During the past year the issue of ethane utilization has been very much in the public eye. The issue, however, does not seem to have been one of supply versus demand but rather one of control (and perhaps cost). In point of fact, at the recent public inquiry into matters arising from the provincial government's proposed policy on ethane, virtually no evidence was offered by any of the participants on the question of supply/demand. This paper will offer a perspective on ethane supply/demand and in the context of those conclusions explore the implications of the Alberta government policy on ethane.
Until the 1970's the ethane content of Alberta's natural gas was of very limited interest. In fact, ethane was assumed to be gas for purposes of reserve and surplus calculations and had no separate identity. To be sure, in the early 1950's, C-I-L had established an ethylene/polyethylene venture at Edmonton based on Judy Creek ethane, but by 1970, the ethane requirements for this operation were still less than 2000 barrels per day, hardly a significant quantity.
The company that was primarily responsible for stirring up interest on the ethane content of Alberta's natural gas was DOME, which In about 1970, began to look at schemes for extracting the ethane and using it as a petrochemical feedstock and in various energy applications. In cooperation with DOW CHEMICAL and subsequently with a NOVA-led group, DOME's project underwent a number of major modifications and emerged in 1975 as what has been commonly come to be known as the ALBERTA ETHANE/ETKYLENE PETROCHEMICAL PROJECT.
The first phase of this project is shown in Figure 2.1. Basically it involved recovering about 75,000 barrels per day of ethane by modifying an existing system of LPG straddle plants. Slightly less than 50 percent (35–36,000 barrels per day) of the ethane was to be utilized as petrochemical feedstock in Alberta. The remainder was to be transported by pipeline (COCHIN) to a fuel market in Ohio.
Given the reserve outlook at that time, the overall ethane requirement, and the potential efficiency of the straddle plant system, it was the logical route for ethane supply to the project. It retained, however, the vulnerability already inherent in the straddle plant system, namely, that both ethane and the LPG's could be removed upstream in the field by the natural gas producers. However, at the time the decision to proceed was made, there was no other significant Alberta market for ethane and no indication of any competing petrochemical projects. Furthermore, the permitting process for ethane utilization in the Province and for its removal from the Province appeared to offer additional comfort.