Sunoco restarts Mariner East 1 pipeline; Outlook strong for US chemicals industry; Global LNG trade continues to grow

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Sunoco’s Mariner East project transports NGLs from the Marcellus and Utica Shales areas in the northeast to destinations in Pennsylvania, including the Marcus Hook Industrial Complex.

Sunoco restarts Mariner East 1 pipeline

Pennsylvania state regulators approved Sunoco’s Mariner East 1 pipeline to resume ferrying natural gas liquids (NGL) from southwestern Pennsylvania across the state, but two pipelines under construction along the same route remain on hold.

A Public Utilities Commission (PUC) judge suspended the existing pipeline from operating in May, and that halted construction of Mariner East 2 and 2X lines in West Whiteland, Chester County.

The Mariner East project will transport natural gas liquids (NGLs) from the Marcellus and Utica Shales areas in western Pennsylvania, West Virginia and Eastern Ohio to places in Pennsylvania, including the Marcus Hook terminal in Philadelphia.

The PUC’s Bureau of Investigation and Enforcement (BIE) found that sinkholes were developed because of Mariner East 2 (ME2) and Mariner East 2X (ME2X) construction.

Outlook strong for US chemicals industry

Strong global growth prospects, rising exports, an upswing in manufacturing, balanced chemical inventories, healthy demand from end-use markets, and favorable shale gas economics suggest growth this year for the U.S. chemicals industry, according to the American Chemistry Council (ACC) mid-year outlook report.

The U.S. chemical industry continues to enjoy a competitive advantage from robust supplies of shale gas and natural gas liquids (NGLs), leading to significant investment in new capacity and capital spending that will continue to grow through 2023.

“During 2018, output gains are expected to be strongest in agricultural chemicals, consumer products, coatings and bulk petrochemicals and organics,” the Outlook states. “In addition, production of plastic resins is set to grow at the fastest pace since 2012 as new capacity comes online and demand firms for domestic customers and those abroad. The specialty chemicals segment is also set to grow as industrial activity improves.”

Housing is set to extend its steady recovery in 2018. Despite a pull back from record-high vehicle sales, the automotive sector is expected to remain at relatively elevated levels. Both are important end-use customers for chemistry.

Over the long term, America’s chemistry industry continues to expand. The economics of shale gas has fostered new investment and growth in capacity, which is now starting to come online.

Chemical production is expected to continue to increase across all regions of the U.S. during 2018, with the most dynamic growth occurring in the Gulf Coast region, followed by the Midwest and Ohio Valley regions. American chemistry revenues will exceed $700 billion by 2023.

“Due to the U.S. chemical industry expansion and strong demand from foreign markets and domestic manufacturers downstream, total two-way U.S. chemicals trade is expected to grow 6.2% this year to $241.0 billion following a 6.0% gain in 2017,” the report notes.

“Driven by the basic chemicals sector, U.S. chemicals exports will grow 7.2% this year to $139.2 billion. At the same time, imports are projected to rise 4.9% to $101.8 billion by the end of this year. The trade surplus in chemicals is projected to reach 71.4 billion by 2023.”

A note of caution is in order. “The projections presented for chemicals trade growth are optimistic for this year and the short-term future,” the Outlook states. “However, there are risks to the scenario related to protectionist trade policies which will reduce the competitiveness of chemical (and other) manufacturers operating in the U.S.”

Global LNG trade continues to grow, especially from Australia and the U.S.

Global trade in liquefied natural gas (LNG) reached 38.2 in 2017, a 10% (3.5 billion cubic feet per day increase from 2016 and the largest annual volume increase since 2010, according to the Annual Report on LNG trade by the International Association of Liquefied Natural Gas Importers (GIIGNL).

In 2017, there were 19 LNG exporting countries and 40 LNG importing countries. Australia and the U.S. were among the countries with the largest increases (2.7 billion cubic feet per day combined) in 2017 LNG exports.

Besides Australia and the U.S., several other countries also increased LNG exports in 2017.

The return to service of Angola LNG and increases from several countries including Nigeria, Malaysia, Algeria, Russia, and Brunei added another 1.4 billion cubic feet per day of LNG exports, more than offsetting a combined decline of 0.6 billion cubic feet per day in exports from Qatar, Indonesia, Norway, Peru, the United Arab Emirates, and Trinidad.

Asian countries led the growth in global LNG imports, accounting for 74% of the increase in 2017. Japan remains the largest LNG importer, importing 11.0 billion cubic feet per day in 2017. China had the largest growth in LNG imports globally (1.5 billion cubic feet per day) and became the world’s second-largest LNG importer in 2017, surpassing South Korea. LNG imports also increased in South Korea, Pakistan, Taiwan, and Thailand, which collectively added 1.0 billion cubic feet per day.

Growth in LNG trade was driven in part by new liquefaction capacity commissioned in Australia, the United States, and Russia, collectively adding 3.4 billion cubic feet per day of liquefaction capacity.

Since 2013, the U.S. and Australia have added a combined 9.67 billion cubic feet per day of new liquefaction capacity, with another 8.3 billion cubic feet per day expected to be completed by 2020. Including additions in the U.S. and Australia, liquefaction projects currently under construction are projected to increase global liquefaction capacity by 13.5 billion cubic feet per day by 2022.

The U.S. is expected to add 6.05 billion cubic feet per day of new liquefaction capacity by 2021, in addition to 3.5 billion cubic feet per day already in operation at Sabine Pass and Cove Point.

In 2018. the Elba Island liquefaction project in Georgia is expected to commission the first 6 of 10 small modular liquefaction units, or trains, with a combined capacity of 0.2 billion cubic feet per day. New trains at Cameron, Freeport, and Corpus Christi—all along the U.S. Gulf Coast—are expected to be commissioned in the next three years.

Source: US EIA