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Send Me an NGL - Where U.S. Exports of Butanes and Natural Gasoline End Up

When it comes to U.S. NGL exports, propane and ethane grab most of the attention. Each accounts for a big share of the typical NGL barrel, and ethane exports are a frequent topic of conversation because of the potential for growth — especially if the U.S. and China find a way to end their trade war. But three other so-called NGL “purity products” — normal butane, isobutane and natural gasoline — are being exported in increasing volumes too, providing important supplemental revenue to NGL producers and marketers. What’s their story? Today, we look at the export volumes and destinations of three often overlooked purity products.

Propane and ethane are the Beyoncé and Jay-Z of NGL purity products — they’re always in the spotlight — while normal butane, isobutane and natural gasoline are backup singers, almost always in the shadowy background. No matter the NGL, though, the name of the game nowadays is exports — thanks to the Shale Revolution, the U.S. produces far more purity products than it consumes, and exports (whether by pipeline or ship) are needed to keep markets in balance. We discussed propane exports a few weeks ago in Unpredictable; there, we noted that propane export volumes have risen from less than 100 Mb/d 10 years ago to ~1 MMb/d in recent months (and to nearly 1.2 MMb/d in June 2019, according to the July 5, 2019, issue of RBN’s NGL Voyager report). We also said that further gains in propane exports are likely into the 2020s as U.S. NGL output continues to rise and domestic demand for propane remains close to flat on an annual basis. Last month, in One of a Kind, we looked at ethane exports (first by pipeline to Canada, and later by ship to other countries), which rose from next to nothing in 2014 to an average of more than 260 Mb/d in the first four months of 2019. Ethane, like Jay-Z (rapper, entrepreneur, recording executive), is in a category of its own, in that it can be “rejected” into natural gas for its Btu content and otherwise has only niche markets in the U.S. and overseas — namely, as a feedstock for steam crackers.

Today, we give some love to the backing vocalists of the NGL world: normal butane, isobutane and natural gasoline. First, a little background on these purity products and how they’re used. Normal butane has three primary uses globally — for heating and cooking (propane and butane are the two liquid petroleum gases in LPG), as a motor gasoline blendstock (see Wastin' Away in Butane Blendingville), and as a feedstock in ethylene plants (steam crackers). Smaller volumes of normal butane are used as feedstock for butamer (isomerization) units to produce isobutane. Isobutane’s primary use is as a feedstock for refinery alkylation units, which produce a high-octane gasoline blending component called alkylate (see You Can Just Iso My Butane). Isobutane also is used as a propellant in shaving cream, cooking sprays and the like; as the liquid fuel in “Bic”-type lighters; a replacement for Freon in refrigeration equipment; and — more exotically — for calorimetric measurements, calibration of gas mixtures and emissions monitoring. As for natural gasoline, it’s used as a gasoline blending agent and a steam cracker feedstock, but most of what’s exported from the U.S. is used (in Western Canada) as a diluent — that is, it is blended with molasses-like bitumen produced in the Alberta oil sands so it can either flow through pipelines (“dilbit”) or be loaded onto unheated rail cars (“railbit”). Natural gasoline/diluent is also used to help conventional heavy crude oil flow better.

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