The recovery of ethane, a key component of liquefied petroleum gas (LPG), marks a halt in the United States due to historically high storage levels. Despite an increase in annual production, the recent slowdown can be explained by a context of fluctuating prices and logistical limitations.
Ethane production averaged 2.78 million barrels per day (bpd) in 2024, up 5% from the previous year, according to S&P Global Commodity Insights. However, this dynamic has slowed in recent months. In November, average production fell to 2.69 million b/d, from a peak of 2.95 million b/d in May.
Stocks at historic highs
The U.S. Energy Information Administration (EIA) reported record inventories of 80.9 million barrels in July, reduced slightly to 79.5 million in August. These levels remain 55% higher than the previous year and 39% above the five-year average.
This situation particularly impacted the Gulf of Mexico region, where production fell from its peak in August (1.99 million b/d) to 1.86 million b/d in November.
Scott Pryor, president of logistics at Targa Resources, noted at a conference that the Permian Basin continues to capture much of the available ethane thanks to low natural gas prices. However, regions outside this basin maintain a mode of rejection due to lack of favorable economic conditions.
Export projects: a breath of fresh air for 2025
The industry is looking forward to new export capacities expected to come online in 2025. Energy Transfer plans to add 250,000 b/d of flexible export capacities, allowing ethane or other LPG from its terminal in Nederland, Texas, starting in the third quarter of 2025.
Enterprise Products also announced major expansions. The first phase of its Neches River terminal will add 120,000 b/d of ethane export capacity from 2025. A second phase, planned for 2026, will allow exports of up to 180,000 b/d of ethane additional or 360,000 b/d of LPG, depending on demand.
Sheridan Swords, executive vice president of Oneok, noted that this capacity increase could boost the recovery by increasing demand for stored ethane.
Booming international demand
Global demand for ethane and LPG remains strong. According to Marshall McCrea, co-CEO of Energy Transfer, this demand “continues to grow exponentially.” These massive investments demonstrate a certain optimism about the export potential of the United States in the global ethane market.
As this new infrastructure comes into operation, it will provide a strategic solution to relieve domestic stockpiles and strengthen the United States’ position as a key player in the international LPG trade.
