US terminal operator warns that its ethane and butane exports could fall

Enterprise Products Partners said on Thursday that the U.S. Department of Commerce's requirement for it to apply for a licence to export to China could hurt its ethane-and-butane exports.

Reports on Wednesday said that the United States had ordered a wide range of companies to cease shipping products, such as ethane or butane, without a permit to China and revoked permits already granted to some suppliers.

The Bureau of Industry and Security (an agency of the Department of Commerce) informed the company of an unacceptable risk of military use in China for exports of butane and ethane.

The liquids ethane and butane that are separated from natural gas can be used for plastics, chemicals, and heating.

Chinese petrochemical companies use ethane to feed their petrochemical plants because it's a cheaper alternative to naphtha. Meanwhile, U.S. producers of oil and gas need China as the domestic supply is insufficient.

Enterprise, one the largest U.S. companies that handle ethane, butane, and propane through their port terminals, stated in a regulatory filing that it was evaluating procedures and internal control and could not decide if it would be able obtain a licence.

Enterprise said that in 2024 the terminal at the Houston Ship Channel, which is located on Enterprise's property, will load about 213,000 barrels of ethane per day, about 85,000 of which, or 40%, will be shipped to Chinese markets.

Enterprise warned that it could not predict how other markets and uses would develop, nor their potential impact on the ethane or butane price.

Natural gas liquids, which are by-products of oil drilling and gas exploration, may also have an indirect impact on U.S. crude and natural gas prices and production.

Enterprise warned that, at this time, it is unable to determine whether the restrictions will have an adverse material effect on its financial position, cash flow, or operations.

According to U.S. Energy Information Administration (EIA) data, U.S. exports to China of ethane reached a new record of 227,000 bpd by 2024. Butane exports also rose to a new record of 26,000 bpd.

These exports were seen as a way to reduce China’s trade surplus with the U.S.

(source: Reuters)