Weighing the Potential Benefits and Risks of US Ethane Export
In 2014, the world’s first large ethane carrier, VLEC, grew to require a dedicated fleet of ships for intercontinental trade. Since then, however, the price of oil has undergone a decline, causing uncertainty for natural gas liquids (NGLs).
Maritime Professional magazine claims that “the export of ethane will eventually happen, in concert with market conditions. When that happens, specialized tonnage will be needed to fill that growing market niche.”
Learn more about ethane and the benefits and risks of its export from the US.
About Ethane and NGLs
Ethane is a by-product of natural gas and predicted to be in demand in the coming years, like other NGLs.
NGLs are valuable co-products that can possibly drive the economics and create gas production growth, but they were once seen as only secondary by-products of gas production. In particular, wet gas, which is natural gas that has a high level of NGLs present, is predicted to determine the natural gas production levels in the US because the cost is lower than in areas that are drilled solely for dry gas.
The industrial value of ethane remains high among petrochemical manufacturers, but transporting it in volumes that make sense economically is challenging.
Ethane hasn’t traditionally been traded in global markets due to the difficulties of liquefying it and transporting it in bulk.
Liquefying petroleum gases for transport requires lowering the temperatures. The more the temperature needs to be lowered, the more problems arise. Ethane is one of the most technically difficult gasses to ship.
In addition to the low temperatures posing to be a challenge for transportation, only the ethylene carrier is equipped to transport ethane. These types of ships are equipped with a specific type of semi-pressurized containment systems called Type C.
Also, ethane is usually transported by small parcels, which are in high demand. According to Maritime Professional, “About 70% of the existing fleet of 160-odd ethylene-capable carriers offers a cargo capacity of 10,000 cubic meters or less. This, however, puts economic constraints on multinational petrochemical manufacturers that would like to move ethane on the long-haul trades, such as those from the U.S. to Asia or Europe.”
Another challenge that ethane presents is that there’s no availability to process the ethane, as all US chemical companies are at capacity. So although ethane gas is a potentially promising niche sector, it can be predicted that owners will opt for other sources to lessen the risk.
It’s estimated that the ethane export market from the US has potential, but the timing of this is unclear.
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