Houston-based American Ethane has announced plans to ship ethane gas culled from American shale to China from Beaumont, Texas, Kallanish Energy reports.
A ground-breaking ceremony was held this week for the $1.5 billion ethane-export facility in East Texas. The terminal is designed to handle 10 million tons of ethane annually. It will take about three years to build.
$72 billion deal
The privately-held company, majority owned by Russian oligarchs, said the project will ship 7.2 million tons a year of ethane to China under binding 20-year agreements.
That makes the deal worth $72 billion over that time, the company said. It also marks the first U.S. ethane exports to China.
Three Chinese companies involved
The others partners in the project are Martin Midstream and three Chinese companies: the Nanshan Group, the Ganergy Group and the Yangquan Coal Group. They will build unloading facilities and ethane crackers in China to process the ethane into ethylene for plastics manufacturing.
Another partner, The Energy and Minerals Group, has agreed to create a portfolio company to furnish American Ethane with up to 480,000 barrels per day of ethane from U.S. shale operations.
Plans call for expanding the Neches Terminal in Beaumont, building a pipeline to Beaumont from liquids hub Mont Belvieu, Texas, and installing the equipment to load ethane onto ships, the Beaumont Enterprise newspaper reported.
Ethane carriers to be built
The China Merchants Group is planning to build 34 ultra-large ethane carriers to haul the gas from Texas to China. The vessels would each hold up to 150,000 cubic meters of ethane gas.
American Ethane CEO John W. Houghtaing said his company was willing to commit to the project because China has signaled its willingness to grant permits to the three Chinese companies involved in the project.
Those permits are expected to be approved within the next 60 days, the Houston Chronicle newspaper reported.
Houghtaing thanked President Trump and Chinese President Xi Jinping for supporting the project. He reported his company expects to triple U.S. ethane exports that now average roughly 272,000 Bpd, when the project is operational.
