Friday, February 23, 2018

Excess Ethane Predicted to Exceed Overseas Shipping Capacity


In an earlier blog post (entitled “Some Comments on the US Ethane Supply Status”; on January 24, 2018), I presented information that the US Energy Information Administration expects the US production of ethane to be approximately 1.7 million barrels per day (M b/d) by the end of 2018.   However, the ethane US domestic consumption is expected to be approximately 1.4 M b/d, leaving a 300,000 b/d ethane surplus.

In this current blog, I provide some information on shipping capacity available to transport (export) excess US ethane capacity to foreign markets.  I also do some analyses related to how much of the anticipated US 300,000 b/d ethane surplus these ships can handle in 2020.

In table 1 below are the names of current ships available for shipping ethane, their ethane capacities, and the ships’ owners (operators).  In table 2 are the ethane-transporting ships under construction (or planned) for near-term (2018-2019) commissioning, their capacities, and the ship owners (operators).   The information in the tables is based on Internet searching and may not represent completed listings.


table 1 ship name (operating)
ethane capacity (cubic meters)
ship owner (operator)
aurora
37,000
navigator holdings
eclipse
37,000
navigator holdings
nova
37,000
navigator holdings
prominence
37,000
navigator holdings
js ineos insight
27,500
ineos (evergas)
js ineos invention
27,500
ineos (evergas)
js ineos inspiration
27,500
ineos (evergas)
js ineos ingenuity
27,500
ineos (evergas)
js ineos intrepid
27,500
ineos (evergas)
js ineos innovation
27,500
ineos (evergas)
js ineos intuition
27,500
ineos (evergas)
js ineos independence
27,500
ineos (evergas)
gaschem beluga
38,000
hartman
gaschem orca
38,000
hartman
ethane crystal
87,187
reliance (mol mitsui osk)
ethane emerald
87,187
reliance (mol mitsui osk)
table 2 ship name (planned for 2018/2019 commission)
ethane capacity (cubic meters)
ship owner (operator)
to be named
87,187
reliance (mol mitsui osk)
to be named
87,187
reliance (mol mitsui osk)
to be named
87,187
reliance (mol mitsui osk)
to be named
87,187
reliance (mol mitsui osk)
to be named
95,000
hartman
to be named
38,000
hartman
to be named
32,000
evergas
to be named
32,000
evergas
to be named
32,000
evergas
to be named
32,000
evergas


If the ethane shipping capacities shown in tables 1 and 2 are available in 2020 and the ethane surplus in 2020 will be 300,000 b/d, how much of this 300,000 b/d excess US capacity can be shipped to overseas markets by the shipping capacity represented in tables 1 and 2?

300,000 b/d equates to approximately 17,400,000 cubic meters per year of ethane (300,000 b/d X 3 cubic meters/18.9 barrels X 365 days) (pressurized ethane).   So, how much ethane can the 26 ships identified in the tables transport to foreign markets in a year and how does this amount compare to 17,400,000 cubic meters?

Here are some assumptions used in answering these questions: 1) the ethane will be delivered either to ports in Europe or ports in India or China; 2) a round trip for a ship to a European port is 10,000 miles and takes 30 days; 3) a round trip for a ship going to an India or Chinese port is 20,000 miles and takes 60 days; 4) only the large capacity ships (greater than 80,000 cubic meters will be used for the Asian trade and the others for the European trade; and 5) the ships will be in continued 365-day use.

With these assumptions, each ship should be able to make 12 round trips to European ports (1 shipment per 30 days X 365 days) and each ship going to Asian ports should be able to make 6 round trips during the year (1 shipment per 60 days X 365 days).

With the ship capacities and assumptions given above, the total ethane that can be delivered (exported) to overseas markets in 2020 is approximately 11 million cubic meters as shown in the following table 3:


table 3 ship capacity (cubic meters)
number of annual trips with ethane on board
total potential ethane delivered in 2020 (cubic meters)
27,500
12
330,000
27,500
12
330,000
27,500
12
330,000
27,500
12
330,000
27,500
12
330,000
27,500
12
330,000
27,500
12
330,000
27,500
12
330,000
32,000
12
384,000
32,000
12
384,000
32,000
12
384,000
32,000
12
384,000
37,000
12
444,000
37,000
12
444,000
37,000
12
444,000
37,000
12
444,000
38,000
12
456,000
38,000
12
456,000
38,000
12
456,000
87,187
6
523,122
87,187
6
523,122
87,187
6
523,122
87,187
6
523,122
87,187
6
523,122
87,187
6
523,122
95,000
6
570,000

total
11,028,732


Assuming the assumptions and computations above are reasonably correct, a conclusion is that a large amount of the 2020 excess of ethane will not be able to be exported to overseas markets, e.g., 6.4 million cubic meters (17.4 million cubic meters less 11 cubic meters) due to lack of ship capacity.   And if so, US ethane supply should considerably exceed demand, putting downward pressure on ethane prices.


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