Renegotiating ethane contracts from producer/processor perspectives

An overview of commercial practices relating to ethane sup ply and other collateral issues, including the variety of technologies used in the recovery of ethane and the manufacture of ethylene was provided. Ethane supply and demand balances, the Alberta ethane supply, the justifications for ethane recovery, the need for renegotiating ethane contracts in view of the changing Alberta market, the major price components , producers and processors' objectives in ethane sales, the nature of ethane contracts, and ethane pricing mechanisms were reviewed. The 'Alberta Advantage' based on gas price, large-scale ethane recovery, proximity to the largest market in the world, efficient transportation and fractionation facilities, further enhanced by deregulation and reduced regulatory barriers, was described. It was suggested that the enhanced competition and increase in market diversity demands a transparency in pricing that may well be realized as additional players enter the petrochemical business, and as competing transportation, processing and fractionation options become available to ethane suppliers and purchasers.1 tab