Report Contents

Contents

1 Introduction and Assumptions
  • 1.1 Current Infrastructure, Market, and Volumetric Highlights
  • 1.2 Industry and Market Dynamics
  • 1.2.1 Feedstocks
  • 1.2.2 Export Logistics
2 U.S. Market Fundamentals
  • 2.1 Ethane
  • 2.1.1 Supply
  • 2.1.2 Demand
  • 2.1.3 Price Forecast – Ethane, Ethylene, Polyethylene
  • 2.1.4 Export Balance and Forecast
  • 2.1.5 Export Logistics and Infrastructure
  • 2.2 Ethylene
  • 2.2.1 Supply
  • 2.2.2 Demand
  • 2.2.3 Pricing
  • 2.2.4 U.S. Ethylene Export Volumes and Infrastructure
  • 2.3 Polyethylene
  • 2.3.1 Supply
  • 2.3.2 Demand
  • 2.3.3 Pricing
  • 2.3.4 Export Balance and Forecast
  • 2.3.5 Export Logistics and Infrastructure
3 International Market Fundamentals
  • 3.1 Ethane
  • 3.1.1 Supply
  • 3.1.2 Demand
  • 3.1.3 Pricing
  • 3.1.4 International Trade
  • 3.1.5 Import Logistics and Infrastructure
  • 3.2 Ethylene
  • 3.2.1 Supply
  • 3.2.2 Import Demand
  • 3.2.3 Pricing
  • 3.2.4 Import Balance and Forecast
  • 3.2.5 Import Logistics and Infrastructure
  • 3.3 Polyethylene
  • 3.3.1 International Trade
  • 3.3.2 Pricing
  • 3.3.3 Import Logistics and Infrastructure
  • 3.3.4 International Trade Forecast
4 Competitiveness of U.S. Exports
  • 4.1 Total Export Costs
  • 4.1.1 U.S. Terminal and Throughput Cost Estimation for Ethane and Ethylene
  • 4.1.2 Throughput Costs for Polyethylene at U.S. Ports
  • 4.1.3 Throughput Cost Estimation for U.S. and International Ports
  • 4.2 Ethylene Terminal Cost Comparisons
  • 4.3 Feedstock Trade-Offs
  • 4.4 U.S. Export Netbacks
5 Conclusions
6 References
Appendix 1 Estimated National Average Gas Composition of US Production in the Lower 48 1986-2013 .
Appendix 2 Ethane Forecast Based on Natural Gas Liquid & Crude Oil Production (August 2015-November 2016)
Appendix 3 Annualized Production of Ethane, Crude Oil, and Natural Gas Liquids (1000s of Barrels) 1981-2014. Source EIA
Appendix 4 Crude Oil and Natural Gas Liquids Conversion from Quadrillion BTU to 1000 barrels/year

List of Tables

Table 1 Export contracts announced to date
Table 2 Ethane production and estimates produced by the EIA and regression mode
Table 3 Forecast of ethane production for 2015-2025 (1000s barrels/year)
Table 4 International Ethane Cracker Investments in the U.S.
Table 5 New U.S. ethane crackers
Table 6 Announced U.S. ethane cracker expansions
Table 7 Regression parameters from daily data
Table 8 Reference Case Monthly Forecast
Table 9 Reference Case Yearly Forecast
Table 10 Low Oil Price Case Monthly Forecast
Table 11 Low Oil Price Yearly Forecast
Table 12 High Oil Price Case Monthly Forecast
Table 13 High Oil Price Case Yearly Forecast
Table 14 Ethane Export Terminals
Table 15 Ethane Sale Contracts
Table 16 U.S. Polyethylene Projects
Table 17 U.S. Ethylene Export in 2015 through Targa Terminal, Houston, TX
Table 18 New Polyethylene Plants
Table 19 North Sea Ethane Balance
Table 20 International Ethane Terminals
Table 21 Dedicated Ethane Carrier Fleet
Table 22 Two-step methodology and assumptions
Table 23 Ship investment analysis assumptions
Table 24 Required time charter equivalent (day rate)
Table 25 Voyage calculation analysis - Routes U.S. Gulf to Asia
Table 26 Voyage calculation analysis – Routes U.S. Gulf to Americas
Table 27 Voyage calculation analysis - U.S. Gulf and U.S. East Coast to NW Europe
Table 28 Ethane trade route, ship capacity, and freight rate estimates
Table 29 Largest importing countries in 1000 tons
Table 30 Examples of Short-Haul Long-Term Trades
Table 31 Examples of Long-Haul Long-Term Trades
Table 32 Ethylene long haul trade (1000 tons)
Table 33 Linear model parameter figures of merit for significance
Table 34 Regression coefficient and MAE during backward stepwise regression
Table 35 Ethylene prices in Europe forecast from August 2015 to December 2016
Table 36 10-year ethylene price in Europe forecast
Table 37 Largest Importing Countries 2004, 2009, 2014
Table 38 Primary U.S. Polyethylene Export Destinations

List of Figures

Figure 1 Ethane Cracker Process Flow Diagram
Figure 2 Process Flow Sheet for Manufacture of Ethylene by Naphtha Cracking
Figure 3 Fluidized catalytic cracker process
Figure 4 Product Yields Produced by Various Feedstock Sources
Figure 5 Steam Cracker Cost as a Function of Feedstock Weight
Figure 6 Process Flow of Oil and Gas from Well to Plastic End Products
Figure 7 The Amounts of Products Produced from a 42-Gallon Barrel of Crude Oil
Figure 8 Steam Cracker Feedstock Sources Meeting the 2012 Ethylene Demand
Figure 9 Yearly Production of Crude Oil by the U.S. from 1950 to 2015
Figure 10 Changes in Composition of U.S. Gas Production over Time
Figure 11 Estimated National Average C2+ Gas Composition (1984-2012)
Figure 12 Actual (E) vs. Predicted Ethane (Ê) Production as a Function of Crude Oil and Natural Liquid Gas
Figure 13 Ethane Forecast (August 2015-December 2016)
Figure 14 Forecast for Ethane Production (1000s barrels/year) 2015-2025
Figure 15 Forecasts for High and Low Oil Price Scenarios
Figure 16 Ethane to Henry Hub Gas Ratio
Figure 17 U.S. Demand for Ethane Crackers
Figure 18 Ethane-Production Capacity vs. Cracker Capacity
Figure 19 EIA WTI Oil Forecasts by Case
Figure 20 EIA Brent Oil Forecasts by Case
Figure 21 EIA Natural Gas HH Forecasts by Case
Figure 22 Ethane Price 18-Month Forecas
Figure 23 Ethane Price Ten-Year Forecast
Figure 24 Ethylene Price Eighteen-Month Forecast
Figure 25 Ethylene Price Ten-Year Forecast
Figure 26 High Density Polyethylene Price Eighteen-Month Forecast
Figure 27 High Density Polyethylene Price Ten-Year Forecast
Figure 28 High Density Polyethylene Price Eighteen-Month Forecast
Figure 29 Low Density Polyethylene Price Ten-Year Forecast
Figure 30 Chemical and Plastics Value Streams
Figure 31 Projected Ethylene Production by Feedstock in U.S.
Figure 32 U.S. Ethylene Export 2001-2015
Figure 33 Quarterly U.S. Ethylene Export 2010-2015 by Destination
Figure 34 Derivative Share % of Ethylene Capacity
Figure 35 Growth of Gross Domestic Product, 2016-2025
Figure 36 Polymers of Ethylene, U.S. Export
Figure 37 Polymers of Ethylene, U.S. Export to the Americas
Figure 38 Polymers of Ethylene, U.S. Export to Europe and Asia
Figure 39 Global Cracker Capacity by Region
Figure 40 Ethane Feedstock Use
Figure 41 Ethane Feedstock
Figure 42 Naphtha Feedstock
Figure 43 Estimated Contracted Volumes by Trade Route
Figure 44 Price Premium for Ethane Carriers versus Conventional LNG Carriers
Figure 45 Linear Relationship between ROE and Time Required
Figure 46 Global cracker capacity by region
Figure 47 Long Haul Import by Region
Figure 48 Global Ethylene Trade
Figure 49 Regional Trade
Figure 50 Long Haul Import by Region
Figure 51 Ethylene price in Europe (orange series) and estimated price using Brent and naphtha prices in Europe
Figure 52 Ethylene prices in Europe (orange) and nonlinear estimation with interaction term (red)
Figure 53 Ethylene prices in Europe forecast for the period August 2015 to December 2016 on three scenarios: reference oil price (orange), low oil price (red), and high oil price (blue
Figure 54 Ethylene prices in Europe yearly forecast for 2015 to 2025 on three scenarios: reference oil price (orange), low oil price (red), and high oil price (blue)
Figure 55 Total Ethylene Trade vs. Brent Crude Price
Figure 56 Ethylene Carrier Fleet 8000-24000 cbm
Figure 57 Global PE Trade
Figure 58 Polymers of Ethylene, Net Exporting Regions
Figure 59 U.S. Polyethylene Exports (1,000 kg) 105
Figure 60 Polymers of Ethylene, Net Importing Regions
Figure 61 Liquefaction and Throughput Cost Benchmarks for U.S. Ports
Figure 62 Project Investment Magnitude with Corresponding Throughput/USD/Ton Cost Tradeoff and Reference Projects
Figure 63 Steam Cracker Costs
Figure 64 Ethylene Yields