Stayin' Afloat With The LP Gees

Exports of liquefied petroleum gases (LPGs – propane and butane) from the U.S. to international markets - are expected to nearly double from 460 Mb/d in 2014 to 915 Mb/d in 2019 as production from gas plant processing exceeds domestic demand. Available Very Large Gas Carrier (VLGC) vessels to carry these increased overseas volumes are limited. As a result spot freight rates have reached record levels recently. In today’s blog “Stayin’ Afloat With the LPGees – Part 4 Freight Voyage Calculation Model” Sandy Fielden walks through a voyage cost calculation. Today we walk through a voyage cost calculation.

At our School of Energy International LPG session earlier this month, Kelly Van Hull presented RBN’s outlook for global liquified petroleum gases (LPG)  production – showing the US poised to become the world’s top exporter of LPGs within the next year or two - displacing Qatar. While most U.S. LPG exports go to Latin America today, a growing portion will move to Europe and Asia in the future. The limited fleet of very large gas carriers (VLGCs) used to ship LPG is growing rapidly with a record new build order book of 72 ships – 45 percent of today’s fleet of 161 vessels. Spot freight rates assessed daily by London’s Baltic Exchange are also at record levels of $82/MT this week. Today we take a closer look at international LPG ship chartering.

Exports of liquefied petroleum gases (LPGs) from the U.S. to international markets - are expected to nearly double from 466 Mb/d in 2014 to 825 Mb/d in 2018 as production from gas plant processing exceeds domestic demand. There are two LPG export terminals on the Houston Ship Channel that have been responsible for most exports, another six around the country that have exported some LPG over the past year, and still another four new-builds that have been announced.  That’s a lot of volume and a lot of dock capacity.  One question is whether there are enough LPG ships to handle all of these exports.  Today we introduce our review of this question, looking at the specialized vessels used to ship LPGs.

US waterborne exports of propane, normal butane and isobutane – known collectively as liquefied petroleum gases or LPGs - are growing rapidly – up from 148 Mb/d in 2011 to 316 Mb/d in 2013. RBN expect these volumes to continue growing from 466 Mb/d this year to 825 Mb/d in 2018 as LPG production from gas plant processing increases more rapidly than domestic demand. The two largest export terminals operated by Enterprise and Targa will add 400 Mb/d of capacity between 2013 and 2018 and as many as 8 more terminals could be built. Today we begin a deep dive series into LPG shipping.