The scene is set for the emergence of ethane as a notable liquefied gas carrier cargo on deep-sea routes. The product is a key component of the natural gas liquids (NGLs) in which the new shale oil and gas volumes coming onto the market are rich. It is also a major petrochemical industry feedstock offering many advantages over the alternatives.
As a reflection of this new dawn for a liquefied gas that has figured only marginally in the annals of gas shipping to date, a number of orders have been placed for large ethane carriers in recent months. The ships will link the US, where the shale oil and gas boom has made ethane available in growing quantities, with Europe, where a number of petrochemical facilities are in need of sustenance and rejuvenation. Ethane holds the potential to develop further as a deep-sea gas carrier cargo in the years ahead as further shale oil and gas plays are developed.
Ethane is at the “light” end of the NGL mix and the most prolific of its five components. The other constituents are propane, normal butane, isobutane and natural gasoline. In most NGL flows ethane accounts for almost 50% of the total volume. Fractionators are used to process NGLs into their pure, component parts.
Ethane has traditionally not traded in global markets and is used primarily in facilities adjacent to where it is processed. This is because it is relatively difficult to liquefy and transport in bulk. Ethane has a vapour pressure of 3.85 MPa at 21.1˚C and a boiling point of -88.5˚C. These properties mean that ethane must be either refrigerated to a very low temperature, compressed to a high pressure or have both temperature and pressure controlled to keep it in a liquid state and enable its transport by sea in bulk.
In gas carrier terms ethane can be carried fully refrigerated in liquefied ethylene gas carriers (LEGCs), because ethylene has a boiling point of -104˚C, or at -45˚C and a pressure of 5 bar. Some ethane, processed from North Sea gas, is moved around locally in the North and Baltic Seas region in small semi-pressurised/fully refrigerated (semi-ref) gas carriers provided with extra compressor power. Aside from these European shipments, which have been underway for a couple of decades, the movement of ethane has been limited to transmission through pipelines in gaseous form.
The new ethane carriers that have been ordered recently are being built with US ethane exports in mind. The newbuilds comprise a series of four 27,500 m3 vessels and one of 35,000 m3. The latter order comes with options. Like LEGCs, they will be built as semi-ref vessels with IMO Type C pressure vessel cargo tanks.
All the ethane carriers on order are larger than the biggest LEGC yet built while the 35,000 m3 vessel will be the largest Type C gas carrier ever constructed. The ships are building in China and will be fitted with tanks that are bilobed in shape to optimise their cargo-carrying capacity. The European engineering company that has designed the gas-handling plant for all the new ships reports that it is working on designs for even larger ethane carriers.
Interestingly, all the new deep-sea ethane carriers contracted to date have been specified with dual-fuel propulsion systems that include an LNG-burning capability. Shale gas production in the US is spurring the construction of numerous liquefaction plants while the LNG bunkering concept is spreading in Europe. It appears likely that there will be adequate sources of LNG bunker fuel for the ships serving on trans-Atlantic routes.
The series of four 27,500 m3 ethane carriers have been designed with the ability to also carry LNG. The extent to which the vessels will be called upon to carry this cargo early in their operating lives is open to question because the quartet will be fixed on a 15-year charter covering the transport of ethane from a new export terminal at Marcus Hook near Philadelphia to two European petrochemical complexes, one in Norway and one in the UK.
The ethane will be sourced from the Marcellus shale gas play in eastern Pennsylvania, the largest and fastest growing source of new natural gas and NGL output in the US. Many of the other major shale oil and gas reserves in the US are located in Texas, close the country’s petrochemical heartland on the Gulf Coast. The shale boom is prompting the construction of new ethylene crackers in the Gulf and it is anticipated that these facilities will be able to absorb most of the new volumes of local Texas ethane becoming available as feedstock.
In contrast, there is no sizeable petrochemical industry in the northeastern part of the US that will be able to absorb the volumes of ethane that Marcellus is starting to produce. Exports to Europe, to assist in revitalising parts of Europe’s ageing petrochemical industry, have been identified as one solution to the conundrum posed by the growing volumes of Marcellus ethane. It is estimated that, even including shipping costs, the Marcellus ethane arriving in Europe will be 50% cheaper than local product processed from North Sea gas.
Ethylene crackers are the centrepiece of petrochemical production centres and most European ethylene crackers utilise naphtha as feedstock. As an oil refinery by-product, naphtha is a relatively expensive product and chemical producers are aware of the attractions of alternatives such as ethane. Its competitive pricing reflects the growing volumes of gas and NGLs being produced in the US and the low price at which natural gas is currently available to US customers.
One problem for the European chemical industry is that relatively few ethylene crackers in the region are geared up for the use of ethane as feedstock. Only about 3% of the continent’s capacity is fully configured for the use of ethane although an estimated additional 6% could be modified relatively easily. A further 39% of Europe’s ethylene production could be revamped to enable the use of ethane feedstock but these change-of-grade projects would involve time and money.
What may decide Europe’s petrochemical producers in favour of converting their feedstock is the competition. The US petrochemical industry is about to be revitalised as a result of its ethane windfall and its output is poised to make major inroads into a global market in which it had been losing market share since the 1980s.
Whatever European chemical producers do decide to do as regards the configuration of their plants, the presence of liquefied ethane carriers in the world gas shipping fleet is set to grow. For a start the volumes of ethane being processed from North Sea gas have a limited life. It is estimated that production at the current plateau level cannot be maintained for more than nine or ten years, after which it will begin to tail off rapidly.
Back in the US, despite the ambitious US Gulf petrochemical plant expansion and newbuilding projects now getting underway, they are unlikely to be able to consume all the ethane that will become available. A new ethane export terminal for Texas, similar to the one at Marcus Hook, is currently under investigation and it could be the first of several in the region.
Beyond that, there are the shale gas and oil developments in many other parts of the world to look forward to. Like those in the US, the deposits will be rich in NGLs, and hence ethane. Whenever volumes require delivery to a distant petrochemical producer in search of a low-cost feedstock, a growing fleet of specialist ethane gas carriers will be ready to assist.
Author: Mike Corkhill who is a technical journalist and consultant specialising in oil, gas and chemical transport, including tanker shipping and chemical logistics. A qualified Naval Architect, he has written books on LNG, LPG, chemical and product tankers and is currently the Editor of LNG World Shipping.