In 2022, U.S. ethane demand increased by approximately 9%, or almost 0.2 million barrels per day (b/d), according to our Petroleum Supply Monthly.

U.S. production and consumption of ethane (a hydrocarbon gas liquid used almost exclusively as a feedstock in the petrochemical industry) has grown since 2010, along with the build-out of U.S. petrochemical capacity. U.S. ethane product supplied, a proxy for ethane consumption, averaged just under 2.0 million b/d in 2022, reaching a peak of almost 2.2 million b/d in July.

Most U.S. petrochemical cracking capacity built after 2012 can use only ethane as a feedstock, meaning high ethane prices can reduce ethylene production. Ethane prices nearly doubled during the first six months of 2022, from approximately 37 cents/gallon (gal), or $5.65 per million British thermal units (MMBtu), to 64 cents/gal, or $9.67/MMBtu, according to Bloomberg Finance, L.P. In the third quarter of 2022, new ethylene crackers came online in Port Arthur, Texas, and Monaca, Pennsylvania, adding a combined 156,000 b/d of domestic ethane cracking capacity. These capacity additions follow a 108,000 b/d increase in ethane cracking capacity in 2021.

Petrochemical plants in the United States and internationally use ethane in steam crackers to produce ethylene, a precursor chemical for manufacturing many plastics and resins. Similar to the expansion of U.S. ethane cracking capacity, international demand for U.S. ethane as a petrochemical feedstock has also been increasing over the past decade, leading to higher exports. Annual U.S. ethane exports reached close to 450,000 b/d in 2022, up 22% from 2021. U.S. ethane exports to China increased 50% from 2021 to a record-high average of 157,000 b/d in 2022. Ethane exports to China increased because an additional 75,000 b/d of ethane-fed cracker capacity came online in China. The construction of new ethane tankers has also helped make higher U.S. ethane exports possible.

In our Short-Term Energy Outlook (STEO), we forecast that domestic ethane consumption will remain similar to 2022 because we do not expect any new U.S. petrochemical cracker plants to be completed before the end of the forecast period. We expect ethane consumption to average 2.1 million b/d in 2023 and 2024. We forecast ethane exports will average 500,000 b/d by December 2024, up 50,000 b/d compared with the 2022 average. More petrochemical capacity coming online abroad and export capacity additions will drive these increases.