Any delay to the Mariner East 2 project would impact LPG markets from Applachia to Asia, according to ESAI Energy's analysis of the Mariner East expansion's impact on U.S. NGL exports. In contrast, ethane exports are emerging much more slowly, according to ESAI Energy's newly released Global NGL Outlook.

Northwest Europe is cracking more ethane and LPG than ever. When Mariner East 2 is completed later this year, it will provide Appalachian NGL producers an outlet for 345,000 b/d of ethane and LPG, most of which is earmarked for ethane.

Europe's use of ethane is developing only slowly, however, and it will take years for ethane exports to reach capacity. For example, both Norway and the UK's imports of U.S. ethane have fallen short of expectations. While this shortfall means there is still upside in Europe's ethane imports, it is also a reminder of the gradual pace at which new ethane demand in Europe is developing.

Mariner East 2 is critical, however, in terms of the U.S.'s ability to physically move more LPG barrels to meet soaring foreign demand. The U.S. is a marginal LPG supplier to Europe. Lately, both heating and petchem demand have created plenty of short-term demand for marginal U.S. barrels from the U.S. But U.S. market share in Europe depends on local developments across the Atlantic. Rather than trigger a spike in U.S. deliveries to Europe, Mariner East 2 simply will shift the outflow of U.S. LPG to Europe away from Gulf Coast terminals. More critically, however, that shift will free up more Gulf Coast LPG exports for Asia.

“Europe is ready to absorb as much U.S. LPG Mariner East 2 can process, but it will not result in any spike in U.S. flows to that market,” comments ESAI Energy Principal, Andrew Reed. “More importantly, there is an imminent global need for Mariner East 2. Global demand is soaring and much of the new supply is in the U.S, so the new export infrastructure is a vital bridge between U.S. producers and foreign buyers. Any delay to the Mariner East expansion would have implications for markets from Appalachia to Asia.”