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London, Houston, Washington, New York, Portland, Calgary, Santiago, Bogota, Rio de Janeiro,
Singapore, Beijing, Tokyo, Sydney, Dubai, Moscow, Astana, Kiev, Porto and Johannesburg
illuminating the markets
Energy and commodity price benchmarking and market insights
Outlook for US Propane Exports Argus Houston webinar
Amy Strahan, editor, NGL Americas April 24, 2013
Propane supply outlook
illuminating the markets
• Crude and shale gas
development likely to
continue to drive NGL
production.
• Forecasts vary, but
NGL supplies expected
to remain robust.
US NGL supplies likely growing
Copyright © 2013 Argus Media Ltd. All rights reserved.
2.0
2.2
2.4
2.6
2.8
3.0
3.2
2010 2015 2020 2025 2030 2035
NGL production mn b/d
Source: EIA 2012 Annual Energy Outlook
illuminating the markets
Lower 48 shale plays
Copyright © 2012 Argus Media Ltd. All rights reserved.
illuminating the markets
• Enterprise Terminal
o Expansions online in March
o 7.5mn bl/m expanded
capacity
• Targa Terminal
o Expansions underway
o 5mn bl/m expanded
capacity
• Sunoco Mariner East o ~900,000 bl exported in 2012
o 70,000 b/d expanded capacity
US exporting more propane than ever
Copyright © 2013 Argus Media Ltd. All rights reserved.
500
1,500
2,500
3,500
4,500
5,500
6,500
7,500
Jan 05 Jan 07 Dec 08 Dec 10 Dec 12
U.S. Exports of Propane and Propylene ('000 bl/mo)
Source: EIA
illuminating the markets
• Mexico – 10.8mn bl
• Central America – 1.3mn bl
• Caribbean - 6mn bl
LPG exports in 2012
• South America – 17.3mn bl
• Europe – 6.8 mn bl
• Far East – 3.7mn bl
Copyright © 2013 Argus Media Ltd. All rights reserved.
Source: Enterprise Product Partners estimates
illuminating the markets
• Mont Belvieu propane
fell to 36pc of WTI
during December
• US inventories remain
20pc over 5-yr
average
• Values strengthened
in March, as exports
resumed
Domestic oversupply lowers prices
Copyright © 2013 Argus Media Ltd. All rights reserved.
30
40
50
60
70
80
90
5 Feb 11 23 Aug 11 9 Mar 12 24 Sep 12 11 Apr 13
Non-LST Propane % WTI
illuminating the markets
US arbitrage with Europe, Far East narrowing
Copyright © 2013 Argus Media Ltd. All rights reserved.
$100
$200
$300
$400
$500
$600
$700
Jan 12 Apr 12 Aug 12 Dec 12 Apr 13
Mont Belvieu v ARA Mont Belvieu v FEI
illuminating the markets
• Canal expansion scheduled for
mid 2015
• Will cut estimated freight
costs by as much as a third,
according to some estimates
• VLGCs will be able to travel
from Caribbean to Japan in
approximately 11 fewer days,
according to the canal
authority
Panama Canal expansion impact unknown
Copyright © 2013 Argus Media Ltd. All rights reserved.
Photo courtesy of Panama Canal Authority
illuminating the markets
• US prices are currently low, but will the economics
make sense beyond 2015?
Japanese, Chinese buyers weighing options
Copyright © 2013 Argus Media Ltd. All rights reserved.
350
600
850
1,100
1,350
Jan 12 Apr 12 Aug 12 Dec 12 Apr 13
Propane Argus Far East Index, USD/t, cfr
Propane Saudi Aramco CP month 1, USD/t, fob
Propane Mt Belvieu Non-LST USD/t, pipeline fob
illuminating the markets
Existing US propane export facilities
Copyright © 2012 Argus Media Ltd. All rights reserved.
illuminating the markets
• Current infrastructure may be insufficient
◦ New export capacity locked under term contracts
◦ Spot cargoes costly for buyers
• New midstream entrants seeking projects
◦ Several new projects announced
◦ Market participants speculate on others
LPG export opportunities
Copyright © 2013 Argus Media Ltd. All rights reserved.
Announced terminal projects
illuminating the markets
• Beaumont, TX
◦ Coastal Caverns
storage
◦ ‘40 ft draft
◦ 3mn bl per month
◦ Final investment
decision by June 2013
◦ Slated for completion
in 2014
Vitol/Itochu
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illuminating the markets
• Nederland, TX
◦ Lone Star storage
◦ 40’ draft
◦ Five docks
connected to
refineries, rail
facilities
◦ Slated for
completion in 2015
Sunoco/Lone Star
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illuminating the markets
• Houston Ship
Channel
◦ Near Deer Park
terminal
◦ 40-45’ draft
◦ Includes barge, rail
access
◦ Slated for
completion
in 2015
Intercontinental Terminals Co
Copyright © 2013 Argus Media Ltd. All rights reserved.
illuminating the markets
• Perth Amboy, NJ
◦ 37’ draft
◦ 4mn bl total
storage
◦ Near Linden
refinery
◦ Four docks,
pipeline,
rail access
Buckeye Terminal
Copyright © 2013 Argus Media Ltd. All rights reserved.
Unannounced/prospective terminal plans
illuminating the markets
• Ingleside, TX
◦ 45’ draft
◦ Supply agreement
with DCP’s Sand
Hills pipeline
◦ Near VCM complex
◦ Fractionator
planned
◦ Regulatory
permits
on file
Occidental Terminal
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illuminating the markets
• Lake Charles, LA
◦ 40’ draft
◦ Near LNG terminal
◦ Unannounced,
unconfirmed
BG Americas Terminal
Copyright © 2013 Argus Media Ltd. All rights reserved.
illuminating the markets
• Houston Ship
Channel
◦ 40’ draft
◦ Near Deer Park,
TX marine
terminal handling
petrochemical
products
◦ Unannounced,
unconfirmed
Vopak Terminal
Copyright © 2013 Argus Media Ltd. All rights reserved.
West coast rumors
illuminating the markets
• Ferndale, WA
◦ Vancouver Island
Waterway
◦ Cherry Point produces
~3,000 b/d of propane
◦ BP uses the terminal for
flow assurance at the
refinery
◦ Purely speculative
BP Cherry Point prospects?
Copyright © 2013 Argus Media Ltd. All rights reserved.
illuminating the markets
• Kitimat, BC
◦ Three deep-sea
marine terminals
◦ Near Pacific
Northern gas
pipeline
◦ Feasibility study
underway
◦ Proposed
completion by
2016
AltaGas/Idemitsu Terminal?
Copyright © 2013 Argus Media Ltd. All rights reserved.
What projects make sense?
illuminating the markets
• VLGC access
◦ Large vessels require 40’ draft
• LPG storage facilities
• Access to LPG supplies, fractionators
Requirements for successful projects
illuminating the markets
• Propane prices
• Existing players
◦ Enterprise considering
expansion to 10mn bl/mo
◦ Targa’s Patriot expansion
• Buyers’ willingness to
lock in long-term
contracts
Obstacles to new terminal projects
Copyright © 2013 Argus Media Ltd. All rights reserved.
200
400
600
800
1000
1200
Propane Mt Belvieu Non-LST $USD/t, pipeline fob
Any questions?
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