The U.S. has firmly cemented a unique position as the dominant global ethane exporter, a trajectory propelled by a trifecta of factors: an abundant domestic supply, surging international demand for cost-advantaged lighter petrochemical feedstocks such as ethane, highly competitive pricing, and the foundational support of long-term customer contracts that de-risked substantial investments in sophisticated export infrastructure. As we move into Q2 2025, U.S. waterborne ethane exports consistently hover around 0.5 MMBPD, representing approximately 20% of total domestic ethane production. This underscores a fundamental shift in ethane market dynamics.

The next 12-24 months will usher in a pivotal “second wave” of ethane export capacity expansion and the deployment of new Very Large Ethane Carriers (VLECs), which is posed to unleash further unprecedented ethane export growth. Key commercial questions for stakeholders now revolve around: the ongoing sufficiency of supply to meet burgeoning global petchem appetite, the sustainability of ethane prices within their historically low range despite rising export volumes, and the evolving geographical landscape of demand drivers.

U.S. Ethane Supply-Demand Balance: A Persistent Surplus

The U.S. continues to ride the wave of robust associated gas production rich in NGLs, which persistently bolsters ethane potential. By mid-2025, the theoretical extractable ethane volume (what we refer to as “ethane potential”) is estimated at 4.3 MMBPD as of 2024. However, a critical commercial nuance remains: only about 65-70% of this potential is actually recovered. This ‘recovered’ volume is driven by factors such as natural gas quality specifications, specific midstream contractual obligations, and firm sales commitments with end users. The remaining 30-35% is either left unextracted in the natural gas stream or purposely excluded from NGL recovery due to economic or logistical considerations (i.e., “ethane rejection”).

Of the ethane actually recovered, approximately 2.1 MMBPD is currently consumed domestically by the U.S. ethylene cracking industry. This leaves a substantial and growing surplus, now closer to 0.6-0.7 MMBPD, available for export. While midstream constraints – specifically adequate NGL pipeline takeaway capacity from basins to fractionation hubs and sufficient fractionation – are always a consideration, the sheer scale of U.S. associated gas production from oil-weighted plays continues to boost overall ethane availability, ensuring ample supply to satisfy expanding export demand well into the future. The fundamental takeaway for investors and market participants is that the U.S. remains structurally long on ethane.

Global Ethane Pull: Long-Term Contracts and Strategic Partnerships Drive Demand

The global shift towards low-cost ethane as a preferred petrochemical feedstock is a testament to its economic advantage. This trend, initially catalyzed by leading petrochemical players in Europe (e.g., INEOS, Shell, Borealis) and India (Reliance) converting their steam crackers from naphtha, has now broadened dramatically.

Ethane export markets retain their unique characteristics, akin to the early days of LNG trade: they are predominantly characterized by long-term, point-to-point contracts that anchor significant investments in dedicated marine vessels (VLECs) operating on consistent routes for decades. Unlike more liquid commodity markets such as LPG, LNG, or crude, a spot market for waterborne ethane does not exist. Consequently, the expansion of U.S. ethane exports is not merely a question of supply, but critically dependent on the ability to secure new, creditworthy markets with dependable buyers. This commercial imperative underpins the massive capital outlays for new terminals and vessels.

U.S. ethane maintains an undeniable cost-competitiveness, making it highly attractive to buyers in regions burdened by higher feedstock production costs, particularly Asia and Europe. China remains the single largest destination for U.S. ethane exports, consistently accounting for over 50% of total volumes. Major Chinese petrochemical giants, including Sinopec, CSPC, Yulong, BASF (via joint ventures), and PetroChina, are aggressively developing new light cracker capacity, with plans for utilizing U.S. ethane. These expansion projects are poised to add a staggering 25+ million tons of new ethylene capacity globally over the next five years, with a significant portion dedicated to ethane-fed crackers.

Beyond China, INEOS’s significant investment of $3.7 billion in a 1.45 million metric tons per year (mt/yr) ethane cracker in Antwerp, Belgium, is a prime example of sustained European demand, expected to add 100+ MBPD of export demand by 2027. Furthermore, a growing interest in ethane as a feedstock from other South Asian countries, as well as emerging markets in Southeast Asia and even parts of Latin America, continues to broaden the global demand base for U.S. ethane. The confluence of rising global ethylene demand, particularly from the rapid industrialization and consumer growth in Asia, combined with the structural advantage of low-priced U.S. ethane, continues to be the primary engine of export growth.

A notable new development for ethane imports is the Terminal Química Puerto México (TQPM) in Coatzacoalcos, Veracruz, Mexico. Inaugurated in May 2025, this strategic ethane storage terminal is a 50-50 partnership between Advario and Braskem Idesa. Representing a $500 million joint investment, TQPM is designed to handle up to 80,000 barrels per day (b/d) of ethane, with a total storage capacity of 54,000 tons across two 50,000 m³ cryogenic tanks. This terminal is crucial for securing a stable feedstock supply for the Braskem Idesa Petrochemical Complex, enabling it to operate at full production capacity and supporting future growth plans for its polyethylene production, which can reach up to 1,050,000 tons per year. The terminal will primarily receive ethane from the U.S. via dedicated cryogenic ethane carriers.

U.S. Ethane Export Capacity: Entering the Next Phase of Expansion

As of Q2 2025, the three major operational ethane export terminals in the U.S. – Enterprise Products Partners’ Morgans Point Terminal (Texas), Energy Transfer’s Orbit Terminal (Texas), and Energy Transfer’s Marcus Hook Terminal (Northeast) – boast a combined capacity of approximately 0.5 MMBPD and are consistently exporting near their design limits.

To cater to the escalating global demand, substantial incremental ethane export capacity is currently under construction and slated to come online, effectively doubling U.S. ethane export capability over the next 24 months:

• Enterprise Products Partners: The expansion of its Neches River export facility (Beaumont, Texas) is on track. Phase 1, a 120 Mbpd ethane refrigeration train, remains expected online by Q3 2025. Phase 2, a flexible refrigeration train capable of handling 180 Mbpd of ethane or 360 Mbpd of propane, is targeted for H1 2026. Additionally, Enterprise is progressing with the conversion of a 120 Mbpd train at its Morgan’s Point facility to handle either ethane or ethylene, which could potentially add another 120 Mbpd of dedicated ethane capacity (in addition to the 120 Mbpd already operating) and a significant amount of flexible NGL capacity post-expansion.
• Energy Transfer: The Flex port project at their Nederland Terminal, designed to add 250 Mbpd of flexible NGL export capacity, with an estimated 150 Mbpd dedicated to ethane, is expected to come online in Q3 2025. Furthermore, they are constructing 900,00 Bbls refrigerated storage tank and approximately 20,000 bbls/d of incremental ethane chilling capacity as a part of Marcus Hook terminal optimization project.

Despite these significant capacity additions, projections indicate that U.S. ethane production growth will likely continue at a pace that maintains, or even slightly increases, current levels of ethane rejection through at least 2030. This critical point reinforces the central premise for ethane exports: despite the robust growth in export volumes, the inherent surplus of ethane in the U.S. will persist, thereby anchoring prices at relatively low and attractive levels. However, natural gas prices typically act as a soft floor for ethane prices, as ethane is rejected into the gas stream when its value falls below its fuel-equivalent worth. As global ethane demand continues its upward trajectory, fueled by ever-expanding petrochemical projects across Asia and Europe, the U.S. is strategically positioned to fully capitalize on its vast and structurally advantageous supply coupled with its rapidly expanding export infrastructure. This creates compelling commercial opportunities across the entire ethane value chain.

-Kush Thakkar

If you are interested in a deeper dive into U.S. ethane market outlook, please contact us at info@enkonenergy.com. We encourage you to subscribe to our articles to get weekly articles via email.

Enkon Energy Advisors is a boutique consulting firm specializing in oil & gas, and energy transition since 2012. We bring deep expertise in a range of markets including natural gas, NGLs, Oil, LNG, and Energy Transition where we provide commercial and market advisory to investors, energy companies, and project developers with consulting services, subscription reports, and analytics, with the goal of delivering commercially actionable outcomes to our client.