The Pacific Northwest will never be a Houston or even a Marcus Hook when it comes to liquefied petroleum gas (LPG) export volumes, but the region — British Columbia, Washington State and Oregon — is finally poised to get a second marine terminal dedicated to loading propane and butane, the two LPG family members. When AltaGas and Royal Vopak’s planned 40-Mb/d LPG export terminal on BC’s Ridley Island comes online in the first quarter of 2019, it will join Petrogas’s 30-Mb/d terminal in Ferndale, WA, in offering time-saving, straight-shot LPG deliveries to Asia, which has emerged as a leading destination for North American-sourced propane and butane. Other LPG export terminals in the Pacific Northwest have been proposed. Today we begin a blog series on propane and butane exports from Ferndale and the prospects for regional export growth.
Propane and butane — the two natural gas liquids (NGL) products generally referenced as LPG — are produced by the processing of natural gas yielding mixed NGLs and the fractionation of those NGLs into purity products (see Talkin’ ‘Bout My F-f-fractionation for more). Refineries also produce LPG. U.S. production of propane and butane has skyrocketed during the Shale Era, largely because of rising production of wet natural gas, which contains significant volumes of NGLs. As result (and as we said in Come on Down to My Boat), the U.S. five years ago flipped from its long-time status as a net LPG importer to a net exporter. By 2016, net U.S. exports had risen to an average of 855 Mb/d, more than 15 times the exporting pace in 2012, and in the first six months of this year, LPG exports averaged just above 1.0 MMb/d, according to the June 20 (2017) issue of RBN’s NGL Voyager Report, which analyzes ship-tracking data to determine how much LPG is exported out of each U.S. terminal and where it ends up.
Canada has been a net LPG exporter for decades, but so far there’s been no need to track propane/butane-laden ships leaving Canadian ports because all of the LPG that leaves the country heads south to the U.S. — though some, as we’ll get to, is loaded on ships in the U.S. and sent to overseas markets. According to Canada’s National Energy Board (NEB), the U.S.’s northern neighbor exported 135 Mb/d of LPG, on average, in 2016, with 115 Mb/d of the total being propane and the rest butane. That 135 Mb/d number from NEB is reasonable close to the Energy Information Administration’s (EIA) 148 Mb/d number for average LPG imports from Canada in 2016 considering that NEB and EIA use slightly different methodologies for tracking imports/exports.