Special Edition: Ethane Focus

As of 2016, we see a dramatic growth in the ethane trade, competing with LPG as a feedstock, we’ve decided to dedicate this week’s interesting moves to seaborne ethane.


Panorama of Ethane Trade

Before Enterprise’s Morgans Point terminal was commissioned on 1-Sept-16, only two terminals were able to export ethane:
  • Sunoco’s Marcus Hook terminal that started exporting Marcellus sourced ethane to Europe earlier this year, on 9-March.
  • Older Statoil’s Kaarstoe terminal that started operations in 2000.
On the demand side, crackers located in NWE are the only facilities currently receiving these shipments:
Sabic’s Wilton cracker in Scotland, is preparing to receive its first US ethane shipment, which will come from the US aboard Clipper Hermes, ETA 14-Nov. However, the first ethane flowing in will be from Norway, as Sabic fixed Thetagas earlier in October lifting an 8,970 cbm  Kaarstoe-sourced  cargo to gas up the lines. The latter is currently drifting loaded ahead of Tees.

Trade Flows
All seaborne ethane trade is currently handled through long-term contracts. But we’re seeing some spot fixtures ethane related.
Exports peaked in August out of Marcus Hook in preparation for September’s planned maintenance in Kaarstoe. US-sourced ethane contributed to more than double the world’s exports in just 6 months.
As Sabic‘s cracker close to Teeside is getting ready to receive its first shipment, NWE crackers have already more than doubled their imports of ethane since the beginning of the year.
A bright future
New trade routes are to be opened:
  • The world’s largest VLEC, Ethane Crystal (87,000 cbm), ordered by Indian petrochemical manufacturer Reliance, started to transmit her AIS signal. Morgans Point might expect her by mid-December, as she’s scheduled to go through Panama Canal on 7-Dec according to the canal schedule. India will receive its first ethane seaborne shipment ever, in the Jamnagar petrochemical complex by early 2017. Reliance and Enterprise signed a 1.5 million ton/year long-term contract to supply the Indian cracker with US shale ethane.
  • From Morgans Point, Enterprise closed a 10-year deal with Braskem to feed its Rio de Janeiro cracker.
  • Versalis‘ cracker in Dunkirk is capable of importing ethane, but with the recent plunge in oil prices, imports were set on hold.
Existing routes are expected to grow dramatically:
  • In order to satisfy the demand of its crackers, INEOS ordered 8 ships (27,500-32,000 cbm) out of which 4 are in service, Js Ineos Innovation is undergoing sea trials, and 3 more are more to come by 2017.
  • Newbuild Navigator Aurora is currently lifting LPG cargoes but has been fixed by Borealis for a 10-year TC to supply US ethane to Stenungsund.