Some 800,000 billion barrels per day of US ethane is currently “in rejection” or left in the natural gas stream, and this figure is expected to rise, American Ethane Co (AEC) chief executive John Houghtaling said.
He said when AEC announced its 10 million tonnes per annum export plans in 2014, the concept was seen as “crazy”. But this view has reversed since the boom in ethane production on the back of the shale gas revolution in the US.
“We went out knowing the amount of ethane that was going to be there,” he said. “We have an excess amount of ethane and we need to get rid of it and it’s very valuable in other parts of the world.”
Houghtaling said ensuring counterparty risk, particularly when selling ethane volumes to emerging markets, is one of the “tricky parts” AEC has been working on for the large investment in ships and terminals it requires.
He said AEC’s existing contracts for China have pledge guarantees in place so that if there is any contractual breach the company will be able to secure assets outside China to cover its investment.
Houghtaling is clearly frustrated that AEC cannot move ahead with its projects in China.
“It’s very hard to read the political tea leaves of what is going to happen with the trade war with China,” he said.
“What I do know is that this particular deal between the US and China is a classic win-win. It’s good for both. Deals aren’t always like that. But this is clearly a deal that sits there.”
Houghtaling said the trade war is not going to last forever.
“It’s going to end at some point. When it’s hard to determine. When it’s there we have gotten feedback that we are going to be able to get our permits from the Chinese side and we will move forward,” he said. “I think it’s a matter of time.”
