The US will have 60,000 bpd of surplus ethane in 2013, global
consultancy ESAI Energy reported on Friday, citing
its recently published Global Industrial Fuels
The supply surplus results from new natural gas liquids (NGL)
fractionation capacity, the group said.
Even after modifying existing ethylene plants to process
more ethane, the US market will have an even bigger surplus
than it did in 2012, according to the report.
This supply glut and restrictions on the amount of ethane that
can be left in natural gas will significantly weaken ethane
prices in 2013, helping the petrochemical industry.
In response to rising shale gas
production, total NGL (natural
gas liquids) fractionation capacity in the US will grow to
2.6 million bpd in 2013, increasing by 575,000 bpd
In turn, that increased fractionation capacity and rising NGL
pipeline capacity to move natural
gas liquids to the Gulf Coast will enable more ethane
production. Ethane production in the US is likely to grow to
1.11 million bpd in 2013, 125,000 bpd more than in 2012,
according to the report.
Petrochemical demand, however, will
not keep up with the flood of ethane supply, ESAI
Based on new capacity and announced modifications to
existing capacity, ethane demand is projected to increase by 100,000 bpd
to 1.05 million bpd, said ESAI Energy analyst Vivek
Mathur. "This means there is about 60,000 bpd of surplus ethane
this year. Of this, about 50,000 b/d could be left in the
natural gas stream.
"But 10-15,000 bpd of ethane will struggle to find a home
because of restrictions of how much ethane can be left in dry
natural gas. Piped gas specifications generally allow for up to
12% of ethane in natural
gas, but can vary depending on processing and commercial
arrangements. This additional supply will depress US ethane
prices and support petrochemical margins."
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