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Outlook for US Propane Exports Argus Houston webinar Amy Strahan, editor, NGL Americas April 24, 2013
Propane supply outlook
US NGL supplies likely growing Crude and shale gas development likely to continue to drive NGL production. Forecasts vary, but NGL supplies expected to remain robust. 3.2 3.0 2.8 2.6 2.4 2.2 NGL production mn b/d 2.0 2010 2015 2020 2025 2030 2035 Source: EIA 2012 Annual Energy Outlook
Lower 48 shale plays Copyright 2012 Argus Media Ltd. All rights reserved.
US exporting more propane than ever 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 U.S. Exports of Propane and Propylene ('000 bl/mo) 7,500 6,500 5,500 4,500 3,500 2,500 1,500 500 Jan 05 Jan 07 Dec 08 Dec 10 Dec 12 Source: EIA
LPG exports in 2012 Mexico 10.8mn bl Central America 1.3mn bl Caribbean - 6mn bl South America 17.3mn bl Europe 6.8 mn bl Far East 3.7mn bl Source: Enterprise Product Partners estimates
Domestic oversupply lowers prices 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 90 80 70 60 50 40 Non-LST Propane % WTI 30 5 Feb 11 23 Aug 11 9 Mar 12 24 Sep 12 11 Apr 13
US arbitrage with Europe, Far East narrowing $700 Mont Belvieu v ARA Mont Belvieu v FEI $600 $500 $400 $300 $200 $100 Jan 12 Apr 12 Aug 12 Dec 12 Apr 13
Panama Canal expansion impact unknown 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 Photo courtesy of Panama Canal Authority
Japanese, Chinese buyers weighing options US prices are currently low, but will the economics make sense beyond 2015? 1,350 1,100 850 600 350 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
Existing US propane export facilities Copyright 2012 Argus Media Ltd. All rights reserved.
LPG export opportunities 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
Announced terminal projects
Vitol/Itochu Beaumont, TX Coastal Caverns storage 40 ft draft 3mn bl per month Final investment decision by June 2013 Slated for completion in 2014
Sunoco/Lone Star Nederland, TX Lone Star storage 40 draft Five docks connected to refineries, rail facilities Slated for completion in 2015
Intercontinental Terminals Co Houston Ship Channel Near Deer Park terminal 40-45 draft Includes barge, rail access Slated for completion in 2015
Buckeye Terminal Perth Amboy, NJ 37 draft 4mn bl total storage Near Linden refinery Four docks, pipeline, rail access
Unannounced/prospective terminal plans
Occidental Terminal Ingleside, TX 45 draft Supply agreement with DCP s Sand Hills pipeline Near VCM complex Fractionator planned Regulatory permits on file
BG Americas Terminal Lake Charles, LA 40 draft Near LNG terminal Unannounced, unconfirmed
Vopak Terminal Houston Ship Channel 40 draft Near Deer Park, TX marine terminal handling petrochemical products Unannounced, unconfirmed
West coast rumors
BP Cherry Point prospects? 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
AltaGas/Idemitsu Terminal? Kitimat, BC Three deep-sea marine terminals Near Pacific Northern gas pipeline Feasibility study underway Proposed completion by 2016
What projects make sense?
Requirements for successful projects VLGC access Large vessels require 40 draft LPG storage facilities Access to LPG supplies, fractionators
Obstacles to new terminal projects Propane prices Existing players Enterprise considering expansion to 10mn bl/mo Targa s Patriot expansion Buyers willingness to lock in long-term contracts 1200 1000 800 600 400 200 Propane Mt Belvieu Non-LST $USD/t, pipeline fob
Any questions?
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