MOSCOW (MRC) -- The US shale boom’s latest reverberations are being felt at a shipyard on the Yangtze River in eastern China, said Hydrocarbonprocessing.
It’s there that Sinopacific Offshore & Engineering Co. unveiled last month a so-called dragon-class tanker to carry US hydrocarbons to Europe. The 180-meter (591 feet) long vessels will move ethane piped from American shale fields to a Pennsylvania terminal, across the Atlantic to Norway and Scotland, where INEOS Group will process the natural gas liquid into chemicals used to make plastics.
The tankers, the biggest of their kind so far, are the latest link in an energy supply chain bringing abundant hydrocarbons unlocked in recent years from the US to markets as far away as India. The ships wouldn’t have been designed or built if their cargo weren’t so cheap, prompting overseas chemical makers to benefit from low feedstock prices.
There’s more to come as export facilities in the US start up and even bigger ships are completed. Enterprise Products, which is planning a 240,000 bpd ethane terminal on the US Gulf Coast, forecasts the number of very large ethane carriers will increase to 48 by 2017, from just five last year.
Shipyards that may benefit from orders for new vessels include Sinopacific, Hyundai Mipo Dockyard Co. and STX Offshore & Shipbuilding Co., according to Park Moo Hyun, a freight market analyst at Hana Daetoo Securities Co. in Seoul.
India’s Reliance Industries last year ordered six very large ethane carriers to transport US supplies. Samsung Heavy Industries Co. is building the ships that cost about USD120 million each and are scheduled to be ready in the fourth quarter of 2016, according to Bloomberg Intelligence analyst Jason Miner.
Exports from the US are being driven by an oversupply of ethane and other light hydrocarbons called natural gas liquids, or NGLs, that have been unlocked from shale deposits by new drilling technologies. US natural gas liquids production rose 9.7% to 4.1 million bpd in May from a year ago, according to the Energy Information Administration. Exports increased 31% to 953,000 bpd in the same period.
A decline in the oil price may erode the competitiveness of ethane as a feedstock as alternatives such as naphtha and liquefied petroleum gas (LPG) become cheaper, according to Yuen.
Spot ethane at Mont Belvieu, Texas, dropped about 9% from a year ago and traded at 20.5 cents/gal on Aug. 12, according to prices from Liquidity Partners and DTN Energy compiled by Bloomberg. The feedstock fell to the lowest since 2001 in December.
As MRC informed earlier, the British government will give its communities minister the power to directly approve shale gas permits, taking away decision-making from local politicians who have in the past months blocked the progress of Britain's first shale gas wells.
MRC