Wells Fargo analysts trimmed their peak ethane oversupply estimates by nearly 100,000 b/d based on a couple of factors, but they “continue to anticipate a period of ethane pricing weakness beginning in 2013 and persisting for several years until new world-scale ethylene crackers are placed into service,” they said in a note Monday.

The revision to the Wells Fargo ethane outlook is based upon the assumed ramp-up in the utilization of the proposed Enterprise Products Partners LP ethane pipeline from the Marcellus Shale to the Gulf Coast (see Daily GPI, Oct. 12) and a reduction in the assumed utilization of natural gas liquids (NGL) fractionators outside Mont Belvieu, TX, the firm said.

In the near term (next year), however, ethane prices will enjoy support “given the faster-than-forecasted pace of heavy- to light-end steam cracker conversions.”

And in the longer term (2017), the analysts said they believe the U.S. petrochemical industry could become short on ethane, assuming the construction of two to three new world-scale ethylene crackers, as have been proposed by Chevron Phillips (see Daily GPI, Dec. 15), Dow (see Daily GPI, April 25), Sasol (see Daily GPI, Dec. 2) and Braskem, whose CEO said earlier this year that the Brazil-based company was considering a greenfield investment in an ethylene cracker and polyethylene plant in the United States, according to press reports.

“Accordingly, we envision additional long-term NGL infrastructure opportunities (e.g., processing and NGL transportation/fractionation) for integrated midstream players,” they wrote.

The Wells Fargo analysis assumes a 90% operating rate for petrochemical plants in the Gulf Coast. “A 5% increase or decrease to our operating rate assumption could result in a 60,000 b/d swing to our peak ethane oversupply forecast in 2014,” they wrote.

Wells Fargo previously said the ethane market could become oversupplied by 85,000-105,000 b/d on a capacity basis beginning in 2012 as expansion projects could mean an end to the fractionation bottleneck for ethane supply.

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