Ethane: An Essential Feedstock for Ethylene Production in the U.S.

Ethane is one of the largest components of the natural gas liquids (NGL’S) stream and primary feedstock for the petrochemicals production. Majority of the U.S. ethane production is used in the petrochemical sector, where it is used to make ethylene. Ethylene is a basic component used for manufacturing many chemicals and plastics. 

Ethane supply was high in the U.S, in 2014 mainly due to increased natural gas drilling with a significant component of natural gas liquids. The demand for ethane could not keep up the inertia for long time as the supply was high and hence the prices plummeted. As ethane prices dropped in the U.S.; major petrochemicals producers such as LyondellBasell Industries, Dow Chemical Company and others tried to use as much ethane as possible for the production of ethylene to enjoy inflated profits. The chemical producers have initiated plans to invest in building new chemical assets and infrastructure. Also, the U.S. chemicals industry growth is bolstered by increasing demand from several key end-use markets such as appliances, computers and electronics, plastic and rubber products which increases the demand for ethylene production.

Another major driver is the shale gas which is being growing at faster rate due to technological developments, is expected to further boost the ethylene growth using ethane as feedstock. Furthermore, ethane which is produced from shale gas is dominating naphtha as a primary feedstock of ethylene, particularly for the plastics industry.

The demand for ethane based cracker is growing at a CAGR of 5.6% from 2015 to 2020 due to upcoming shale based plants as well as surplus ethane in the market. As the cost of production is very low to produce ethylene from ethane the demand is increasing for ethylene from ethane.  

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