A transformation in US gas production could prove the basis for new export trades in ethane, according to a study published by Lloyd’s Register (LR) this week. Produced from natural gas and a by-product of the oil refining process, ethane is a vital component in the production of ethylene which is itself used to make polythene, PVC, ethylene glycol and styrene. If the LR analysis proves correct, long-haul trades from the US to Europe and Asia could prove the catalyst for a new generation of so-called VLECs – very large ethane carriers.

The shale gas revolution in the US and soaring production of gas is leading to growing volumes of ethane in the US for which there is no demand and which is therefore potentially available for export. The LR analysis suggests that 200,000 barrels of ethane are currently being “rejected” in the US every day because there is insufficient domestic demand. “Rejected ethane represents a potential surplus to drive increased domestic demand or exports,” the report states. “When domestic demand is insufficient there currently is no mechanism to export the surplus to balance the market.”

However, new capacity to distribute ethane domestically and to pipe it to new export terminals will come on stream in the US soon. The 50,000 b/d Mariner East pipeline, for example, is scheduled to become fully operational in the first half of 2015 and will facilitate the delivery of propane and ethane to Marcus Hook. The project is being undertaken by Sunoco and will enable ethane and other products to be processed, stored, chilled and distributed to local, regional and international markets. Ethane exports to Europe will flow through a new export terminal. Meanwhile, a new LPG export terminal also capable of exporting ethane is under development in Houston.

Mostly concentrated in the Middle East and the US, global ethane production last year totalled about 2.6m tonnes, according to the LR study. But the ability to handle and process more ethane in the US and make it available for export means that volumes could more than triple in the coming years – to around 8.5m tonnes by 2020. However, most seaborne movements of ethane are shipped in relatively small liquefied ethane/ethylene carriers with type-C containment systems – where cargoes are shipped under pressure – and this limits the size of cargo tanks that can be used.

According to the class society, there are only 29 vessels larger than 10,000 cubic metres, with the largest having a capacity of 22,000 cubic metres. The maximum size limit for ships with type-C tanks is thought to be about 40,000 cubic metres. But the new long-haul trades will be best served by vessels of greater capacity, according to the LR analysis, and such ships would be too large to operate with the containment systems in use today.

Membrane systems or independent tank containment systems would both potentially be suitable on board VLECs and various systems are at different stages in the approvals process. In a membrane system, ethane would be shipped at atmospheric pressure and a temperature of minus 90°C but ethane is denser than liquefied natural gas so existing tank designs would have to be tested for ethane suitability. Sloshing studies would also need to be carried out. Such VLECs with membrane containment systems would likely be designed with either three or four cargo tanks, according to LR.

Only a limited number of independent tanks would be suitable for ethane carriage. Conventional type-A tanks would need to be constructed of special steels which would prove too expensive. But an aluminium double barrier tank might prove suitable, LR suggests, although such a system has only received approval in principle and more work would be required before such an installation could be made on board ship.

Two type-B tank systems have currently been approved – Moss and self-supporting prismatic designs – but these are used in the carriage of LNG. More than 100 ships currently operate with Moss containment systems and LR believes that the smaller tanks associated with a VLEC would make the approval process straightforward. Meanwhile the class society is working with a major shipbuilder to evaluate a new self-supporting prismatic design using 3.5% nickel steel and suitable for the carriage of ethane.

 

The views of the Publishers do not necessarily correspond to the views of Lambos Maritime Services Ltd.

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