Daily Energy Blog

U.S. ethane has never been exported overseas.  Not yet, that is.  Week by week, the details of an emerging export market for U.S.-sourced ethane are coming into focus. Enterprise Product Partners, which has been expressing interest in exporting ethane for some time, a couple of weeks ago announced plans for a 240 Mb/d export terminal on Texas’s Gulf Coast and explained how it sees things shaking out. Navigator Holdings, a major shipping company, has placed an order for new semi-refrigerated liquefied gas carriers capable of carrying ethane (or ethylene). And while U.S. ethylene producers fret about how ethane exports could drive up domestic ethane prices, there is solid evidence ethane will remain a surplus, low-cost commodity for years to come. In this follow-up to our recent ethane exports series, we consider recent developments and what they mean.

Propane has received a lot of airtime in recent months given the Polar Vortex and heavy crop drying demand anomalies coinciding with growing propane export volumes.  Now it’s time to show normal butane a little love as normal butane exports almost tripled from this time last year.  In January 2013, 22 Mb/d of butane was exported; that number was 63 Mb/d in January 2014, as reported by the EIA.  All indications are that butane export volumes will be experiencing an astronomical growth rate over the next five years, reaching 300 Mb/d by 2019.  What are the factors driving this rate of growth, and what are the implications for refiners and petrochemical companies?  In today’s blog, we assess the rapid growth in normal butane exports.

With U.S. ethane prices low and ethane rejection expected to continue increasing, interest in exporting liquid ethane is ramping up. But there are significant barriers to these exports, including: (1) loading and unloading terminal infrastructure, (2) shipping, (3) pricing, and (4) petrochemical demand.  We examined the first two of these barriers earlier this week.  Today we wrap up this blog series, examining pricing and demand.

It is a familiar refrain in the shale era.  The U.S. produces more of a hydrocarbon commodity than it can use.  This time we are talking ethane, a natural gas liquid that is experiencing production constraints mostly due to the inability of U.S. petrochemical plants to use more of the feedstock. So why not just export the surplus?  Unlike crude oil there are no legal constraints on exports.  Unlike natural gas, you don’t need a $10 billion plant to convert it to a liquid (LNG) – ethane is already a liquid.   Unfortunately for many ethane wannabe exporters, ethane has its own infrastructure and market issues that must be resolved before it can be shipped overseas in significant quantities. Today we continue our blog series on the feasibility of overseas ethane exports.

The large and growing surplus of U.S. ethane is leading producers and shippers to step up efforts to export ethane to Europe and eventually to Asia. But there are several hurdles, including the need to construct specialized dock and loading facilities, special ships required to move ethane in overseas trade, unloading and storage facilities at the receiving end, and the need for ethylene crackers in the global market —most of which now use naphtha as their feedstock—to make costly modifications before they can switch to ethane. It may be costly, but it could happen.  There are those that hang on to the belief (a mistaken one, we think) that the ethane surplus will disappear later this decade as planned U.S. crackers come online and use increasing amounts of ethane.   It is true that those plants will use a lot of ethane.  But not nearly enough. Today in the first episode of this blog series we begin to explore the ethane-export issue.

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.

The recent propane shortage is being called a “crisis” and for good reason. But like so many “crises” there is more to the story than is generally known and in this case it’s worth a careful examination of the events involved.  Clearly it was a perfect storm in the balance of supply and demand, resulting in huge price spikes.  And the consequences included panic, headline news, government intervention and of course, lots of finger pointing.  Today we look at how the market responded and why the propane industry will once again be stronger for it.