July 17, 2017 [OPIS] - Enterprise Products Partners and gas shipowner Navigator Holdings have signed a letter of intent to jointly develop an ethylene export terminal on the Houston Ship Channel to unlock the growing U.S. petrochemical capacity, the two companies announced Tuesday.
Enterprise would manage the construction, operations and commercial activities of the proposed terminal, which would be located at the group’s Morgan’s Point complex that includes their ethane marine export terminal.
The ethylene export terminal is to be connected to Enterprise’s ethylene salt dome storage and ethylene pipeline system, currently under construction, that will connect multiple producers and consumers on the U.S. Gulf Coast. currently under construction. The storage facility will have approximately 600 million pounds of capacity with an injection/withdrawal rate of 210,000 pounds per hour, expandable to 420,000 pounds per hour, the announcement said.
Navigator Gas, owner of the world’s largest handysize fleet, has 14 ethylene-capable vessels to deliver ethylene to customers worldwide. The shipowner has increasingly utilized these vessels, which have the flexibility to carry ethane and LPG, to transport petrochemicals to combat softness in the LPG shipping market.
Abundant and cheap natural gas and ethane supplies as a result from U.S. shale reserves have driven the U.S. petrochemical industry to expand its ethylene production capacity by 45% between 2016 and 2020, the statement said.
“Customers would have the ability to manage the transportation and storage of ethylene supplies from the tailgate of producing facilities to domestic and international consuming derivative plants,” said A.J. “Jim” Teague, CEO of Enterprise. “The proposed ethylene export terminal would provide U.S. petrochemical companies critical market diversification rather than relying solely on polyethylene export markets,” he added.
Navigator CEO David Butters has previously said that only Targa’s export terminal (on the Houston Ship Channel) is capable of moving ethylene, which takes approximately two weeks to load one handysize vessel (see OPIS alert, March 3, 2017).
The 50-50 joint venture is subject to board approvals, and the commercialization of the project is dependent on sufficient long-term customer commitments.
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