will become a significant net exporter of polyethylene and put pressure on the international polyethylene supply/demand balance,” it said. It rated Asia as the most promising U.S. export market.

The domestic petrochemical industry has a built-in advantage because of cheap ethane feedstock costs, enhanced by the fact that ethane-based cracking capacity is cheaper to build, although operating costs outweigh part of that advantage, the report noted. That advantage holds through low-, medium- and high-price crude oil projections made by the report. Naphtha is an intermediate product of crude refining and dependent on oil prices, while the gas-liquid ethane is prices off cheaper natural gas.

“In general, the feedstock’s molecular weight dictates the needed total capital expenditures, with heavier feedstocks requiring additional, high-priced plant equipment. While an ethane cracker entails considerably lower capital costs it does have a higher operating cost than a naphtha cracker,” according to the white paper. It added ethane now constitutes about 48% of worldwide steam cracker feedstocks. The U.S. also has begun direct exports of refrigerated ethane to Europe and India, backing out naphtha feedstock at existing steam crackers.

Although forecasts look promising for the U.S. petrochemical business, there could be logistical challenges, the paper cautioned.

“The export competitiveness of U.S. ethane, ethylene and polyethylene is dependent upon all the cost and supply and demand variables,” it said. “As indicated by the significant market price changes in the 2013-2015 time frame for crude oil and natural gas, as well as for U.S. shale products, the economics of U.S. exports can change quickly. Consequently, export infrastructure capacity and costs must be heavily factored into export optionality and competitiveness.

“For U.S. ethane, the communicated export volumes from Sunoco’s Marcus Hook [Pa.], and Enterprise Products’ Morgan’s Point [Texas] facilities indicate there are specific scenarios where exports are feasible, even with the required export and import logistics infrastructure investments. For U.S. ethylene exports, only the Targa terminal in Houston currently has the capacity and capability to load vessels for transport offshore. U.S. ethylene export volumes in recent times have primarily been limited to pipeline transport to Canada and Mexico.”

Paul Hart can be reached at pdhart@hartenergy.com.