NGL

U.S. production of natural gas liquids is projected to increase by 17% this year, and by another 10% in 2020, according to RBN’s forecast. These gains will result in similar increases in the output of propane and normal butane — two NGL purity products generally referred to as LPG — and, with U.S. demand for LPG expected to stay relatively flat, most of the incremental volumes will be sent to export terminals for shipment to foreign buyers. The question is, will the nine U.S. marine terminals that are equipped to send out LPG have enough capacity to handle the much-higher flows? Today, we continue our series with a review of four smaller export terminals along the Gulf and East coasts.

Way back in 2012, the U.S. flipped from being a net LPG importer to a net exporter. Since then, exports by ship have skyrocketed, up from 0.3 MMb/d in 2013 to more than 1.1 MMb/d at year-end 2018, an astronomical compound annual growth rate (CAGR) of 30%. The vast majority of waterborne exports was out of a handful of LPG terminals along the Gulf Coast. These facilities — plus Ferndale in the Pacific Northwest and Marcus Hook near Philadelphia — so far have managed to handle the increasing flow of LPG, but with U.S. NGL production still rising, it looks like new export capacity is needed — and is on the way. All the while, imports of LPG, almost all from Canada, have remained relatively flat, averaging only 130 Mb/d in the 2013-18 period. Today, we begin a series on existing and planned LPG export capacity along the Gulf, West and East coasts — and what’s driving the build-out of these assets.

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.

The availability of vast amounts of ethane from the nearby “wet” Marcellus and Utica plays is spurring a petrochemical rejuvenation in Sarnia, ON. Two years ago NOVA Chemicals stopped using naphtha as a feedstock at its 1.8 billion pound/year ethylene plant in Sarnia’s Chemical Valley and now relies on a combination of ethane, propane and butane. Next year the company is planning to complete the plant’s conversion to 100% ethane and is considering the possibility of building a big polyethylene plant nearby. Today, we continue our comprehensive review of southwestern Ontario’s NGL, petchem and refining infrastructure, including Sarnia’s NGL fractionation, storage and end-use markets.  

The U.S. Northeast now produces all the propane and butane it needs on an annual basis (Energy Information Administration - EIA PADD 1 plus Utica production from Ohio), but the seasonal nature of the region’s demand—and a dearth of in-region storage—means a lot of the natural gas liquid (NGL) production needs to be railed to storage facilities elsewhere during the warmer months, then be moved back in to meet wintertime needs. This propane/butane back-and-forth raises costs and reduces producer netbacks. Surely there is a better way. Today, we continue our review of NGL storage (or the lack thereof) in the Northeast, and how proposed NGL storage facilities in the region might help.

Ever-increasing production of natural gas liquids (NGLs) in the U.S. Northeast is highlighting—and exacerbating—what has always been a challenge for the region: a serious lack of nearby NGL storage capacity. In the years before NGL production took off in the “wet” Marcellus and Utica shale plays, this storage shortfall mainly affected propane and butane, with their very seasonal demand; the lack of Northeast NGL storage required a huge wintertime influx of propane and additional butane that had been stockpiled elsewhere. More recently, with Northeast NGL production booming, propane and butane barrels need to be moved out of the region by rail during the non-winter months and be railed back when the weather turns colder and motor gasoline blending limits are higher—killing producer netbacks in the process. Add to that a new (and equally vexing) challenge: dealing with the vast quantities of ethane being produced in the wet Marcellus/Utica. There is currently no in-region demand for ethane and (unlike propane and butane) you can’t just load surplus purity ethane onto rail cars. Today, we begin a series on the need for more NGL storage in the Northeast, and the pros and cons of a specific proposed storage project.