Ethane prices rebounded at both hubs this week on the back of the news that ConocoPhillips’ Gulf Coast Fractionators ONEOK Partners’ Mont Belvieu fractionator will undergo maintenance in April and May. The ethane market was similarly supported in late 2011 in response to the news that ethane crackers would undergo scheduled maintenance in early 2012.

The 30- to 45-day scheduled turnarounds for these fractionators may result in up to 115,000 barrels per day of ethane extraction to be affected. In the very near-term, ethane prices should benefit, but prices may experience some dips with the two fractionators down in the spring as the remaining fractionators and storage facilities may not be able to handle all of the volumes coming into the region. This could result in either some short-term ethane rejection, or even the shut down of some natural gas processing plants connect to these two fractionators.

However, the region’s largest fractionator, owned by Enterprise Products Partners, will remain online. In addition, the majority of the ethane cracker turnarounds should be completed by this time. The Conway market should also benefit from increased transportation capacity to Sarnia as Kinder Morgan’s Cochin pipeline will begin to transport E-P mix to Nova Chemicals’ ethylene plant in April.

All of this news resulted in Mont Belvieu ethane improving 5% to 46¢ per gallon (/gal), which was the hub’s second-lowest price in nearly two years. The Conway price came back much stronger as it rose 54% to 23¢/gal, its highest price in a month.

During their Q4 2011 conference call, Dow Chemical reiterated its plans to build a world-scale ethane-based cracker with the most likely destination for this facility being in Texas. “We are working to consume of the excess ethane as we can …We will expand and you can count on us putting a world-scale cracker in place to use that ethane … and our view is we can bring that on in the 2016-2017 time frame,” Andrew Liveris, the company’s chairman and chief executive, said.

There were some market corrections taking place for propane at both Mont Belvieu and Conway this week. While moderate winter temperatures have limited heating demand this year, Conway prices seemed to have been driven down too far in recent weeks. Consequently, prices saw a bit of a turnaround this week as they gained 1% to close at 98¢/gal. The final day of the trading week also saw prices increase above the $1.00/gal threshold. The Mont Belvieu price lost 3% to $1.18/gal as the market corrected itself in the opposite direction of Conway.

Crude prices saw improvements this week as traders considered the possibility that Iran may restrict the global crude trade by acting to close the Strait of Hormuz in response to international sanctions. The improved prices didn’t carry over to heavy NGLs at Mont Belvieu, although the opposite was true at Conway. It is likely that the improvements at Conway were price corrections more than a stronger correlation to crude prices though.

Contact the author, Frank Nieto, at fnieto@hartenergy.com.

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