INSIGHT: Surge of US ethane, LPG to hit global chem markets in ’24-25

HOUSTON (ICIS)–Midstream companies in the US are expanding capacity to handle growing amounts of associated gas being produced from oil wells in west Texas, and they plan to export more of the resulting natural gas liquids (NGLs) to chemical plants around the world.

• New ethane crackers and propane dehydrogenation (PDH) units in Asia are increasing demand for ethane and other NGLs from the US.
• The new midstream capacity should provide US crackers with sufficient supplies of ethane.

THE NEW PROJECTS
Enterprise Products announced several new midstream projects on Tuesday that will add to an already large list of plants, pipelines and terminal expansions that should start up in the next two years.

The following table lists some of those projects, with the new ones by Enterprise highlighted in boldface.

COMPANY	PROJECT	CAPACITY	STARTUP
Durango Midstream	Kings Landing Gas Plant, Phase I	200m cubic feet/day	Q4 24
Durango Midstream	Kings Landing Gas Plant, Phase II	200m cubic feet/day	na
Energy Transfer Partners	Expansion of Nederland NGL terminal	add up to 250,000 bbl/day	mid 25
Enterprise	Orion Gas Plant	300m cubic feet/day	H2 25
Enterprise	Mentone 4 Gas Plant	300m cubic feet/day	H2 2025
Enterprise	Fractionator 14	195,000 bbl/day	H2 2025
Enterprise	Bahia NGL pipeline	600,000 bbl/day	H1 25
Enterprise	Seminole conversion to NGLs	450,000 bbl/day	23-Dec
Enterprise	Mentone 3 Gas Plant	300m cubic feet/day	Q1 24
Enterprise	Leonidas Gas Plant	300m cubic feet/day	Q1 24
Enterprise	Neches River Ethane/Propane Export Terminal	120,000 bbl/day ethane|180,000 bbl/day ethane, 360,000 bbl/day propane flex capacity	H2 25 and H1 26
Enterprise	Ethylene Export Expansion*	550,000-2m tonnes/year	H2 24 & H2 25
MPLX	Preakness II	200m cubic feet/day	H1 24
MPLX	Secretariat	200m cubic feet/day	H2 25
MPLX	Harmon Creek II**	200m cubic feet/day	H1 24
MPLX	BANGL pipeline***	expansion from 125,000 to 200,000 bbl/day	H1 25
ONEOK	MB-6 Fractionator	125,000 bbl/day	Q1 25
Targa	Greenwood Gas Plant	275m cubic feet/day	Q4 23
Targa	Greenwood II Gas Plant	275m cubic feet/day	Q4 24
Targa	Wildcat II Gas Plant	275m cubic feet/day	Q2 24
Targa	Roadrunner II Gas Plant	230m cubic feet/day	Q2 24
Targa	Bull Moose Gas Plant	275m cubic feet/day	Q2 25
Targa	Daytona NGL Pipeline	400,000 bbl/day	End ’24
Targa	GCF Fractionator	135,000 bbl/day	Q1 24
Targa	Train 9 Fractionator	120,000 bbl/day	Q2 24
Targa	Train 10 Fanctionator	120,000 bbl/day	Q1 25
Targa	LPG Export Expansion	1m bbl/month	Q3 23

^ Capacity based on 2019 figure.
* The project will be operated by the Navigator Ethylene Terminal joint venture with partner Navigator.
** Being built in the Marcellus in the eastern US.
*** BANGL is a joint venture made up of White Water, MPLX, WTG and Rattler.

Enterprise’s Neches River NGL export facility will have two trains. The first train can load 120,000 bbl/day of ethane only. The second will be a flex train that could export a maximum of 180,000 bbl/day of ethane, a maximum of 360,000 bbl/day of propane or a combination of the two.

The company also is planning upgrades to the Enterprise Hydrocarbons Terminal (EHT). This project includes upgrading to fully refrigerated propylene loading; upgrading instantaneous butane loading rates and other improvements that will increase product flexibility.

WORLD’S CHEM PLANTS DEMAND MORE NGLS
Enterprise and Energy Transfer described ever increasing demand for NGLs during their earnings calls this week.

“It’s hard to over-exaggerate the ethane and, more importantly, the LPG growth,” said Mackie McCrea, co-CEO of Energy Transfer.

McCrea noted that demand is coming from ethane crackers and propane dehydrogenation (PDH) units, which convert propane into propylene. “Assets cannot be built quick enough in the US to meet the international demand,” he said.

US monthly exports of ethane broke 400,000 bbl/day for the first time in February 2022, according to the US Energy Information Administration (EIA). A little over a year later, they broke 500,000 bbl/day.

The following charts shows the destinations of US exports of ethane in August, the most recent month available. Figures are in thousands of barrels per day.

Source: EIA

Demand continues to grow for exports of liquefied petroleum gas (LPG) as well, said Jim Teague, co-CEO of Enterprise Products. About a third of those exports are used to make petrochemicals. The rest is used as fuel.

US propane exports reached a record of 1.70m bbl/day in March 2023, according to the EIA.

US TO REMAIN FLUSH WITH ETHANE
The US should remain well supplied with ethane. The only cracker project that is moving forward is the Golden Triangle Polymers project, which is being developed by a joint venture made up of QatarEnergy and Chevron Phillips Chemical. It should start up in 2026.

The Sunshine Project, being developed by a subsidiary of Formosa Plastics Group, has been in limbo since a state court in Louisiana voided its air permits in 2022.

Thailand’s PTT Global Chemical (PTTGC) is continuing to search for a partner for the project it is considering in Ohio, said spokesman Dan Williamson. So far, the company has had good conversations with interested parties, but none have yet to commit to the project.

PTTGC’s Ohio project hit a snag in July 2020, when the company’s joint venture partner left.

REASON BEHIND MIDSTREAM BUILDOUT
US crude production is rising because oil prices should remain well above the break-even price point for wells in the Permian, the region in western Texas that is responsible for much of the growth in oil production.

The average cost to produce a barrel of oil in Midland and Delaware basins of the Permian was $29 during the first quarter, according to the Q1 Dallas Fed Energy Survey, conducted by the Federal Reserve Bank of Dallas.

The Brent futures contract is trading above $80/bbl, and it should reach an average of $94.91/bbl in 2024, according to the latest Short Term Energy Outlook from the Energy Information Administration (EIA).

Such margins are giving energy companies a powerful incentive to produce more oil, and the EIA expects US oil production will rise to 13.12m bbl/day in 2024.

The wells in the Permian produce shale oil, which has a large amount of associated gas, which is rich in ethane and other NGLs. The ratio of gas to oil for these wells increases relatively quickly over time.

All of that gas needs to be processed and taken away from the Permian to prevent flaring in the region.

In response, midstream companies are building plants to process the raw natural gas, pipelines to ship out the processed gas and the NGLs, fractionators to separate the NGLs into ethane, propane and butane and terminals to export the NGLs to markets around the world.

Insight by Al Greenwood

Thumbnail shows polyethylene (PE), which is made with ethylene. Image by ICIS.