3 million barrels per day! U.S. ethane production to peak in 2050

The U.S. Energy Information Administration (EIA) released a forecast on August 31, local time, that ethane production in the second half of this year will increase by 9% over the first half of the year, averaging more than 2.6 million barrels per day, and it is expected that production in 2022 will exceed that in 2021 by 16%. %, or 340,000 barrels per day.

U.S. ethane production has been growing for the past five years, hitting a monthly record of 2.5 million barrels per day in March, data show. Since then, the U.S. has produced more than 2.4 million barrels a day of ethane.

The EIA forecasts that annual U.S. ethane production will increase by 7% to nearly 2.7 million barrels per day in 2023 to support continued growth in U.S. consumption and exports. Ethane is used almost exclusively as a feedstock in petrochemical plants for the production of ethylene. Three new petrochemical crackers in the US have come online to support growth in domestic ethylene consumption: two in Texas and one in Pennsylvania.

U.S. ethane prices have generally been higher than natural gas prices since 2017, prompting natural gas plant operators to recover more ethane from raw natural gas streams. When ethane prices are relatively high, natural gas operators recover more ethane to sell on the liquid fuel market. When ethane prices are relatively low, operators leave more ethane in the treated natural gas stream to sell as natural gas heating value.

In 2021, ethane prices will average 80 cents per million British thermal units (MMBtu), 26% higher than pure natural gas prices. Drives higher ethane recovery.

In the first half of 2022, despite higher average gas prices, the ethane premium remained stable at $1.36/MMBtu, 25% higher than the wholesale gas price in Henry Harbor.

Demand for ethane as a petrochemical feedstock outside the U.S. has been growing since 2015. EIA expects U.S. ethane exports to grow from about 350,000 bpd in the second quarter of 2022 to about 440,000 bpd in the fourth quarter. Ethane exports are expected to increase to 460,000 b/d in 2023.

The EIA expects the rapid growth of U.S. ethane production to stabilize at around 2.7 million barrels per day in the second half of the 2020s, before entering a new period of generally stable growth after 2030.

The EIA believes that the bulk of U.S. ethane production will increasingly be concentrated in two regions. In the Southwest, ethane production is expected to grow from 0.8 million bpd in 2021 to 1.1 million bpd in 2050. In the eastern United States, ethane production is expected to triple from 300,000 bpd in 2021 to nearly 1 million bpd in 2050. U.S. ethane production is expected to peak at 3 million bpd in 2050.