As I noted in the Condensate Economics Explained this summer, condensate splitters will not be a sustainable solution to the condensate flood in the US by itself. The recent article by RBN indirectly supports this claim. RBN expects very high natural gas liquids (NGL) production. The problem child in NGL is ethane. Ethane, because of its unique property relative to propane, butane, and pentanes plus, requires much more effort to liquefy.   Therefore, often ethane is left in the gas stream (rejected) versus extracting and supplying it to the petchem industry. However, only so much ethane can be left in the dry gas stream before it would fail to meet pipeline specifications.

With ethane falling to the lowest level ratio in decades to natural gas, there is a large incentive to go ahead and leave as much as one can in the dry gas stream. As also noted by RBN, there is just so much NGL that ethane will easily exceed the current demand levels leaving prices to likely free fall in certain regions. This will result in petchem plant demand which brings us back to Condensate splitters. The yield of condensate splitters is mainly Naphtha. Naphtha is used by many petchem plants. There exist many chemical plants which can take multiple feedstocks to produce the same product. The driving products of the petchem industry are known as Olefins (CnH2n) – a hydrocarbon with one double bond carbon and single bonds elsewhere – aka Alkenes (sorry about being so nerdy, but sometimes you just have to be technical to really understand it all – I also need to use my Chemical Engineering Degree every now and then). These Olefins include the more recognized names of ethylene, propylene, and butylene. The process of taking the feedstock and converting the product is typically called cracking. The reason for this is because you are breaking the molecular bonds and producing a new combination which constitutes your product.

Historically speaking Naphtha is the dominant feedstock for world production of olefins. For ethylene production Naphtha represents almost 50% of the primary feedstock. However the use of ethane to make ethylene is rapidly growing. Hopefully by now you are starting to see the convergence of Condensate Splitter and Ethane. Even if a petchem plant is designed for a certain feedstock – all it takes is some capital to be able to process other feedstock. Those who built US condensate splitter hopefully did their economics based on significant market competition with ethane.