With all the attention on U.S. exports of crude oil and LNG, there has been much less notice of the remarkable growth of liquid petroleum gas (LPG). Exports have burgeoned seven-fold, from 54 million barrels (MMbbl) in 2011 to 367 MMbbl in 2016, according to U.S. Energy Information Agency (EIA) data.
Demand has been strong for long-established consumption in cooking and heating not just in the traditional stronghold of Asia, but also Latin America and Africa. A significant contributor to the fresh demand is propane consumption in chemical processing. Most notably that is in the form of dehydrogenation (PDH) to propylene for polypropylene as well as gylcols and acrylonitrile.
Another important factor has been access to markets. The expansion of the Panama Canal has been a significant factor, allowing larger ships from the Gulf Coast to reach delivery ports on the Pacific. LPG carriers accounted for just 2.5% of the Panamax vessels that passed through the canal in the year since the expansion, but 34% of the neo-Panamax vessels that transited according to data complied by Sandy Fielden, director of oil and products research at analyst firm Morningstar.
There are seven existing LPG export terminals in the
Ridley Island Propane will be designed to ship up to 1.2 million tons of propane per year. It will be built on a brownfield site leased from the port authority with existing rail access, marine jetty and deep-water access. In May, global terminals major Vopak joined the project as a partner.
Propane from
“The sizable increase in LPG shipments through the Canal using very-large gas carrier vessels since the expansion purely reflects shippers applying economies of scale to already escalating volumes of U.S. exports” wrote Fielden in the July 17 report, “LNG and LPG Shippers Celebrate Panama Anniversary.” “The ability to use larger ships over the past year has coincided with expanding export infrastructure and demand for LPG from Asian countries.”
Morningstar noted that U.S. output of propane from gas-processing plants more than doubled between 2010 and 2015 to more than 1 MMbbl/d. But with domestic demand effectively static, exports have jumped.
“We expect U.S. LPG exporters to continue taking advantage of the expanded Panama Canal to ship cargoes to Asia as well as the west coast of
There is definitely new demand for LPG, Fielden told Hart Energy.
“China is building a lot of PDH and there is no local source other than refinery byproduct,” he said. “But that demand is definitely subject to arbitrage. The Chinese are savvy. They won’t buy without a good price.”
Of the existing terminals in the
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