The U.S. is loaded with ethane. Lots of ethane.
For the last few years, the shale boom has boosted the supply of ethane, the second largest component of natural gas, to a level far outpacing demand.
Most ethane is used by petrochemical plants to produce ethylene, a key feedstock for making plastics.
But because of the current glut, prices for ethane have been depressed, making it less economical to separate it from the natural gas stream. This situation, known as “ethane rejection,” has been on the rise. According to one estimate, about 250 million barrels per day (Mb/d) of ethane were rejected in 2014. That number is expected to triple this year to 700 Mb/d.
All of that ethane could be used to make plastics, however, if more world-class cracker plants were built.
“It’s very difficult to hide the secret,” Warren Wilczewski, a U.S. Energy Information Administration economist, recently told The Allegheny Front.
According to the U.S. Energy Information Administration, ethane production is expected to increase from 1.25 million barrels per day in 2016 to 1.7 million barrels a day by 2018.
Shell’s planned petrochemical complex in Pennsylvania will take advantage of the cheap abundant ethane and will have the capacity to produce 1.6 million tons of polyethylene per year.
Other plants planned for the Gulf Coast region will also tap into ethane to crank out plastics.
But Wilczewski says there’s room in the market for more.
“By our calculations, you could easily have another two or three world-scale crackers,” he said. “Right now all you need is additional infrastructure and you could be getting all that ethane without additional natural gas production, and at current levels of drilling and exploitation.”
