Ethane is too cheap

Down there on the Gulf Coast of Texas, you might be able to buy a barrel (42 gallons or 159 liters) of ethane for $8 to $25 (0.20 to 0.60 per gallon excluding the cost of the barrel). If that seems like it is cheaper than fresh, high quality, bottled water (Retail equivalent), you’re right. That would cost perhaps $42 per barrel at $1 per gallon. In summary: ethane is cheap.

A by-product of fracking for natural gas

When we say Natural Gas in the context of energy and electricity, we primarily mean Methane (CH 4). Commercial natural gas delivered to homes and power plants typically consists of 85% to 97% methane.

Now ethane (not to be confused with methane) comes out of the ground along with methane, propane and butane. But here’s the thing: Nobody is drilling for the ethane. Instead, people want the methane, together with the propane and butane.

Over the last 20 or 30 years in the US, for a variety of reasons, we have become very propane, butane and methane hungry. Indeed, we use it all over the place. A lot of kitchens burn gas to cook food and a significant primary way of generating electricity nowadays is burning methane, replacing the even dirtier coal. Methane is delivered via pipelines directly to power plants as natural gas. Compared to coal, burning methane is much better for air quality as methane burns very cleanly. We also get more energy per unit of carbon dioxide produced compared to coal.

So mining (fracking) has resulted in increased volumes of methane, propane and butane, to the point where the United States is now the world’s dominant producer of natural gas (methane/propane), accounting for approximately 26% of global production in 2025. And thus, the US has a lot of ethane.

Ethane (like the other 3) is a greenhouse and specifically a ozone inducing gas that can’t (should not) be released into the atmosphere as is. As a natural gas supplier, you can either burn it or try to sell it. Supply and demand determines you can sell it to a petrochemical cracker facility, albeit at a very low price.

Recycled aluminium is significantly cheaper than freshly produced (primary) aluminium. This cost advantage stems from the massive difference in energy consumption: Recycling requires only about 5% of the energy needed to extract and refine aluminium from bauxite ore.

Ethane, Propane, Butane and Methane

During natural gas processing, its components are separated via low-temperature fractionation.

Propane (the main component of LPG) relates to methane and ethane as part of the alkane series of hydrocarbons, differing primarily in carbon chain length, source, and physical state.

Propane and Butane are easily liquefied under moderate pressure at ambient temperatures, making them ideal for bottled gas (LPG) and transportation.

Methane is kept as the primary pipeline gas.

Ethane sits in a difficult middle ground: it is too heavy to remain efficiently in the methane pipeline stream in large quantities (due to heat content regulations), but it is too light to be easily liquefied for transport like propane.

Ethane is not wanted?

Ethane is thus often treated as a “residual” or “waste” product in the context of fuel because infrastructure is optimized for methane (pipelines) and propane (liquid tanks). Since ethane requires specialized cryogenic handling or dedicated pipelines to transport as a liquid, and cannot be easily sold as bottled gas, it is often the component left over after the more versatile fuels are extracted.

If there is no nearby petrochemical cracker to buy it, it is economically rational to leave it in the natural gas stream to be burned as fuel, effectively making the separated liquid product cheap or even negative in value relative to processing costs.

Ethane is cheap

Ethane is cheap primarily due to massive oversupply driven by the shale gas boom and its limited applications compared to other hydrocarbons.

Oversupply from Shale Gas

Advanced drilling and hydraulic fracturing technologies have led to a surge in natural gas production, which contains significant amounts of ethane (often 1–15% of the stream). In many cases, the supply of extracted ethane exceeded the capacity of petrochemical plants to consume it, leading to prices dropping below the energy value of methane. At times, the BTU value of ethane has traded at a discount to natural gas, making it an incredibly cheap feedstock.

Rejection into Natural Gas

When the price of liquid ethane drops below the value of leaving it in the natural gas stream (based on its heat content), processors choose not to recover it. This “ethane rejection” floods the natural gas pipeline system, further suppressing the price of separated ethane because the marginal cost of leaving it in the pipe is effectively zero compared to the cost of extraction and separate transport.

High Value as Feedstock

Ethane is the primary feedstock for producing ethylene, the building block for polyethylene plastics. Because the petrochemical industry can absorb large volumes at low prices to produce high-margin plastics, the market equilibrium for ethane remains low compared to fuels like propane or gasoline. The massive scale of modern “world-scale” crackers creates a demand floor, but the sheer volume of available ethane keeps prices depressed.

Recycling ethane based plastics is significantly more expensive than making new plastic.

Making plastics

It turns out, rather than burn it, ethane can be used to make plastics. It is a feedstock for the petrochemical plastic industry.

You can do some fairly simple chemistry to ethane to make it into ethylene, which then can polymerize into polyethylene, which is what plastic grocery bags are made out of.

And you can also do a little bit of additional chemistry processing of the terephthalic acid to create copolymers and thermoplastic polyesters like Polyethylene terephthalate (PET) and glycol-modified PET (PETG). PETG plastics are more flexible, and impact-resistant plastic compared to standard PET.

PET and PETG are amongst the most common forms of plastic. PET is the stuff that soda bottles are made out of. PET is preferred over PETG for carbonated beverages primarily due to its superior gas barrier properties and higher tensile strength and because it is cheap. PETG is used in specific applications like culture media bottles and thermo-formed packaging.

In summary, most single use plastic starts out as ethane.

Recycling single use plastics

Recycling single use plastics, most agree, is a goal worth striving for. Rather than polluting the earth, including our bodies, with an ever increasing amount of PET and PETG derived plastics, scrubbing the land, seas and indeed our bodies from plastics serves the goal of a healthier, more sustainable earth.

All plastics have a recycling code. The two materials mentioned have different codes (PET is #1, PETG is #7) which is aimed to avoid them being mixed in recycling streams. Each type requires its own recycling path.

However, at present, recycling soda bottles or plastic bags is somewhat complicated and capital intensive. The recoup the investments, recycled plastics have to be sold at a high price, many times more than what it costs the industry to produce new plastics. The low price of ethane, helps keeping the price of recycled plastics too high in comparison.

The harsh reality is that recycling ethane based plastics is significantly more expensive than making new PET or PETG plastics and thus is not a popular investment. Additionally, the increasing demand for natural gas, means more ethane is available making sure the price of ethane will remain low for the foreseeable future.

The future

If preservation of the health of our bodies and our earth in general is our goal, we should anticipate both cheaper recycling methods and reduced demand for methane and propane.

As for cheaper recycling of plastics I look for example at new chemical process that is using a nickel catalyst and some hydrogen can crack plastic to be recycled apart and break it down into component parts that can give it a 2nd life for something else. This to replace sorting and identifying components of the plastics to be recycled.

Or I look at the experiments of using a plasma torch process, exposing the plastics to the plasma in an oxygen free zone, to break it down to components.

As for reduced demand for natural gas and thus reduce the surplus of cheap ethane: I look at replacing burning natural gas for electricity generation with solar/wind generation combined with batteries, nuclear power and specifically geo thermal driven generation.

Iceland shows geo thermal electricity (and heating) at a large scale is entirely possible. Surely there is enough heat stored in our earth to power life on our planet for millions, billions of years. All we need it the capability of drilling just a little bit deeper than we currently can.