New Ethane Blending Facility Provides Flexibility for Natural Gas vs. Ethane Spreads
Enterprise Product Partners’ recently opened Ethane Blending Facility in Natchitoches, LA provides an unprecedented option for U.S. Northeast ethane rejection by blending ethane moved on the company’s 125,000 bpd ATEX pipeline into the U.S. Gulf Coast natural gas stream.
The ability to refine ethane from the Northeast natural gas and then reject it, on a secondary basis into another market, allows for a new type of flexibility in ethane and natural gas supply optimization. This type of infrastructure, which can be switched on or off, allows for a midstream company, like Enterprise, to capture favorable natural gas versus ethane spreads with geographic flexibility.
The Ethane Blending Facility is connected to Enterprise’s ATEX pipeline, which moves ethane from the Marcellus and Utica shale plays to the Gulf Coast petrochemical complex. An Enterprise spokesman did not comment on the capacity of the facility, but market sources estimate that it could blend from 25,000-75,000 bpd of ethane from ATEX into the Acadian, LA natural gas market.
Ethane rejection, traditionally, is when ethane is left in the residue gas stream at the gas processing level, rather than extracted with the other natural gas liquids. Ethane rejection is popular in the Marcellus and Utica plays due to a combination of relatively high ethane content in the rich gas, a lack of de-ethanization capacity in the region, and unfavorable ethane prices. However, ethane rejection capacity is limited in the Northeast because of BTU standards natural gas pipelines. Ethane increases the BTU content of the gas stream.
Enterprise may use the facility to capitalize on favorable natural gas blending economics, rather than as a way to support the ethane market at Mont Belvieu, TX, market sources said. If the ethane is left on ATEX, then it flows into the Mont Belvieu hub. But, the diversion of Marcellus and Utica-sourced ethane from the Mont Belvieu market translates into less ethane supply flowing into the hub, which potentially supports ethane prices.
Genscape began monitoring the Enterprise Ethane Blending Facility in May with proprietary infrared-camera technology. Through this monitoring, it is possible to determine when the facility is on or off. When the facility is operational, ethane is being pulled off ATEX for natural gas blending.
There are times when the facility is on that ethane prices fall below natural gas prices, but ethane blending also appears to be taking place at times when the price spread reverses. The seemingly uneconomic blending could be due to supply optimization and storage management at Mont Belvieu, sources said.
Genscape monitors the Enterprise Ethane Blending Facility as part of the ATEX pipeline system.
The graph shows when the facility has been “on” and “off” against a comparison of Mont Belvieu ethane prices against Henry Hub, LA natural gas prices.
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