CEH Report

Table of Contents

Abstract

Ethane is consumed as a feedstock in the production of ethylene (its largest end use, accounting for 95–99%) or as an industrial fuel (very small end use) and for other smaller uses (i.e., EOR operations). Ethane consumed in the manufacture of ethylene competes with other steam cracker feedstocks such as propane, butane, naphtha and gas oil. Most ethane occurs indigenously with other NGLs, such as propane and butane, in natural gas, either associated with crude petroleum (associated gas) or in gas reservoirs not associated with petroleum (nonassociated gas). Smaller volumes of ethane are also recovered from refinery gases generated by catalytic cracking of petroleum fractions.

The United States, Canada and the Middle East have long been the dominant producers and consumers of ethane. Western Europe and Asia have consumed much smaller amounts and Japan has essentially no market for ethane. Moreover, China consumes negligible amounts of ethane in comparison to North America and the Middle East. In the Middle East, ethane consumption has grown with additions in ethylene capacity. Feedstock prices, ethane availability, and demand for ethylene and downstream petrochemical products will help determine the future ethane producers as well as production levels.

The Middle East will continue to have the largest average annual growth rate (during the forecast period of 2009–2014) for ethane consumption as a result of the many ethane-based cracker projects coming on stream in the near term. The three major regions represent three-fourths of total ethane consumed for 2009 worldwide.

The following pie chart shows world consumption of ethane:

North America and the Middle East are the largest consumers of ethane for ethylene in the world. Other regions such as Western Europe and most of Asia use other feedstocks such as naphtha for ethylene production. The supply and cost competitiveness of ethane are key drivers for feedstock selection for steam cracking. Historically, North America and the Middle East have held most of the ethane market share.

In the Middle East, 33% of ethylene capacity in 2009 was solely ethane based, while 40% of total ethylene capacity was ethane/propane based. The Middle East is in the forefront to become the world’s major source of petrochemical products. Ethylene capacity in the region is expected to grow by around 10% per year from 2009 to 2014. The region’s vast oil and gas reserves and the current cost advantage of ethane-based ethylene production have prompted investments in petrochemical production. Because of this, the region is expecting to see an ethane price increase in the next three to four years as a result of the looming shortage of ethane supply. The Middle East will see the highest average annual growth rate for ethane consumption (7.6%) during 2009–2014.