U.S. ethane shipments to Europe are on track to begin later this year, with petrochemical giant INEOS Europe AG last month accepting delivery of the first ship in an eight-vessel fleet that would specialize in the intercontinental deliveries, according to the Energy Information Administration.
INEOS said in May it had expanded its contract with Evergas, a company specializing in petrochemical and liquid transportation, to supply the high-tech ships, which are to enter service this year.
U.S. ethane production has increased to more than 1 million b/d this year from 869,000 b/d in 2010. The glut has driven down prices, prompted exports to Canada, additional investment in the domestic petrochemical industry and attracted more attention from plastics producers overseas.
INEOS, with ethane crackers in Scotland and Norway, became the first European company to contract for U.S. feedstock in 2012, when it agreed to transport Range Resources Corp. production through Sunoco Logistics Partners LP’s Mariner East pipeline project (see Shale Daily, Sept. 28, 2012).
Propane deliveries began on Mariner East 1 in December, and Sunoco officials told NGI's Shale Daily earlier this month that ethane deliveries would start on the line by the third quarter. The pipeline would deliver up to 70,000 b/d to its Marcus Hook Industrial Complex on the Delaware River south of Philadelphia, which is being repurposed for natural gas liquids storage, processing and distribution to local, domestic and international markets. Sunoco plans to begin construction on the 275,000 b/d Mariner East 2 pipeline next year and it is considering a third pipeline (see Shale Daily, June 4).
As an anchor shipper, Range has 40,000 b/d of firm transportation for ethane and propane on Mariner East and has said ethane exports would begin later this year. INEOS has also contracted with Consol Energy Inc. for ethane (see Shale Daily, Feb. 14, 2014).
The INEOS ships are considered class-leading at 591 feet long and 87 feet wide. They are being designed with 175,000 bbl of capacity. They are expected to use liquified natural gas (LNG) for propulsion.
Designated as “Dragon” class by Evergas, the ships are being manufactured by Sinopacific Offshore & Engineering in China and Finnish manufacturer Wartsila is providing the LNG propulsion and cargo handling systems.
INEOS is also planning to upgrade its ethane terminal in Norway later this year to handle the ships.