US to Export More Chem Feedstocks Amid Drought of US Cracker Projects
US production of ethane, propane and other natural gas liquids (NGLs) will continue to grow while domestic demand for these chemical feedstocks will likely remain flat, a trend that is contributing to a surge in new terminal projects that will export these products to growing markets overseas.
US ETHANE, PROPANE PRODUCTION TO CONTINUE RISING
Midstream companies continue to announce new projects, which would increase US production of ethane and LPG.
These projects are on top of the ones that are already under construction and that will start up in the upcoming months. Targa alone is starting up four natural gas processing plants in west Texas in 2026, and it has picked out multiple sites for future processing plants in the region’s Delaware and Midland basins.
The following table shows the ICIS forecast for US NGL supplies in the next couple of years. Figures are in millions of bbl/day, and they include imports as well as production from gas processing plants and refineries.
US supplies of NGLs are rising because of increased production of crude oil and natural gas. The following table shows forecasts for US production of oil and dry natural gas from the short term energy outlook of the Energy Information Administration (EIA). Oil figures are in millions of barrels/day. Gas production is in billion of cubic feet/day. As shale reservoirs mature and reservoir pressures decline, the ratio of gas to oil increases. This raises gas production and further increases NGL supplies.
NO NEW CRACKER OR PDH CAPACITY
The US has had a drought of new cracker announcements, with 2025 being the first year since 2010 that the country will add no new ethylene capacity.
Chevron Phillips Chemical and QatarEnergy will break the drought in 2026 when their Golden Polymer joint venture project starts up.
But that’s it. ExxonMobil Chemical and Shintech have early plans for crackers, but neither have announced final investment decisions (FID).
Westlake has expressed openness into possibly expanding the joint venture cracker that it owns with Lotte Chemical in Louisiana. But any decision would have to follow a review of costs.
FG LA LLC, a subsidiary of Formosa Plastics Group, has said little about a two-phased proposed project called Sunshine that would produce ethylene and downstream derivatives.
Thailand’s PTT Global Chemical (PTTGC) has been considering a cracker in Ohio that would supply ethylene for new PE capacity. The project hit a snag in July 2020, when the company’s joint venture partner left.
Meanwhile, no company has announced plans to consider any propane dehydrogenation (PDH) units in the US, which convert propane into propylene.
Rising costs for labor and material have made capacity expansions less attractive. In addition, the world has an oversupply of many plastics and chemicals, which is providing producers with another reason to forego capacity expansions.
Because of the dearth in new chemical projects, demand for NGLs will remain steady in the next couple of years, according to the latest short term energy outlook from the EIA, as shown in the following table. Figures are in millions of barrels per day.
US NGLS BOUND FOR OVERSEA MARKETS
Outside of the US, companies continue to add capacity despite the supply glut.
By 2029, capacity in northeastern Asia will be nearly 43% larger than in 2024 according to the ICIS Supply & Demand Database. For Asia and Pacific, capacity will grow by more than 10% over the same period.
In India, GAIL (India) and Nayara Energy have each proposed building 1.5 million tonne/year ethane crackers.
In Vietnam, Siam Cement Group (SCG) plans to build Vietnam’s first integrated petrochemical complex that will use ethane from the US as a feedstock.
For propylene, capacity in northeastern Asia will be nearly 28% larger in 2029 versus 2024. For Asia and Pacific, capacity will be grow by nearly 25% over the same period.
In addition, demand for LPG continues to grow because consumers are using it to replace wood and other sources biomass-based fuel.
Rising supplies of chemical feedstock in the US and rising demand in the rest of the world are creating an opportunity for midstream companies to connect the producers with the customers by expanding export capacity.
DETAILS ON TERMINAL PROJECTS