Ocnus.Net
News Before It's News
About us | Ocnus? |

Front Page 
 
 Africa
 
 Analyses
 
 Business
 
 Dark Side
 
 Defence & Arms
 
 Dysfunctions
 
 Editorial
 
 International
 
 Labour
 
 Light Side
 
 Research
Search

Editorial Last Updated: Jul 26, 2017 - 10:02:26 AM


Ethane An Important New Energy Export
By
Jul 25, 2017 - 10:42:13 AM

Email this article
 Printer friendly page

Background

One of the most important serendipitous effects of the shale oil and gas boom in North America has been the expansion of ethane into the export stream of the U.S. petrochemical trade. Ethane is a chemical compound with chemical formula C2H6. At standard temperature and pressure, ethane is a colourless, odourless gas. It is an alkane (single-bond hydrocarbon), second in the series with two carbon atoms, after methane and before propane and butane.

Ethane is produced on an industrial scale from natural gas, and as a by-product of petroleum refining. The primary use of ethane is in the chemical industry in the production of ethylene by steam cracking; alternative feedstocks are naphtha and liquefied petroleum gases (propane and butane- LPG). Ethylene is arguably the most important organic chemical. It is converted to polyethylene; to PVC (via ethylene dichloride and vinyl chloride monomer); to ethylene glycol (via ethylene oxide); and styrene (via ethyl benzene). Ethane can also be used as a refrigerant in cryogenic refrigeration systems.

U.S. production of ethane is expected to increase from an average of 1.25 million barrels per day (b/d) in 2016 to 1.7 million b/d in 2018 according to the EIA. Increased ethane production is expected to be consumed in the petrochemical industry domestically as well as exported to other countries.

Ethane is present in raw natural gas extracted from the ground. In recent years, because of the rise in the production of shale gas in the U.S., the amount of ethane produced by the expanded extraction of raw natural gas has exceeded U.S. demand and exports. Increases in domestic consumption and exports of ethane are expected to support higher ethane prices relative to natural gas prices, which will encourage more ethane recovery from raw natural gas. The natural gas produced by the fracking process produces a 'wet' gas; a natural gas that has a higher level of NGLs present. Typically, wet gas can provide as much as 10 times the amount of recoverable liquids than comparable volumes of 'dry' gas. Shale gas production from areas such as Eagle Ford Shale, in Texas, is rich in NGLs; products that, in addition to ethane, include propane, butane and pentanes. These products are separated from the gas at a processing plant. A typical NGL barrel consists of 40-45% ethane, 25-30% propane, 5-10% normal butane, 10% isobutene and 10-15% pentanes. Each product has its own market.

Ethane is used almost exclusively as a petrochemical feedstock to produce ethylene, a compound used in the creation of many plastics. Expansions at existing ethylene plants contributed to a 170,000 b/d increase in ethane consumption between 2013 and 2016. By mid-2018, construction is expected to be completed at six new ethylene plants and one restarted plant, collectively capable of using 450,000 b/d of ethane feedstock. Most of these plants are designed specifically to use ethane without the ability to switch to other feedstocks. EIA expects U.S. ethane consumption to increase by 310,000 b/d (26%) between the first quarter of 2013 and the fourth quarter of 2018 as these plants ramp up operation[i]

Ethane exports are also expected to increase. Until December 2013, when the new Mariner West pipeline provided a route to the Canadian market by bringing Marcellus ethane from southwestern Pennsylvania through Ohio and Michigan to Ontario, Gulf Coast petrochemical plants were the only outlet for domestically produced ethane. Since then, the completion of the Vantage pipeline project, which ships ethane to Canada, and of two marine export terminals have allowed ethane exports to expand to an estimated 130,000 b/d by the fourth quarter of 2016.

Transporting Ethane By Pipeline


Although there has been a burgeoning supply of ethane as a result of the increased production of shale gas it has been difficult to deliver the ethane to the U.S. and Canadian petrochemical industries because there has been a deficiency in dedicated pipelines to transport ethane to these markets. Some of the ethane could be shipped using the natural gas pipeline stream but only a small portion of the ethane could be shipped this way within the natural das flow without the danger of producing a gas stream which was too 'energy rich' and damaging to the existing equipment, pipes, blowers and valves. That meant that there was increasing volumes of ethane retained in the system, but not used. Difficulties in storing ethane have created a glut, resulting in a 'use it or lose it' situation. Before 2013 over 200,000 barrels per day were being 'rejected', that is, left in the natural gas stream. When domestic demand was insufficient. until recently. there was no mechanism to export the surplus to balance the market.

The first step in dealing with the opportunities posed by increasing supplies of ethane was the investment in bringing ethane to the markets through de-ethanization facilities, ethane pipelines, petrochemical plants, and ethane export facilities, producing additional� take-away capacity for ethane, especially in the Marcellus and Utica shale regions, mainly in Pennsylvania, Ohio, and West Virginia, where market outlets for rapidly growing natural gas supply were previously limited to pipeline natural gas. There are several examples of such dedicated ethane pipelines:, Sunoco's Mariner West and East pipelines take ethane from the Marcellus Shale north to Canada or east to Marcus Hook, Pennsylvania and key north eastern markets; the Mariner West project runs from Houston, Pennsylvania, to Sarnia, Canada, a major petrochemical area; ATEX has an initial capacity of 125,000 barrels per day, terminating at EPP's complex at Mont Belvieu in Texas, which has NGL and petroleum liquid storage facilities, and which can fractionate NGLs to LPG and ethane. ATEX allows Marcellus-derived ethane to reach every existing ethylene production facility in the US and ensure security of supply to support construction of new crackers on the Gulf Coast.

In addition to the Mariner pipelines, the ATEX connects ethane (and NGLs) through the Marcellus-Utica Shale extraction area.

In January 2017, despite a series of lawsuits which have delayed the project Sunoco Logistics Partners LP's Mariner East (ME) 2 pipeline project remains on track for a late 2017 start-up after the Pennsylvania Supreme Court rejected the last appeal against the building of Mariner East 2 and a third quarter 2017 opening is expected.

As a direct result of these new pipelines, in 2014, the United States switched from being a net importer of ethane to a net exporter. EIA's Short-Term Energy Outlook (STEO) expects annual average ethane net exports to increase from 60,000 b/d in 2015 to 230,000 b/d in 2017, as new export facilities and ethane-carrying ships enable ethane to reach overseas markets. On March 9, the United States shipped the first waterborne exports of ethane from the Marcus Hook, Pennsylvania terminal to Europe. A second ethane terminal has opened at Morgan's Point, Texas. The two terminals are now exporting ethane, mainly to European and Asian countries.

Enterprise Products Partners L.P. announced in mid-September 2016 that the first cargo of ethane was scheduled to be exported from Enterprise's Morgan's Point, Texas. The M/V JS INEOS Intrepid, loaded with approximately 265,000 barrels of ethane, set sail from the facility en route to the INEOS facility at Rafnes in Norway. The Morgan's Point ethane export facility, which is the largest of its kind in the world, has a design loading capacity of 10,000 barrels per hour. The supply for this new ethane export terminal is sourced from Enterprise's natural gas liquids fractionation and storage complex in Mont Belvieu, Texas and transported through a new 18-mile, 24-inch diameter pipeline that was completed in February of 2016. In addition, the Mont Belvieu complex is connected to ethane production from the Marcellus and Utica Shale regions through the ATEX pipeline. There are several smaller export facilities for ethane but the largest is Sunoco's at Marcus Hook in Pennsylvania.

Transporting Ethane By Sea

Having delivered the ethane from the areas of production through the new pipelines was the necessary conditions for the trading of ethane internationally. However, once at the export terminals the ethane had to be put on marine vessels which could safely and efficiently carry the ethane from the U.S. to its export destinations. Since there had not really been a large ethane marine trade there were not the special ships designed to carry the ethane.

Ethane must be refrigerated to a low temperature, compressed to a high pressure, or a combination of both to be transported by sea. These factors limit the types of vessels that are capable of transporting the product in its liquid state. To liquefy petroleum gases for maritime transport their temperatures need to be lowered; lighter gases require lower temperatures. For example, a heavier gas such as Butane is cooled to just below 0o C, propane is cooled to about -50o C, ethane to about -90o C and methane all the way down to -162o C. The more the temperature of the gas has to be lowered to reach its liquid state, the greater the number of technical challenges that arise to cool and transport it, making ethane one of the more technically difficult gasses to ship.

Ethane has a vapour pressure of 3.85 MPa at 21.1˚C, a boiling point of -88.5˚C and a specific gravity of 0.54. For transport by sea ethane must be either fully refrigerated or have both temperature and pressure controlled. As developed in the technological requirements of the LNG vessels, there are two kinds of cargo containment systems that can be used for large ethane carriers: membrane systems and independent tanks (type A, type B and type C). The containment system is a critical aspect of the design; much as it was important in the shipping of LNG. There are predominately two types of gas tankers, the Moss (spherical) and the membrane. The Moss Bottle system use spherical storage bottles inside the vessel. Moss vessels have distinctive, self-supporting spherical cargo tanks, normally constructed of aluminium, which contain no internal structural members or bulkheads. These tanks are supported by a continuous metallic cylindrical skirt attached to the equator by a special extrusion allowing the sphere to expand and contract freely. The skirt is itself welded to the hull structure and is subjected to the hull's deflexions, which it has been designed to absorb. The tank is covered with insulation and an aluminium foil protecting coat. The insulation space is continually purged with nitrogen and fitted with gas detection monitors. The tanks are free-standing, self-supported and do not form part of the ship's hull structure. The method by which the tanks are designed is such that a serious failure is highly unlikely. Therefore, unlike the membrane design, a full secondary barrier is not required but a drip tray is fitted to prevent any small leaks contacting the tank top.

The other type of vessel is a 'membrane' carrier where, instead of bottles, the refrigerated sections are built into the vessel itself. They carry less gas but are easier to sail. However, unlike the Moss bottles they are subject to 'sloshing'. Sloshing refers to waves being generated inside an LNG tank in the ullage (the space between the cargo and the hold top) as the vessel plies the ocean. These waves can damage the tank and the vertical pump so, for safety's sake the amount of LNG it can carry ranges between 10% and 70% because of having to cope with sloshing. Keeping a minimum of 10% in the tank (or 'heel') is required to keep the tanks cold for the next load but adds to the effect of 'boil-off' in both types of carriers as some gas leaks inevitably occur in transit. Membrane tanks are very different from Moss in that they use flexible steel membranes, of approximately 1mm thickness, to contain the cargo. The membranes are surrounded by insulation material applied directly on to the ship's double hull and the weight of the cargo is transmitted through the insulation and supported by the ship's structure. The design requires a primary and secondary membrane. The latter capable of containing the cargo for 15 days, given a failure of the primary membrane. There is insulation between primary and secondary membranes and between the secondary membrane and inner hull. These spaces are purged with nitrogen and constantly monitored for the presence of gas and temperature change. [ii]

Although ethane has been transported by sea for many years, the vessels used were primarily small, short-haul tankers carrying small quantities. "Out of the 1150 liquefied gas carriers which are currently available, 800 are used to carry LPG and other products such as butane, propane and similar derivatives; 200 of these ships carry LNG and the rest are designed to carry ethane/ethylene. Currently there are 141 small sized ethane and ethylene carriers worldwide with capacities ranging from 918 m2 to 22,000 m2. [iii] As ethane became more available, the company Evergas contracted with INEOS to deliver vessels for the ethane trade from the U.S. to Ineos' facilities at Rafnes, Norway, and Grangemouth in the United Kingdom. The first export cargo left Marcus Hook aboard Evergas "JS Ineos Intrepid " bound for Norway.

There are eight such ships with 27,500 m2 LNG/ethane carrier capacity, of which four have been delivered. (JS Ineos Intrepid, Ingenuity, Insight, Inspiration); all eight are chartered to INEOS. In addition to the Evergas newbuilds chartered by INEOS, Borealis has a 10-year charter for one of the four 35,000 m2 ethane/ethylene carrier newbuilds being constructed for Navigator Holding in 2016-2017. Borealis will use the vessel to ship ethane from Marcus Hook to Stenungsund, Sweden. However, with the volumes of ethane now being produced and transported to export terminals it became clear that a new type of marine vessel would be needed; able to carry higher volumes over longer distances; the Very Large Ethane Carrier (VLEC).

Development of the VLEC

The first move into the VLEC business was Reliance Industries of Mumbai, India. In 2014 Reliance ordered the building of six Very Large Ethane Carriers (VLECs) at Samsung Heavy Industries Pvt. Ltd shipyards in Korea. The vessels are the first to feature new membrane technology from French specialist Gaztransport & Techni Gaz SA(GTT), considered key to the execution of the project. With a capacity of 87,000 cubic meters, the two vessels are the largest ethane carriers built to date. Reliance took delivery of the first two of these VLECs in 2016, the Ethane Crystal and Ethane Emerald. Samsung was to deliver the ships to be used for ethane transportation, from October 2016 to January 2017. All eight were delivered by April 2017. Each ship is priced at $120 million and are to transport liquefied ethane from the US to the Dane terminal in Gujarat, which will be used to supply feedstock for RIL's crackers in Dane, Hazira and Nagothane. RIL plans to ship 1.5 million tonnes a year of ethane from its US shale joint ventures to its chemical complex in Gujarat. The firm has two joint ventures (JVs) in Pennsylvania's Marcellus Shale;one with Chevron Corp., in which it has invested $1.7 billion, and another with Houston-based Carrizo Oil & Gas Inc., in which it has invested $392 million. It has a third JV, in which it invested $1.5 billion, in Texas' Eagle Ford Shale group with Dallas-based Pioneer Natural Resources Co.

The vessel features the GTT Mark III membrane cargo containment system (CCS), which integrates a cryogenic liner covering the inner hull. The liner includes a primary metallic membrane made of corrugated stainless steel, a secondary membrane made of Triplex, and a load-bearing system made of pre-fabricated insulation panels. The pressure-resistant membrane system is designed to absorb the energy resulting from the movement of liquid during transportation ('sloshing'). These have dual-fuel propulsion systems. The VLEC solution has prompted the possibility of burning ethane cargo as fuel, as many LNG ships with cargos of methane do nowadays. Another series of VLECs is under construction. Five 85,000m3 vessels are being built for Oriental Energy to transport Morgan's Point ethane to China. Hartmann and Evergas parent company Jaccar Holdings have established United Ethane Carriers (UEC) as a joint venture to manage the VLECs and the ships are being constructed to Hartmann's ECO STAR 85K design. Soon, VLECs will be a familiar sight in the Houston Ship Channel.

The Market Future of U.S. Export Ethane

The U.S. export trade in ethane has taken off since 2016. In the last year, six import terminals received shipments from the US's Marcus Hook and Morgan's Point export terminals and 17 new high-capacity gas carriers, built to deliver US ethane cargoes, have entered service under long-term time charters.Seven additional liquefied ethylene gas carriers (LEGCs) that can also handle ethane lifted spot and commissioning cargoes at Marcus Hook and Morgan's Point. [iv] In 2017 there seems to be a growing international demand for seaborne ethane, including to many of the chemical plants that have traditionally relied on naphtha for their crackers. However, as the new wave of US ethylene and PE supply comes onstream, domestic overcapacity will force producers to export more, pushing global prices downwards.The following table lists the cracker announcements made for the US. [v]

Company

Capacity

Location

Start-up

Chevron Phillips Chemical

1.5m tonnes

Cedar Bayou, Texas

Q4 2017

ExxonMobil Chemical

1.5m tonnes

Baytown, Texas

H2 2017

Dow Chemical

1.5m tonnes

Freeport, Texas

mid-2017

Formosa Plastics

1.59m tonnes

Point Comfort, Texas

NA

Occidental Chemical/Mexichem

544,000 tonnes

Ingleside, Texas

Q1 2017

Indorama

370,000 tonnes

Lake Charles, Louisiana

Q4 2017

Shintech

500,000 tonnes

Louisiana

early 2018

Sasol

1.5m tonnes

Lake Charles, Louisiana

H2 2018

Axilla/Lotte

1.0m tonnes

Lake Charles, Louisiana

early 2019

Shell

1.5m tonnes

Monaca, Pennsylvania

early 2020s

SABIC/ExxonMobil

world-scale

Texas or Louisiana

NA

Total Refining & Chemical

1m

Port Arthur, Texas

end 2019

PTT Global

1m

Belmont county, Ohio

2021

Formosa Petrochemical

1.2m tonnes

Louisiana

NA

Williams

1.5m tonnes

Geismar, Louisiana

NA

Odebrecht

World-scale

Wood county, W Virginia

NA

So, the increase in U.S. production of shale gas and the concomitant production of ethane points to a booming export market forming for ethane, although the recent doubling in price for ethane is likely to diminish as increased production reduces the margins internationally.



[i] U.S.Energy Information Administration (EIA),"U.S. ethane production, consumption, and exports expected to increase through 2018" 17/1/17

[ii] Patrick Janssen, William Sombre, "Ethane Transport & Technology", Marine Professional 1Q, 2015

[iii] More than 30% of them are occupied in the trade of propylene, butadiene and vinyl chloride monomer (VCM). http://www.icis.com/resources/news/2011/03/02/9440201/twenty-new-ethylene-carriers-needed-by-2015-ship-owner

[iv] Mike Corkhill, LNG World, 4/5/17

[v] Cowen & Co., "NGL Bubble Bursts: Chemical Earnings At Risk". February 2017


Source:Ocnus.net 2017

Top of Page

Editorial
Latest Headlines
Turkish Labour's Heroic Battle With Erdogan
The Jewish Mob and the Nazis
The Peach Tree War
BREXIT: The Single Market of Cartels
Ethane An Important New Energy Export
Putins Domination of Russias Military
The Crucial Link Between the PLA and Chinese Political Reform
The myth of Britains decline
With German and French Allies You Don't Need Enemies
Russia In The Throes of Change