Petral Consulting Co.
In this era of tumult and constant
change in the US petroleum sector,
the mundane matters of infrastructure
served as a reminder that a focus on
gritty day-to-day details remains important to US Gulf Coast olefins producers.
Ethylene markets in Louisiana are
chronically short, with three pipelines
transporting needed supplies from
storage in Mont Belvieu, Tex., and
producers on the Upper Texas Coast.
Evangeline pipeline, a Texas-to-Lou-isiana ethylene pipeline operated by
Boardwalk Pipeline Partners LP, was out of service
from early January to mid-June 2015. As was the
case during the September 2013-May 2014 outage
of the line, the pipeline’s operator discovered integrity problems that required many segments to
be replaced before it could return to service safely.
With Evangeline—the largest of the three ethylene pipelines—out of service, the remaining pipelines operated at near full-capacity, and ethylene
prices at Choctaw Dome, the primary pricing point for ethylene in southeast Louisiana, spiked to significant premiums
vs. spot prices in Mont Belvieu. Alongside the pipeline’s outage, a few Louisiana ethylene plants also experienced operating problems during first-half 2015, which exacerbated
Louisiana’s chronic supply shortfall during second-quarter
Despite the Evangeline pipeline’s return to full service
in June, ethylene production from plants in Louisiana will
remain insufficient to meet demand, and Louisiana buyers
will remain vulnerable to future supply disruptions due to
problems with ethylene pipeline infrastructure.
While all major elements of industry infrastructure func-
tioned as intended on the US Gulf Coast propylene market
during first-half 2015, a growing inventory surplus emerged
as the primary problem. This propylene inventory surplus
prompts an important question: How will US propylene
markets absorb the additional produc-
tion when the first two of five planned
propane dehydrogenation (PDH)
plants come on stream in fourth-quar-
ter 2015 and second-half 2016.
Petral Consulting Co. tracks US eth-
ylene production via the results of a
monthly survey of operating rates and
feed slates. Results of the monthly
surveys show ethylene production was
150.7 million lb/day in first-quarter
2015, down by 318 million lb ( 2.3%)
from fourth-quarter 2014. For second-
quarter 2015, survey results showed
ethylene production at 155.8 million
lb/day, which was an increase of 614
million lb ( 4.5%) from the previous quarter.
Compared with the same quarter during 2014,
US ethylene production during first-quarter 2015
was up by 97 million lb (0.7%), while production
during second-quarter 2015 was 1.05 billion lb
( 8.0%) more than during the same period in 2014.
Production losses in first-quarter 2015 due to
turnarounds and unplanned maintenance prob-
lems stood at 1. 2 billion lb, 0.9 billion lb higher
than the same quarter in 2014. Production losses during sec-
ond-quarter 2015, however, were down 0.35 billion lb from
the previous quarter and were 0.67 billion lb less compared
with second-quarter 2014 (Table 1).
Compared with the final quarter of 2014, ethylene plants
in Texas during first-quarter 2015 raised production by
Infrastructure issues slow first-half
2015 ethylene production
ETHYLENE PRODUCTION Table 1
feed feed Total
2015 ––––––––––––––– million lb/month –––––––––––––––
January 372.7 4,290.3 4,663.0
February 343.7 3,864.0 4,207.8
March 410.4 4,284.3 4,694.7
April 393.1 4,141.3 4,534.4
May 394.6 4,412.7 4,807.3
June 376.0 4,461.4 4,837.4
Source: Petral Consulting monthly survey