Ohio and other key swing vote states are becoming more reliant on Canada as a customer for their energy exports, despite Trump’s antagonistic trade relationship with its neighbor to the north.
President Trump last week reiterated his stance that he and Canadian Prime Minister Justin Trudeau have reached an impasse on NAFTA, threatening to impose a straight tax on all cars coming from Canada into the United States. It was enough to get Trump to ignore Trudeau’s request for a meeting.
“His tariffs are too high and he doesn’t seem to want to move, and I told him ‘forget about it’ and, frankly, we’re thinking about just taxing cars coming in from Canada,” Trump said at a press conference.
Despite the tensions, the Energy Department says U.S. shale energy states like Ohio and Pennsylvania are becoming more deeply connected to Canada and other foreign customers than ever before because of their vast energy production.
Ohio, a key voting state for Republicans, is also quickly becoming a destination for companies from around the world that want access to the liquid-rich byproducts that come from natural gas drilling, namely ethane. Ethane is used to make ethylene, which is used in nearly all manufactured goods.
The Energy Information Administration, the Energy Department’s analysis arm, calls ethane the next big U.S. energy export after oil and natural gas, and Canada wants a lot of it.
The demand is so high for the product from Ohio that one of the largest ethane pipelines linking the Buckeye State to refineries in Ontario was opened earlier this year.
“In Canada, the commissioning of expanded ethylene capacity at a petrochemical cracker in Corunna, Ontario, coincided with the early-2018 completion of the 50,000 [barrels per day] Utopia ethane pipeline linking ethane production in Ohio with chemical facilities in Ontario,” according to the EIA’s latest Week In Petroleum report.
“The Utopia pipeline, combined with two other ethane pipelines that came online in 2014, has shipped 90,000 [barrels per day] to Canada in the first half of 2018,” the agency added.
The pipeline company Kinder Morgan said Utopia, which is nearly 300 miles long, can be expanded to deliver more than 75,000 barrels per day as demand grows.
Ethane demand in both global and domestic markets will only continue to increase in the coming year as more petrochemical refineries open and new pipelines and seaborne exports terminals increase, the report explained.
House lawmakers and senators from the tri-state region that includes Ohio, West Virginia, and Pennsylvania are seeking to pass legislation to study the creation of an “Appalachian Ethane Storage Hub,” which would create the infrastructure necessary to expand the market for ethane even more.
Many of the investments in ethane refineries, or crackers, both in the U.S. and abroad have been a result of the huge amounts of ethane being produced between Ohio and Pennsylvania, according to EIA.
“U.S. ethane exports, which have become a significant outlet for U.S. ethane production, averaged 290,000 [barrels per day] in the second quarter of 2018,” EIA said, noting the marine export terminal for ethane that came online at Marcus Hook in Pennsylvania. “This capacity to export ethane from the United States has enabled development of foreign ethane projects,” the agency added.
The Brazilian petrochemicals manufacturer Baskem converted its petrochemical cracker in Bahia to consume ethane supplied from the United States, according to the agency’s report. “Other U.S. ethane export destinations include India, the United Kingdom, Sweden, and Norway.”
But the investment is coming into Ohio from overseas, as well. PTT, Thailand’s global chemical company, is looking to build a $5-10 billion petrochemical facility in eastern Ohio to refine ethane.
It expanded the project’s size by partnering earlier this year with South Korea’s Daelim Industrial Co., which Republican Gov. John Kasich called “a game-changer, not only for Eastern Ohio, but for the entire state, as it will create so many new opportunities for economic development.”
