Between Mont Belvieu and the Deep Blue Sea - More U.S. LPG Export Terminals Needed?

Way back in 2012, the U.S. flipped from being a net LPG importer to a net exporter. Since then, exports by ship have skyrocketed, up from 0.3 MMb/d in 2013 to more than 1.1 MMb/d at year-end 2018, an astronomical compound annual growth rate (CAGR) of 30%. The vast majority of waterborne exports was out of a handful of LPG terminals along the Gulf Coast. These facilities — plus Ferndale in the Pacific Northwest and Marcus Hook near Philadelphia — so far have managed to handle the increasing flow of LPG, but with U.S. NGL production still rising, it looks like new export capacity is needed — and is on the way. All the while, imports of LPG, almost all from Canada, have remained relatively flat, averaging only 130 Mb/d in the 2013-18 period. Today, we begin a series on existing and planned LPG export capacity along the Gulf, West and East coasts — and what’s driving the build-out of these assets.

As we said in our Floating Bridge blog series, most U.S.-sourced propane and normal butane — the NGL purity products generally referenced as LPG — is produced by the processing of raw natural gas (which yields mixed NGLs, or y-grade) and the fractionation of that y-grade into purity products (see Talkin’ ‘Bout My F-f-fractionation for more on fractionation). Refineries also produce LPG, but it is the increased production of “wet” natural gas (with its high yield of propane, butane and other NGLs) that has really been propelling the U.S. LPG market. With the run-up in NGL production in the Permian, the Marcellus/Utica and other major shale plays, increasing volumes of U.S. propane and butane are being exported (blue layers in Figure 1); in fact, more than half of propane is already being sent abroad.

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