MOSCOW (MRC) -- Enterprise Products Partners this week aims to ship out the first cargo from its new US ethylene export terminal, freeing up producers to run crackers at high rates and export surplus output when domestic downstream derivative demand is limited, reported S&P Global.
The new terminal, a joint venture with global chemical shipper Navigator Gas, will initially have 60% to 70% of its eventual 1 million mt/year capacity, depending on marketing opportunities, company executives said.
For the first phase, Enterprise has converted an ethane cavern at its natural gas liquids and petrochemical hub in Mont Belvieu east of Houston to hold up to 275,000 mt of ethylene. The company also has started up a new bidirectional pipeline connecting that cavern to the new terminal at Morgan's Point along the Houston Ship Channel, where Enterprise already operates an ethane export facility, to move ethylene from the cavern to ships.
Cavern-to-ship is already how Enterprise handles ethane, liquefied petroleum gas and propylene exports, according to company officials.
When finished in the fourth quarter next year, the terminal will have an onsite refrigerated tank - currently under construction - that can hold up to 30,000 mt of ethylene. The ethylene system also will have a six-mile pipeline extension to Bayport closer to the mouth of the waterway, where several producers operate ethylene pipelines.
The new ethylene system is expected to have eight participants by the first quarter next year and potentially 20 - including seven US producers - by Q4 2020, according to the company.
Enterprise also expects to see financial contracts tied to the new hub, with connectivity throughout the US Gulf. The company is preparing for contracts to be listed on a futures exchange after transactions begin next year.
Company officials said the new terminal is part of Enterprise's establishment as a major midstream player in the petrochemicals space rather than a producer, reminiscent of its midstream position in crude oil, natural gas liquids and refined products.
Even though Enterprise produces propylene at a 750,000 mt/year propane dehydrogenation (PDH) plant at its Mont Belvieu NGLs hub and has a second under construction, the company says those units are tolling facilities that make output contracted to buyers. LyondellBasell shelved its tentative plans to build its own PDH and signed on to be the anchor customer for Enterprise's second 750,000 mt/year PDH to start up in 2023.
S&P Global Platts Analytics senior lead for global petrochemicals Rob Stier said that in the short term, more US ethylene exports will involve a supply push from the US Gulf to help clear the long market, rather than a demand pull from Asia or Europe.
"Now ethylene exports can be thought of another way to profitably export cheap ethane at the expense of international ethylene produced from naphtha feedstocks," he said.
Stier added that the most logical US ethylene buyers will be styrene, polyvinyl chloride and monoethylene glycol producers, as ethylene makes up only 30%-60% of their feedstock requirements. They can pay higher prices than polyethylene producers because other cheap feedstocks let them maintain profitability, whereas polyethylene producers typically need cheaper ethylene relative to the other three products.
Enterprise had discussed plans for an ethylene export terminal since 2016, when the company began exporting ethane from the Morgan's Point site. Other companies have considered ethylene exports as well, but scrapped their plans.
Norwegian chemical shipper Odfjell acknowledged in August the company would not build a USD300 million, 745,000 mt/year facility at its terminal near the mouth of the ship channel and recorded a USD1.6 million writedown related to the project on its third-quarter 2019 earnings. CEO Kristian Verner Morch had already signaled in February 2018 that Odfjell likely would not move ahead on its plans if a competitor did so first.
Energy Transfer Partners and NOVA Chemicals also briefly teamed up to establish an ethylene export terminal, but NOVA said in July 2018 the companies shelved it when unable to agree on terms.
The US currently has one ethylene export terminal, operated by Targa Resources at its ship channel facility, which is contracted to Mitsubishi Chemical. The facility has a loading capacity of 1,000 mt/d, so it takes about 10 days to load a Handysize vessel.
Enterprise's terminal will be able to load 1,000 mt/hour at multiple docks. A single ship can carry both ethane and ethylene in separate compartments.
Some US producers had been skeptical of the need for more US ethylene export capacity because derivatives would soak up that output. More than 7.74 million mt/year of new ethylene capacity has started up in the US since 2017, another 2 million mt/year is slated to come online by year-end 2019 and 8.3 million mt/year more is under construction or planned for startup through the 2020s.
As MRC informed before, Enterprise Products Partners' Mont Belvieu propane dehydrogenation unit in Texas restarted from planned maintenance in the first week of December, 2019. The PDH unit went offline for maintenance on November 13. That day, the company said in a filing with the Texas Commission on Environmental Quality that the RAC "B" turbine shut down, which resulted in flaring. The flaring was estimated to last 72 hours. The unit has a capacity of 750,000 mt/year.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,724,670 tonnes in the first ten months of 2019, up by 7% year on year. Shipments of all PE grades increased. The estimated PP consumption in the Russian market in January-October 2019 totalled 1,066,520 tonnes, up by 7% year on year. Supply of block copolymers of propylene (PP block copolymer) and homopolymer of propylene (homopolymer PP) increased, demand for statistical copolymers (PP random copolymer) decreased.
Enterprise Products Partners L.P. is an American midstream natural gas and crude oil pipeline company with headquarters in Houston, Texas. It acquired GulfTerra in September 2004. The company ranked No. 105 in the 2018 Fortune 500 list of the largest United States corporations by total revenue
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