Bloomberg reported that Enterprise Products Partners LP, the largest US pipeline partnership by market value, will build a 1,230 mile line to ship ethane from Pennsylvania to US Gulf Coast petrochemical plants.
The ATEX Express pipeline will have the capacity to transport as much as 190,000 barrels a day. The company has commitments from shippers to pay 14.5 to 15.5 cents per gallon.
Chemical companies, including Dow Chemical Co and LyondellBassell Industries NV, are using more ethane and other natural gas liquids from shale formations as a way to replace crude oil based feedstocks such as naphtha. Enterprise estimates Gulf Coast petrochemical demand for ethane is about 955,000 barrels a day. Ethane is a feedstock for producing ethylene, the main ingredient in plastics.
Mr Michael A Creel CEO of Enterprise said that "The willingness of shippers to commit to a term of at least 15 years reflects the long term potential of shale development in the Appalachian region."
The ATEX line will connect to the Marcellus and Utica shale formations in Pennsylvania and Ohio.
Mr TJ Schultz, an analyst with RBC Capital Markets in Austin, said that "Enterprise has garnered the most shipper interest and at this point is the only pipeline solution that goes from the Marcellus Shale down to Texas. Schultz rates Enterprise's units at outperform and owns none."
Mr Darren Horowitz, an analyst for Raymond James & Associates Inc, said that Enterprise's Mont Belvieu complex is the biggest storage and processing facility for ethane and other gas liquids on the Gulf Coast. It's connected to almost every petrochemical facility on the Gulf.
He added that "Producers want a complete solution and they are willing to pay more for access."
According to Bloomberg calculations, if the pipeline reaches its full capacity, it may generate more than USD 400 million a year in revenue. The release didn't say how much of the capacity is committed to shippers. The pipeline is expected to begin service in the first quarter of 2014.
(Sourced from www.bloomberg.net)
