09:15 - 09:45
Wednesday, 18 September 2019
T3.3 New Generation of Very Large Ethane shipping (VLEC)
The US shale gas revolution has created significant change in world natural gas markets in the past years. It is less well known but it is also transforming the petrochemical market. US shale gas contains significant quantities of ethane which is an important feedstock in the petrochemical industry. All of the ethane cannot be monetized in the short and medium term in the US. This new supply provides opportunities for non US petrochemical companies to supplement their domestic ethane feedstock or substitute for conventional oil based naphtha feedstocks in the production of ethylene and other derivative products. So far, South America, Europe and India are currently sourcing US ethane.
Ethane has not been traded in very large quantities before. Ethane or ethylene carriers have typically been capable of transporting up to 35,000 m3 of cargo. Much greater capacity is needed to yield attractive transportation costs from the US Gulf or East coast to Asia. In late 2016, the Indian based conglomerate Reliance industries took the initiative for a new generation of ethane ships which reach 87,000 m3. They are referred to by industry as “Very Large Ethane Carriers” (“VLECs”), not to be confused with “VLGCs” (Very Large Gas Carrier, typical ships which carry large quantities of LPG).
Large, non-LNG gas ships, accommodating ethane and other derivatives with lower boiling points (circa -89°C) had never been made except for the six Worlds First VLEC. While its boiling point lies between those typical of the LPG and LNG shipping industries, liquid ethane also has a higher density. The appropriate ship architecture is thus a blend of VLGC and LNGC (LNG carrier) design.
With the oil price getting back to $70+, available and affordable US ethane, has attracted the interest of Asian petrochemical industry players, especially in China, who are seriously considering US feedstock sources.
The shipping takes a significant cost of the value chain. In order to be more competitive and make new project more viable, new generations of VLECs are currently under consideration. These new generation ethane carriers tend to be larger (~100,000 m3 and more and more flexible in terms of gas carrying capability (from LPG to LNG). This market is quite interesting and unique as it attracts stakeholders from the NGL and LNG shipping sectors.
The purpose of this paper is to give update on the growing Demand of Ethane Supply in Asia. Then highlight how the LNG industry contribute into the NGL industry, which lowers the break-even point for ethane feedstock competitiveness and can potentially unlock new projects.
Main characteristics of the new generation of larger VLEC just ordered in 2018, will be shared and the relation with LNG fall back option as well.