As the Trump administration clamps down on ethane exports to China, industry is scrambling to find a home for displaced volumes.
The Department of Commerce’s Bureau of Industry and Security (BIS) has denied export licenses to Enterprise Products (EPD) for three ethane cargoes. The denial follows a May 23 BIS determination that high-purity ethane (≥95%) exports to China pose a national security risk.
With the China market now effectively off-limits, the key question becomes: Is ethane rejection a realistic outlet?
Rejecting the ~250 Mb/d of ethane that previously flowed to China would equate to roughly 360 MMcf/d of additional volume injected into the US natural gas stream. Assuming an average current pipeline gas energy content of 1,037 Btu/cf and a national average spec limit of 1,094 Btu/cf, operators can increase heat content by up to 57 Btu per cubic foot.
That margin allows for ~7.8% of each cubic foot of gas to be replaced with ethane. East Daley Analytics estimates ~5 Bcf/d of gas would need to be reblended to fully absorb 250 Mb/d of rejected ethane without breaching pipeline specs. On paper this is feasible — but not everywhere.
Rejection is most likely to come from the Anadarko and Rockies regions, where ethane economics are more tenuous and processors have greater flexibility. The Permian Basin, by contrast, remains constrained on gas takeaway, limiting its rejection capability in the near term. However, some Permian recovery could still occur if operators opt to blend ethane downstream of the bottlenecks, easing egress pressures.
Petrochemical buyers in the US or Europe may also emerge opportunistically. These companies could consume more cheap ethane in spot markets, or store volume at Mont Belvieu if forward curves support contango strategies.
By limiting ethane exports, the administration also advantages the US petrochemical sector. Pinching China’s ethane supply will stifle its ability to produce ethylene since its petrochemical sector is 100% reliant on the US for feedstock. This move will make US petchem producers more competitive by lowering the cost of ethane (more stays in the US) and supporting a higher-priced end product (by reducing China’s output).
This is more than a trade hiccup — it’s a structural threat to the fastest-growing leg of US NGL exports. With 100% of China’s ethane imports sourced from the US, the new BIS policy could stall petrochemical expansions, create feedstock shortfalls, and leave billions in Chinese infrastructure bets hanging. Meanwhile, US midstreamers must now find a home for ~250 Mb/d of displaced ethane — either through rejection, burn or blend. The race is on. – Julian Renton Tickers: EPD.
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