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ETP forms JV with petrochemical company to export ethane to China

Energy Transfer Partners LP formed a joint venture with the petrochemical wholesaler Satellite Petrochemical USA Corp. to build a new export terminal in the Gulf Coast, which would deliver supplies to Satellite's ethane crackers in China.

The joint venture, Orbit Gulf Coast NGL Exports LLC, would build a 20-inch ethane pipeline that would flow ethane to the planned export terminal from Energy Transfer Partners', or ETP's, fractionators in its Mont Belvieu complex. The pipeline would also deliver ethane to domestic markets in the region, according to a March 15 news release.

Under the agreement, ETP would operate the Orbit assets. The partnership would also build and own the facilities that would provide the ethane to the pipeline and load it on to ethane carriers bound for Satellite's new ethane crackers, located in the Jiangsu province of China. In addition, Satellite entered into a long-term, demand-based agreement to buy ethane at the terminal, under which ETP would provide about 150,000 bbl/d of ethane, along with storage and marketing services, to Satellite.

The export terminal would consist of a refrigerated ethane storage tank with 800,000 barrels of capacity, and an ethane refrigeration facility with a capacity of 175,000 bbl/d. It is expected to begin commercial service in the fourth quarter of 2020, pending approval from the Chinese government.

ETP is said to be making a $334 million investment for a 53% stake in the joint venture, and Satellite would fund $296 million for a 47% stake, according to a CreditSights note released March 15, citing the Chinese media organization Yicai Global. The analysts said the joint venture's boost to ethane demand is "welcome" but that "additional export capacity or a second wave of crackers will be needed to eat away at ethane rejection and provide some balance to the market," the note said.