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 from
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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