Still a dream - GAIL's ethane cracker plans
GAIL's efforts to replicate Reliance's success in the ethane business look set to remain a fantasy, at least for now.
A senior GAIL source tells us the company is evaluating EoIs to hire a Very Large Ethane Carrier (VLEC) to carry ethane to India from four US facilities and to trade ethane on the global market. Ethane is the feedstock that produces ethylene for packaging films, other plastic products, and synthetic rubber.
"We have received some bids," he says, "but almost all of them offer the VLEC from 2027 onwards." GAIL wants the 80,000-90,000 cubic metre capacity VLEC for an initial 20 years plus an optional five years from 2026, and on January 25 (2023), invited EoIs with a February 25 (2023) deadline, later extended to March 31 (2023).
GAIL was encouraged to explore increasing its use of ethane as a petrochemicals feedstock because of abundant availability in the US following the shale gas revolution, as we reported on February 9 (2023). Our company source adds that GAIL is "evaluating the entire ethane value chain."
Reuters reported on May 10 (2023) that GAIL is scouting for land near its Dabhol LNG terminal to set up a 1.5m t/y ethane cracker, estimated to cost $4.9bn. "But nothing is finalised," stresses our GAIL source.
Another industry source dismisses GAIL's ethane plans as "too expensive a dream to be fulfilled." He tells us GAIL's current ethane cracker plans are the rehash of an Rs45,000cr ($6.43bn) proposal in 2015 in partnership with HPCL to set up a similar project in Andhra Pradesh with state government financial incentives.
"That project was discussed for nearly four years but died as political equations changed," we hear. "If that (proposed) project was so lucrative, why wasn't it set up?" He adds ethane requires different infrastructure from gas, such as shipping tankers, onshore storage tanks, and a pipeline network.
GAIL's cross-country pipeline network mainly carries gas (ethane, propane, carbon dioxide, water vapour) and methane (colourless, odourless). "All gas supplied in a CGD network, either as CNG or piped gas, is methane", we hear.
"If ethane is transported, mixed with methane in the same pipeline system, and pumped into CGD networks, vehicle engines using CNG will be damaged; so too will equipment in factories that use piped gas."