Enterprise plans to expand ethylene, ethane export capacity

Enterprise Products Partners will expand its 1 million mt/year ethylene export terminal 50% by the second half of 2023 and double it to more than 2 million mt/year by 2025, the company said May 2.

The second expansion will coincide with an expansion of ethane export capability as well in 2025, according to Enterprise's presentation that accompanied the company's first-quarter 2022 earnings call.

According to Chris D'Anna, the company's senior vice president of petrochemicals, the terminal, a joint venture with Navigator Gas, has been operating at 125% of its nameplate capacity, or 1.25 million mt/year. A 50% expansion of that level of output would push capacity to 1.875 million mt/year, and doubling the current beyond-nameplate output by 2025 would push capacity to 2.5 million mt/year.

Co-CEO Jim Teague said during the May 2 call that Enterprise has seen some economic run cuts at crackers amid logistics logjams that have hindered downstream resin exports.

"You're definitely seeing the supply chain somewhat concentrated," Teague said. 'We're realizing some economic run cuts in ethylene plants as they're stacking up polyethylene."

Market sources have seen similar backups for other resins, including construction staple polyvinyl chloride.

Market sources have said resin packaging warehouses were full or nearly full, leaving rail cars with new cargoes waiting to unload for packaging. Sources had expected those holdups to prompt resin and ethylene producers to reduce rates until the clogs can clear.

"But that ultimately gets resolved," Teague said of logistics holdups. "And this is still the most price-advantaged market in the world."

Teague referred to the US ethane feedstock advantage over crackers in naphtha-dependent regions, namely Asia and Europe. Naphtha prices have risen sharply alongside crude prices after Russia's Feb. 24 invasion of Ukraine, raising ethylene production costs in Asia and Europe, and widening the cost advantages of using ethane feedstock for US crackers.

During the company's April 12 analyst meeting, D'Anna said operating the ethylene export terminal at 125% of its nameplate capacity was not enough.

"The terminal is full as the rest of the world is struggling with high energy and feedstock prices. They want more across the dock. Both our US ethylene producers and our international customers want more."

Enterprise secures sufficient long-term support for ethane export capacity expansion

Teague also said during the analyst meeting that Enterprise has secured a long-term agreement with INEOS that supports a second ethane terminal along the US Gulf Coast "somewhere along our ethane header system" between Corpus Christi, Texas, and New Orleans.

"When INEOS approaches us with this opportunity, they were adamant that a second terminal was needed to be able to step up their commitments," Teague said. "They're developing markets around the world and supporting our value chain via their waterborne logistics."

He said the company was still working on the final site location.

Justin Kleiderer, vice president of natural gas liquids marketing and supply, said during the May 2 earnings call that Enterprise has seen spot ethane volume availability rise in the last 12-18 months. The company's current ethane terminal can load 10,000 barrels/hour at the same site along the Houston Ship Channel, which is home to the ethylene export facility.