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Natural Gas Liquids

Stayin’ Afloat With the LPGees – US Waterborne LPG Exports Part 3 - Freight Rates

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.

Changes in Longitudes—Ethane Exports to Europe

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.

Beyond Hypothermia and Extreme Propane Price Spikes – Petrochemical Feedstock Switching 2013-14

We’ve done several blogs over the past months about the impact of the back-to-back crop drying and Polar Vortex anomalies on natural gas liquids (NGL) prices in general and propane prices in particular.  Today we are going to take a walk further downstream and look at how increasing propane exports, the weather related anomalies and subsequent price spikes shifted the petrochemical feedstock slate.    From mid-year 2013 to early 2014, huge volumes of propane were backed out of the petrochemical sector, replaced for the most part by ethane.  These swings have important implications for the future consumption of NGL feedstocks by petchems.  In today’s blog, we assess petrochemical feedstock switching in the 2013-14 timeframe, and beyond.

Stayin’ Afloat With The LP Gees – U.S. Waterborne LPG Exports 2 – Gas Carriers

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.

Stayin’ Afloat With The LP Gees – US Waterborne LPG Exports I - Rosetta Stone

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.

Winter 2014 Propane Crisis – The Rest of the Story

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.

Sail Away – Propane Exports Exceed 400 Mb/d for the First Time

We’ve been talking a lot over the past year about the need for increasing exports to balance the U.S propane market as growth in production from gas processing plants outruns domestic demand.  U.S. propane production from gas processing has increased by over 100 Mb/d since January 2013, and there’s lots more to come.  For the first time U.S. propane exports exceeded 400 Mb/d in October 2013 thanks to growing U.S supply and infrastructure developments including dock expansions by Enterprise and Targa.  But just after exports ramped up, the propane market was hit by a couple of wild cards – a late and very heavy crop drying season and a series of record cold temperature events. In today’s blog, we continue our series covering the record setting 2014 NGL markets.

A Perfect Storm – Polar Vortex Turns Propane and other NGL Markets Upside Down

Last week the U.S. NGL markets entered uncharted territory.   According to OPIS, cash propane prices in the Conway, KS market reached almost $5.00/gallon for a time, responding to a massive product shortage across the entire eastern half of the country.  But at the same NGL hub, OPIS also reported that the price for ethane/propane mix (EP mix) dropped deep into negative territory at $(0.50)/gallon.  That’s crazy.  The seller is paying the buyer to take the product.  Nothing like this has been seen before in these markets.  Propane inventories continue to drop, transport trucks are moving product hundreds of miles to markets, terminals remain on allocation and a state of emergency has been declared by at least 20 state governors.  The inventory graphs look so scary that the Black Swan is frozen stiff.   Today we begin a series on the NGL markets of 2014, a year that this industry will be talking about for a long time.

The Gas is Hot Tonight – Spiking Ethane into LNG Exports – Part 2

There simply is not enough petrochemical demand to absorb all of the ethane that the U.S. can produce.  The result is rejection - ethane sold as natural gas at fuel value rather than being extracted and used as a petrochemical feedstock. Today around 250 Mb/d of ethane is being rejected, and that number could increase by 200% over the next three years.  Yes, you read that right.  Rejection could triple.  As NGL production from the big shale plays increases, the U.S. petrochemical industry will not be able to use most of the incremental ethane - thus rejection.  But it may not play out that way.  All that ethane could be exported - perhaps as liquid ethane. Or is there another possibility: Spiking ethane into the soon to be exported volumes of LNG from terminals like Cheniere Sabine Pass, Freeport, ETP/Southern Union at Lake Charles and Dominion at Cove Point?  Today we continue our exploration into the possibility that surplus ethane could be exported in the form of “hot” LNG.

Breakin' It Up & Breakin' It Down – PADD 1 NGL Storage: Capacity Requirements

Two weeks ago we posted part 1 of a series looking to answer the question – ‘Are we likely to run into storage issues with NGLs in PADD 1 while we are waiting for infrastructure and demand side projects such as export terminals and petrochemical facilities to be built out?’  We assessed growing supply and demand mismatches, how production will move between regions, and set the stage for today’s blog where we will examine the need for and availability of NGL storage capacity in PADD 1.  In today’s blog, we will finish painting the PADD 1 NGL storage picture.