If Saudi Arabia and Russia flood the world with their crude oil in the midst of a global demand crisis, it would have impacts and implications far beyond crude. A ramp-up in Saudi and Russian oil production this spring would also increase their output of associated gas and NGLs. At the same time, the opposite will be happening in the Permian and other liquids-rich U.S. shale plays, where producers, stunned by sub-$25/bbl oil prices, already are pulling back on drilling and later this year will see their oil and NGL production gradually level off and eventually decline. All this is already turning the international LPG market on its head — just last week, U.S. propane exports plummeted by nearly 40% versus the prior week, to only 889 Mb/d. Today, we consider recent extraordinary market developments and their effect on the arb between Mont Belvieu and Far East LPG prices.
The RBN Energy U.S. Propane Infrastructure map provides a comprehensive view of the propane supply network in the lower 48 states.
The production and export of U.S.-sourced propane, normal butane and other NGL purity products has been an almost entirely good-news story for the past few years. NGL production growth in a number of shale plays led to the development of new NGL pipelines, new fractionation capacity, and new LPG and ethane export terminals. As we said in our Between Mont Belvieu and the Deep Blue Sea blog series, the U.S. flipped from being a net LPG importer to a net exporter in 2012. Since then, export volumes shipped to overseas destinations rocketed higher, from 318 Mb/d, on average, in 2013 and 683 Mb/d in 2015 to a hair over 1 MMb/d in 2017 and 1.35 MMb/d in 2019 — see Figure 1. In the first two and a half months of 2020, U.S. LPG export volumes continued rising, averaging just over 1.5 MMb/d, according to RBN’s NGL Voyager report, solidifying the U.S.’s status as the world’s #1 LPG exporter. That trajectory in export volumes has become a necessity because propane demand from the U.S. retail sector has been stagnant and NGL demand growth from the U.S. petrochemical sector has focused on ethane, not propane. Put simply, the NGL market has had to keep Mont Belvieu propane pricing attractive enough to keep exports flowing — that is, to keep the arb open to minimize use of that dreaded phrase: cargo cancellations. In response, LPG buyers in Asia (dark-blue bar segments), Latin America (light-blue bar segments) and Europe (orange bar segments) have turned to U.S. supplies as they ramp up LPG cracking utilization and invest in new technologies, especially propane dehydrogenation (PDH).
Join Backstage Pass to Read Full Article
About the song
"Spoilin' for a Fight" was written by Angus Young and Malcolm Young, and appears as the seventh cut on AC/DC's 15th studio album, Black Ice. Black Ice was recorded in March and April of 2008 at The Warehouse Studio in Vancouver, BC, with Brendan O'Brien producing. The 15-song album was mostly recorded live in the studio, with a minimum of overdubs used on the guitar solos and vocals. Black Ice is the last album to feature the Back in Black era lineup of the band. Released in October 2008, the album went to #1 on the Billboard Top 200 Albums chart. It has been certified 2x Platinum by the Recording Industry Association of America, with worldwide sales of over eight million copies. The Black Ice World Tour grossed more than $440 million for the band, making it the fourth-highest grossing concert tour of all time. Personnel on the record were: Brian Johnson (lead vocals), Angus Young (lead guitar), Malcolm Young (rhythm guitar, backing vocals), Cliff Williams (bass, backing vocals) and Phil Rudd (drums, percussion).
AC/DC are an Australian rock band formed in Sydney in 1973 by brothers Angus and Malcolm Young. They have sold more than 200 million records worldwide. The band has released 16 studio albums, four live albums, one EP, two soundtrack albums and 47 singles. Their album, Back in Black, has sold more than 50 million copies worldwide, making it the second-highest selling album in history. AC/DC were inducted into the Rock and Roll Hall of Fame in 2003. Twelve members have passed through the ranks of the band since its inception. The band's second lead vocalist Bon Scott died in 1980, and Malcolm Young died in 2017. Cliff Williams officially retired from the band in 2016, and lead singer Brian Johnson had to leave the band due to severe hearing loss. The future of AC/DC is uncertain for now.
