The US ethane-export trade, a new gas-shipping phenomenon, has celebrated its first anniversary and, one year on, is on schedule to meet its targets, having exceeded expected performance standards.
In that first year, six import terminals received shipments from the US’ Marcus Hook and Morgan’s Point export terminals and 17 new high-capacity gas carriers, built to deliver US ethane cargoes, have entered service under long-term time charters.
Seven additional liquefied ethylene gas carriers (LEGCs) that can also handle ethane lifted spot and commissioning cargoes at Marcus Hook and Morgan’s Point. These ships helped to overcome logistics challenges before the purpose-built tonnage was delivered.
The ships built to transport US exports have introduced several design innovations that push the boundaries for gas carrier containment systems, cargo-handling plant and propulsion.
Marcus Hook in play
March 2016 opened a new era for US ethane exports when the 27,500m3 JS Ineos Intrepid lifted the first shipment from Sunoco’s Marcus Hook terminal near Philadelphia. Two weeks later, JS Ineos Intrepid discharged its cargo at Ineos Europe’s ethylene cracker in Rafnes, Norway.
Ethane is an attractive alternative to LPG and naphtha as a petrochemical feedstock. The US shale gas revolution has created plentiful supplies of competitively priced ethane, which now costs a third less than in 2008. And this has piqued the interest of chemical manufacturers.
Ineos Europe was first to take the plunge, signing a deal in September 2012 to purchase 800,000 tonnes per annum of Marcus Hook ethane for 15 years, for delivery to its crackers in Rafnes and Grangemouth in Scotland. Sabic, Borealis, Reliance Industries, Braskem and Oriental Energy then signed their own supply and purchase agreements (SPAs) for US ethane.
Before Marcus Hook and Morgan’s Point terminals were commissioned, seaborne movements of ethane were limited to small-volume, short-distance shipments in LEGCs from Statoil’s Kårstø plant in Norway to Rafnes and the Borealis cracker in Stenungsund, Sweden.
JS Ineos Intrepid is one of eight Dragon-class gas carriers that Evergas booked in China – six with Sinopacific Offshore and Engineering (SOE) in Qidong and two with JHW Engineering & Contracting in Yangzijiang – against the Ineos Europe SPA.
Last month’s flurry of three deliveries means that all eight are operational. The Dragon-class ships are built to the semi-pressurised/fully refrigerated (semi-ref) design and are multigas carriers that can also transport LNG, ethylene, LPG and a range of chemical gases.
In December 2015 Evergas ordered four Ineos Max ethane carriers of 32,000m3 at JHW Engineering, for delivery from early next year. The Ineos Max vessels will replace several Dragon-class ships in Ineos’ Europe ethane service, enabling Evergas to switch the existing ships to the growing small-scale LNG trades. Previously the largest ethane carriers on the water, the Dragon-class ships have been overtaken in the last year by the new ethane carriers.
JS Ineos Intrepid will go down in history as the vessel that lifted the inaugural ethane cargoes at Marcus Hook and at Morgan’s Point. The latter shipment departed from Texas in September and was transported to Rafnes.
Enterprise Products Partners (EPP), the largest US exporter of LPG, built Morgan’s Point ethane terminal near the mouth of the Houston Ship Channel to service several long-term export contracts.
The first, with Sabic Petrochemicals, was initiated in November, when the 17,000m3 ethylene carrier Clipper Hermes delivered a Morgan’s Point ethane cargo to the chemical company’s North Tees cracker on Teesside in the UK. The ship arrived days after the 9,000m3 Thetagas had delivered a cooldown shipment from Kårstø to the Teesside terminal.
Sabic used Clipper Hermes as a stop-gap. The two ships that will service the chemical company’s Morgan’s Point loadings, under 15-year charters, are Gaschem Beluga, completed by SOE in November, and sistership Gaschem Orca, due to leave the yard in July.
Designed and operated by Hartmann of Leer in Germany for the Norwegian investment firm Ocean Yield, Gaschem Beluga and Gaschem Orca are semi-ref ethylene/ethane carriers built to Hartmann’s new ECO STAR 36K concept. Groundbreaking features include a Svelte bow profile, the accommodation superstructure forward and Type C cargo tanks of the trilobe type.
The vessels are also the first ethane carriers powered by two-stroke dual-fuel engines. The MAN ME-GI unit on each ship can utilise ethane cargo boil-off gas as fuel or burn LNG bunkers.
In December, EPP agreed to supply ethane from Morgan’s Point to Braskem for its Rio de Janeiro cracker. To date the Braskem-chartered, 8,000m3 Gaschem Arctic and Gaschem Atlantic have been utilised to service this route.
Borealis has also signed up for Morgan’s Point ethane, booking Navigator Gas to meet its transport needs, using one of the four-ship series of 37,300m3 semi-ref ethylene/ethane carriers being built at the Jiangnan yard in China.
Before this vessel comes into play, Navigator has employed its ethylene and ethane-capable 22,000m3, 2000-built Navigator Neptune to lift the first Borealis cargo. It transported the Texas shipment to Stenungsund in March.
EPP’s biggest ethane-export contract is with Reliance Industries of India and covers the delivery of 1.5 million tonnes per annum (mta) from Morgan’s Point to a new ethane-distribution terminal at Dahej in Gujarat, India. Six 87,000m3 very large ethane carriers (VLECs) were ordered at Samsung Heavy Industries (SHI) in Korea in August 2014 to service the contract.
The first, Ethane Crystal came into service in December and by April SHI had handed over all six vessels. Operated by Mitsui OSK Lines (MOL) for Reliance, the VLECs are built to the fully refrigerated design and their membrane cargo tanks mark the first use of GTT’s Mark III LNG containment system on an ethane carrier.
Another series of VLECs is under construction. Five 85,000m3 vessels are being built for Oriental Energy to transport Morgan’s Point ethane to China. Hartmann and Evergas parent company Jaccar Holdings have established United Ethane Carriers (UEC) as a joint venture to manage the VLECs and the ships are being constructed to Hartmann’s ECO STAR 85K design.
Unlike the Reliance VLECs, the UEC ships are being built to the semi-ref configuration and will be by far the largest gas carriers of this type when they enter service, starting next year. The largest of the four Type C cargo tanks on each vessel will be a 23,000m3 trilobe unit.
In February, Marcus Hook and Morgan’s Point loaded 130,000 tonnes of ethane between them in February. In March, Morgan’s Point alone dispatched 190,000 tonnes. This highlights how quickly the new gas-carrier trade is evolving.
The availability of all six Reliance ships, each able to load 48,000-tonne parcels on their three-month round trips via the Suez Canal, will enable the US to continue to escalate its ethane exports in the months ahead.