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Enterprise to build ethane export facility on Texas Gulf Coast

4:07 PM MDT | April 28, 2014 | —Clay Boswell

Creel: Receiving strong international interest.

Enterprise Products Partners (Houston) is building a fully refrigerated ethane export facility on the Texas Gulf Coast, the company announced on 22 April. Enterprise expects the facility, which will be able to load up to 240,000 bbl/day of ethane, will begin operations in the third quarter of 2016.

“We continue to receive strong interest from the international community for this project and are having ongoing discussions with other potential customers that could result in our contracting the remaining capacity of the facility,” says Michael Creel, CEO of Enterprise’s general partner.

Enterprise will integrate the facility with its Mont Belvieu, TX, complex, which includes over 650,000 bbl/day of natural gas liquid (NGL) fractionation capacity and 100,000 bbl of NGL storage capacity. The Mont Belvieu complex is connected to NGL supplies in the Marcellus and Utica shale regions through Enterprise’s recently completed ATEX ethane pipeline.

Drawn by cheap, shale-based ethane, producers have proposed at least 10 ethane cracker projects for North America. IHS expects at least seven, totaling 8.7 million m.t./year of ethylene capacity, to begin operating during 2016–20. Creel does not expect these new plants will affect the availability of ethane for export.

“We estimate US ethane production capacity currently exceeds US demand by 300,000 bbl/day and could exceed demand by up to 700,000 bbl/day by 2020, after considering the estimated incremental demand from new ethylene facilities that have been announced,” he says. “By providing new markets access to ethane, we are assisting US producers to increase their production, which assures the US will have access to abundant supplies of domestically produced natural gas and crude oil.”

Andrew Liveris, chairman and CEO of Dow Chemical, told Bloomberg News on 23 April that he does not expect the Enterprise project to affect its own business. “There is nothing that we see as concerning about that announcement,” he says. “The chances this will get built on schedule and impact supply is very low for us.”

Enterprise is a major raw material supplier to Dow.

During Dow’s earnings call earlier the same day, Liveris noted that the energy and infrastructure costs involved in exporting ethane are much higher than for propane. “To put these contracts in place for ethane consumers, they are going to have to commit capital. And, it all comes down to a view to the oil and company arbitrage,” he says. “Our assumptions are … that that arbitrage will close with time—that’s oil to gas, and therefore naphtha to ethane. And, as it closes, the economics change, and the prices that people can get to export ethane will drop. So, it’s actually, in our view, a strong message of ethane length, which we believe is beyond 2020 at this point in time.”

Only one other ethane export terminal is currently being developed in the US: Sunoco Logistics’ Marcus Hook, PA, terminal. Ineos has contracted with Range Resources and Consol Energy to export ethane from Marcus Hook to Europe.

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