http://www.eia.gov/todayinenergy/detail.cfm?id=16151
I find ethane to be a fascinating part of the energy mix that no one ever pays attention to because it is not something that we ever deal with in our everyday lives. Ethane, is C2H6, the lightest of the "natural gas liquids". It is produced mainly in "wet gas" wells. Wet gas production has gone up tremendously because of the huge quantities of resource produced in some areas like the Southwestern Pennsylvania Marcellus. Although crude oil has higher values at around $100/bbl, mixed NGLs can be worth $50/bbl or so (it depends heavily on pricing and the ratio of the various constituents) and wet gas wells may produce far more total resource on an energy-equivalent basis, than the best unconventional crude oil wells. The main problem that arises is what to do with the NGLs. Black-oil wells tend to produce oil and gas. Oil collects in tanks until it is trucked away. Gas goes into a "gathering network" of pipelines which take it to a processing plant. But NGLs have to go through fractionation plants, which separate out the components, which then have to be shipped to various places. Ethane can only be shipped by pipeline, while propane and butane are also more difficult to ship than crude. A problem that has arisen for the E&P companies: what do they do with all the NGLs?
Well they found something to do with the propane (C3H8). Imports have all but ceased, and exports have gone way up. They are also using more of it as a feedstock for chemical production.
http://www.eia.gov/todayinenergy/detail.cfm?id=15951
I find statistics on propane production to be incredibly confusing. Some sources are reporting propane from wells only. Some are also including propane produced as a biproduct of oil refining. EIA reports "propane + propylene" production. A lot (if not most) propylene is not produced from propane, so I don't really have any idea why a stat would be reported this way.
Ethane oversupply is a much tougher problem, because it is difficult to export, and there are more limited opportunities for substitution to replace oil. It is extremely volatile and has a very low density. Ethane is used for exactly two purposes. It is left in the gas supply for its heat value or it is "cracked" to make ethylene, a building block for many chemicals and plastics. The majority of common plastics, like ABS, PVC, PE, PETE use ethylene as a feedstock. Ethylene can also be made from naptha, a biproduct of oil refining, or from Propane. But when NGL production went way up, all the Ethylene producers in the USA that could switched to ethane cracking. Since then there has also been a substantial increase in propane cracking for a number of reasons, but its a bit complicated to get into that.
At some points in the past few years the oversupply of ethane was dramatic; prices hit $.01 per gallon at the Conway hub at one point. Meanwhile basic chemical producers have made money hand over fist. Observe the stock prices of Lyondell Bassell and Westlake Chemical over the past few years. They produce a global commodities, with a regional input that is in massive oversupply.
But now there are starting to be exports going to Nova Chemical in Canada, owned by Abu Dhabi. Starting next year there is also a project to export Marcellus ethane by sea out of the east coast called the Mariner East project. There has been much speculation about where this will go. Most of the european etheylene capacity really can't take Ethane because it is inland and/or because their crackers aren't really set up for light feedstocks. It may just end up being blended with gas, since US ethane competes very well with LNG imports into Europe, and may be much cheaper to transport as scale increases. It will be interesting to see how it plays out.
If seaborn ethane exports work out it would be very good for Range Resources and other eastern ethane producers. There is only so much ethane that can be "rejected" and left in the gas system. This limit is sometimes called the "blend wall". Capacity constraints, either from lack of capacity to separate the constituent liquids out of the gas stream ("fractionation capacity") or lack of takeaway pipelines for either gas or NGLs has been a constant issue in many plays, but the Marcellus particularly, since it is so big and so far from the infrastructure hub on the Gulf Coast where all the chemical plants are.
I find ethane to be a fascinating part of the energy mix that no one ever pays attention to because it is not something that we ever deal with in our everyday lives. Ethane, is C2H6, the lightest of the "natural gas liquids". It is produced mainly in "wet gas" wells. Wet gas production has gone up tremendously because of the huge quantities of resource produced in some areas like the Southwestern Pennsylvania Marcellus. Although crude oil has higher values at around $100/bbl, mixed NGLs can be worth $50/bbl or so (it depends heavily on pricing and the ratio of the various constituents) and wet gas wells may produce far more total resource on an energy-equivalent basis, than the best unconventional crude oil wells. The main problem that arises is what to do with the NGLs. Black-oil wells tend to produce oil and gas. Oil collects in tanks until it is trucked away. Gas goes into a "gathering network" of pipelines which take it to a processing plant. But NGLs have to go through fractionation plants, which separate out the components, which then have to be shipped to various places. Ethane can only be shipped by pipeline, while propane and butane are also more difficult to ship than crude. A problem that has arisen for the E&P companies: what do they do with all the NGLs?
Well they found something to do with the propane (C3H8). Imports have all but ceased, and exports have gone way up. They are also using more of it as a feedstock for chemical production.
http://www.eia.gov/todayinenergy/detail.cfm?id=15951
I find statistics on propane production to be incredibly confusing. Some sources are reporting propane from wells only. Some are also including propane produced as a biproduct of oil refining. EIA reports "propane + propylene" production. A lot (if not most) propylene is not produced from propane, so I don't really have any idea why a stat would be reported this way.
Ethane oversupply is a much tougher problem, because it is difficult to export, and there are more limited opportunities for substitution to replace oil. It is extremely volatile and has a very low density. Ethane is used for exactly two purposes. It is left in the gas supply for its heat value or it is "cracked" to make ethylene, a building block for many chemicals and plastics. The majority of common plastics, like ABS, PVC, PE, PETE use ethylene as a feedstock. Ethylene can also be made from naptha, a biproduct of oil refining, or from Propane. But when NGL production went way up, all the Ethylene producers in the USA that could switched to ethane cracking. Since then there has also been a substantial increase in propane cracking for a number of reasons, but its a bit complicated to get into that.
At some points in the past few years the oversupply of ethane was dramatic; prices hit $.01 per gallon at the Conway hub at one point. Meanwhile basic chemical producers have made money hand over fist. Observe the stock prices of Lyondell Bassell and Westlake Chemical over the past few years. They produce a global commodities, with a regional input that is in massive oversupply.
But now there are starting to be exports going to Nova Chemical in Canada, owned by Abu Dhabi. Starting next year there is also a project to export Marcellus ethane by sea out of the east coast called the Mariner East project. There has been much speculation about where this will go. Most of the european etheylene capacity really can't take Ethane because it is inland and/or because their crackers aren't really set up for light feedstocks. It may just end up being blended with gas, since US ethane competes very well with LNG imports into Europe, and may be much cheaper to transport as scale increases. It will be interesting to see how it plays out.
If seaborn ethane exports work out it would be very good for Range Resources and other eastern ethane producers. There is only so much ethane that can be "rejected" and left in the gas system. This limit is sometimes called the "blend wall". Capacity constraints, either from lack of capacity to separate the constituent liquids out of the gas stream ("fractionation capacity") or lack of takeaway pipelines for either gas or NGLs has been a constant issue in many plays, but the Marcellus particularly, since it is so big and so far from the infrastructure hub on the Gulf Coast where all the chemical plants are.
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