EIA expects US ethane production to grow by 9% in 2H22
Published by Bella Weetch,
Editorial Assistant
Hydrocarbon Engineering,
Ethane production has been increasing in the US for the past five years, and it reached a monthly record of 2.5 million bpd in March 2022. More than 2.4 million bpd of ethane has been produced in the US every month since then. In the EIA's Short-Term Energy Outlook (STEO), ethane production in 2H22 is forecast to grow by 9% compared with 1H22, averaging over 2.6 million bpd. It is expected that production in 2022 will exceed production in 2021 by 16%, or 340 000 bpd.
The STEO forecasts annual ethane production to increase again in the US during 2023 by 7% to nearly 2.7 million bpd to support continued growth in US consumption and exports. Ethane is consumed almost exclusively as a feedstock in petrochemical plants known as steam crackers to produce ethylene, a precursor chemical for manufacturing many plastics and resins. Three new petrochemical crackers have come online to support growth in domestic ethylene production: two in Texas and one in Pennsylvania.
Since 2017, US ethane prices have generally traded at a premium relative to natural gas prices, spurring natural gas plant operators to recover more ethane from raw natural gas streams. When ethane prices are relatively high, natural gas operators recover more ethane to sell in the liquid fuels market (known in the industry as ethane recovery). When ethane prices are relatively low, operators leave more ethane in the processed natural gas stream (known in the industry as ethane rejection), and this ethane is sold at the natural gas heating value. In 2021, ethane prices averaged US$0.80/million Btu — 26% higher than dry natural gas prices – driving higher rates of ethane recovery. During 1H22, the ethane premium remained steady at US$1.36/million Btu, which was 25% above the Henry Hub natural gas wholesale price, despite higher average natural gas prices.
Demand for ethane overseas as a petrochemical feedstock has been growing since 2015. It is forecast that US exports of ethane will continue to grow from about 350 000 bpd in 2Q22 to about 440 000 bpd in 4Q22. Ethane exports are expected to rise to 460 000 bpd in 2023.
In the EIA's long-term Annual Energy Outlook 2022 (AEO2022), the rapid growth in US ethane production is expected to plateau around 2.7 million bpd in the second half of this decade. Predictions hold that there will be a renewed period of generally steady growth after 2030, when we expect greater demand for natural gas to drive higher natural gas production. More natural gas production results in more natural gas plant liquids (NGPL), including ethane. The majority of US ethane production is expected to be increasingly concentrated in two regions. In the Southwest, ethane production is forecast to grow from 800 000 bpd in 2021 to 1.1 million bpd in 2050. In the eastern US, ethane production is expected to triple from 300 000 bpd in 2021, to close to 1.0 million bpd by 2050. By 2050, the Southwest will account for 36% of all US ethane production, and the eastern US will account for 32%. It is projected that total US ethane production will peak at 3.0 million bpd in 2050 – the end of the AEO2022 projection period.
Read the article online at: https://www.hydrocarbonengineering.com/petrochemicals/31082022/eia-expects-us-ethane-production-to-grow-by-9-in-2h22/
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