US ethane exports will fall by 24 per cent in 2025, while production of the shale gas will decline by four per cent, the US Energy Information Administration said on Tuesday, after Washington requested US exporters seek licenses to ship ethane to top buyer China.
Around half of all US ethane exports head to China, and the license requirement has already impacted exports and raised questions about extracting ethane from natural gas versus leaving it in the stream.
US ethane exports will fall to 410,000 barrels per day in 2025 from a previous forecast of 540,000 bpd, the EIA said, adding that output would fall to 2.8 million bpd from 2.9 million bpd estimated previously.
Exports would fall by 51 per cent to 310,000 bpd in 2026, while output would fall by 12 per cent to 2.7 million bpd, the government's statistical arm said.
"We reduced our forecast for US ethane production for both 2025 and 2026 because we expect that without an outlet for exports, ethane will not be separated from the natural gas stream," EIA wrote in its monthly short-term energy outlook.
Ethane is separated from natural gas, a process called ethane recovery, when prices for it are higher than prices for natural gas and it is profitable to do so.
Almost all the ethane currently exported to China can be left in the gas stream if the export challenges continue, analysts have said, boosting natural gas volumes and reducing ethane output.
Energy Transfer and Enterprise Products Partners, two of the top US ethane producers and exporters, said that they have received letters from the US Commerce Department requiring the companies to apply for a license to ship ethane to China.
Enterprise said it also received a notice from the US Government of its intent to deny emergency requests for three proposed export cargoes of ethane totaling around 2.2 million barrels to China.
At least nine vessels, originally expected to load ethane and set sail for China, were stalled or drifting along the US Gulf Coast on Tuesday, according to ship-tracking data.
(Reporting by Arathy Somasekhar in Houston; Editing by Lisa Shumaker)