Enterprise buys NOVA's Texas ethylene trading storage hub

Enterprise Products Partners has bought NOVA Chemicals' ethylene trading hub and storage business in Mont Belvieu, Texas, expanding its olefins footprint to include the largest, most liquid ethylene market in the US, the companies announced July 1.

Terms were not disclosed.

Chris D'Anna, Enterprise's senior vice president of petrochemicals, said in a statement that the deal complements Enterprise's growing ethylene network in the region as well as improved access to the company's midstream ethylene services, including its 1 million mt/year ethylene export terminal on the Houston Ship Channel. NOVA will be a long-term customer in Enterprise's expanded system.

John Thayer, senior vice president of sales and marketing for NOVA, said in a statement that the deal allows NOVA to focus on ethylene and downstream polyethylene production and completion of its technology facility in Ontario that will recycle resins for sustainable packaging.

"This transaction provides the best long-term solution for the Mont Belvieu ethylene storage business and trading hub," Thayer said.

Enterprise has become the key delivery point for physically settled futures markets, with global hydrocarbon risk management from the wellhead to waterborne markets, said Rob Stier, senior manager of global petrochemical analytics at S&P Global Platts.

Enterprise already provides significant US crude oil and refined products pipeline, storage and exports services. The company has the sole US propylene export terminal, and started up its 1 million mt/year ethylene export terminal – with storage at its natural gas liquids hub in Mont Belvieu – in early 2020.

"Ethylene is one of the final touches to support their terminal," Stier said. "They already dominate the propylene market. Full risk management services since they own storage and distribution to do the physical deliveries."

NOVA retains a majority ownership of a 977,000 mt/year merchant cracker in Geismar, Louisiana. The company paid Williams Companies $2.1 billion for its 88.46% interest in the cracker in 2017. That deal also included about 525 acres of land adjacent to the plant and Williams' interest in the Mont Belvieu ethylene trading hub.

Stier noted that Enterprise could consider buying NOVA's interest in the cracker as well. Enterprise could structure a deal for the cracker much like its 2019 deal with LyondellBasell to be the anchor customer for output from Enterprise's new 750,000 mt/year propane dehydrogenation plant under construction at Mont Belvieu.

Deal another NOVA divestment of US assets

The deal announced July 1 also marks NOVA's second major divestment of a US petrochemical holding. In 2020 Austria's Borealis bought the Canadian company's 50% stake in a 625,000 mt/year PE plant near the mouth of the Houston Ship Channel under construction with an expected startup in Q1 2022.

That sale marked NOVA's exit from a joint venture with Borealis and Total formed in 2018 that includes the new PE unit under construction, Total's adjacent 400,000 mt/year PE unit in Bayport, Texas, and Total's new 1 million mt/year cracker in Port Arthur that recently began starting up.

When that joint venture was originally formed, the new PE unit was touted as a way for NOVA to expand its US footprint and give Borealis a vehicle to expand its Borstar PE technology into the US and into global PE export markets.

NOVA said at that time that the company was interested in eventually building downstream derivative plants on that adjacent land, but has not announced any such plans.