Enterprise Products Partners has begun construction on a new 1 million mt/year ethylene export terminal at its Morgan's Point, Texas, facility near the mouth of the Houston Ship Channel, the company said Tuesday.
Enterprise's decision to place the new terminal slated to start up in the fourth quarter of 2019 at Morgan's Point, home to the company's ethane export terminal that started up in September 2016, was not a surprise. CEO Jim Teague suggested in October 2016 that placing an ethylene export terminal next to the ethane facility "kind of ties together" with customers keen on increasing access to global markets, particularly in Asia.
The company also had begun work to convert a 5.3 million-barrel ethane cavern to hold ethylene by the second quarter of 2019 at its operations in Mont Belvieu, the US natural gas liquids hub east of Morgan's Point. Enterprise also is building a new 24-mile, bidirectional pipeline connecting Mont Belvieu to Morgan's Point and then Bayport, about 13 miles closer to the mouth of the ship channel from the company's ethane terminal. The leg connecting Mont Belvieu and Morgan's Point will start up in 2019 to support the new terminal, while the leg from there to Bayport will be operational in 2020, the company said.
Enterprise and its partner in the project, London-based Navigator Gas, said Tuesday that the new ethylene export terminal will facilitate growth of domestic ethylene production. US output is expected to rise nearly 28% to surpass 40 million mt/year by 2021 with steam cracker projects under construction or undergoing commissioning, with more planned thereafter.
US ethylene prices have been low on a glut of output from new capacity while run rates of derivative plants have lagged behind, though prices have rebounded from all-time lows after Chevron Phillips Chemical shut its smallest cracker at Sweeny, Texas, earlier this month to optimize production. On May 10 US spot ethylene was assessed at 12 cents/lb FD USG, the lowest level since S&P Global Platts began assessing the market in July 2004. On Friday spot ethylene was assessed at 15-15.50 cents/lb FD USG, half a cent higher on the day and 1.75 cents higher on the week as buyers nominated lower contract volumes in favor of buying cheaper spot material, market sources said.
Even though most new US cracker capacity has new associated derivative capacity as well, Enterprise executives have said they often will not match up to the point where derivative plants soak up all the ethylene. More export capacity allows crackers to run full-tilt and ship out excess when derivative plants fall behind because of lower run rates, outages and maintenance, the company has said.
Enterprise is one of three companies planning a new US ethylene export terminal, and the only one that has begun construction.
Norwegian chemical shipper Odfjell has been planning a 750,000 mt/year ethylene export facility at its terminal closer to the mouth of the ship channel at Bayport, where where multiple producers operate ethylene pipelines including Shell, Chevron, INEOS, LyondellBasell and Flint Hills Resources.
Enterprise announced earlier this year that it had signed contracts with customers, including Flint Hills, which operates a 634,000 mt/year merchant cracker in Port Arthur, Texas. Odfjell has not publicly announced any linkups with producers.
In March, NOVA Chemicals announced that it had teamed up with Energy Transfer Partners to build an 800,000 mt/year terminal somewhere on the US Gulf Coast, without mentioning a location. NOVA operates a US ethylene trading hub at Mont Belvieu and bought Williams Partners' 88.46% interest in an 884,500 mt/year merchant cracker in Geismar, Louisiana, last year. Energy Transfer operates a crude oil and LPG terminal in Nederland, Texas, about 78 miles east of the ship channel.
Currently, the only ethylene export terminal in the US is a 300,000 mt/year facility deep in the ship channel operated by Targa Resources and contracted to Mitsubishi Chemical.
