Drive My Car - The Thinking Behind A Planned Gulf Coast Ethylene-To-Alkylate Project

For a few years now, the Shale Revolution has been opening up development opportunities hardly anyone would have thought possible in the Pre-Shale Era. For example, new crude oil, natural gas and NGL pipelines from the Permian to the Gulf Coast, lots of new fractionators and steam crackers, as well as export terminals for crude, LNG, LPG, ethane and, most recently, ethylene. And here’s another. Thanks to the combination of NGL production growth and new ethylene supply — plus increasing demand for alkylate, an octane-boosting gasoline blendstock — the developer of a novel ethylene-to-alkylate project along the Houston Ship Channel has reached a Final Investment Decision (FID). Today, we discuss how the FID is driven by both supply-side and demand-side trends in the NGL and fuels markets.

As Rusty Braziel said in “The Domino Effect,” his book on the Shale Revolution, energy markets over the past few years have been characterized by an interconnected sequence of developments that have together propelled the U.S. crude oil, natural gas and NGL sectors into an extraordinary new era of abundance. Examples of the knock-on effects of the flourish caused by plentiful drill-bit hydrocarbons abound, but one that caught our eye in recent weeks is Next Wave Energy Partners’ (NWEP) FID on its planned 28-Mb/d ethylene-to-alkylate plant in Pasadena, TX. We’ll discuss the company’s project, known as Project Traveler, in detail in a moment; first we’ll look at “the row of falling dominoes” that led — almost inevitably, it now seems — to its fruition.