All eyes on ethane

Enterprise Product Partners (EPP) made waves Thursday after lining up another long-term contract for an ethane terminal under construction on the Houston Ship Channel.
EPP says the export terminal will linked to Mont Belvieu by an 18-mile pipeline.

EPP says the export terminal will linked to Mont Belvieu by an 18-mile pipeline.

In a statement the New York-quoted company said the deal encompasses storage, transportation, refrigeration and loading services and marks a major milestone since it now boasts commitments for approximately 85% of the site’s total capacity.

“As a result of this agreement, we have commenced evaluation of expansion options at the new ethane terminal,” added AJ “Jim” Teague, the company’s chief operating officer.

“The seamless integration of the new terminal with our existing natural gas liquids complex at Mont Belvieu and beyond will help ensure market access for the growing surplus of domestic ethane and facilitate continued development of the nation’s abundant energy reserves.”

Assuming offtake tops 200,000 barrels per day (bpd), which amounts to roughly 85% of the terminal’s theoretical maximum capacity, Benjamin Nolan claims transportation to the Far East could be satisfied by between 18 and 20 very-large ethane carriers (VLECs).

“EPP also indicated that they are working on further contracts which would require at least a 50% increase to the planned capacity, or effectively bringing total operable offtake to 300,000 bpd although those plans have yet to be finalized,” the equity analyst told clients Thursday.

Collectively, Nolan believes a terminal with fully-expanded capacity could keep between 26 and 30 VLECs employed or a combination of 80,000-cbm gas-carriers and midsized vessels but noted EPP expects the total size of the market to top 450,000 to 700,000 bpd by 2020.

The forecaster told investors that the construction of EPP’s new ethane terminal bodes well for the likes of Navigator Gas, BW LPG and a joint venture between Teekay LNG Partners and Exmar in addition to other operators of 80,000-cbm gas ships and midsized tonnage.

EPP says its ethane terminal, which will be based at its Morgan’s Point facility on the Houston Ship Channel, is due for completion in the third-quarter of 2016 and will be capable of loading fully refrigerated ethane at a rate of approximately 10,000 standard barrels per hour.

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