Energy and commodity price benchmarking and market …info.argusmedia.com/uslib/Argus...
Transcript of Energy and commodity price benchmarking and market …info.argusmedia.com/uslib/Argus...
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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
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Outlook for US Propane Exports Argus Houston webinar
Amy Strahan, editor, NGL Americas April 24, 2013
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Propane supply outlook
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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
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NGL production mn b/d
Source: EIA 2012 Annual Energy Outlook
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illuminating the markets
Lower 48 shale plays
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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
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U.S. Exports of Propane and Propylene ('000 bl/mo)
Source: EIA
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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
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Source: Enterprise Product Partners estimates
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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
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Non-LST Propane % WTI
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illuminating the markets
US arbitrage with Europe, Far East narrowing
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Mont Belvieu v ARA Mont Belvieu v FEI
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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
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Photo courtesy of Panama Canal Authority
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illuminating the markets
• US prices are currently low, but will the economics
make sense beyond 2015?
Japanese, Chinese buyers weighing options
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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
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illuminating the markets
Existing US propane export facilities
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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
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Announced terminal projects
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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
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• Perth Amboy, NJ
◦ 37’ draft
◦ 4mn bl total
storage
◦ Near Linden
refinery
◦ Four docks,
pipeline,
rail access
Buckeye Terminal
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Unannounced/prospective terminal plans
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• 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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• Lake Charles, LA
◦ 40’ draft
◦ Near LNG terminal
◦ Unannounced,
unconfirmed
BG Americas Terminal
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• Houston Ship
Channel
◦ 40’ draft
◦ Near Deer Park,
TX marine
terminal handling
petrochemical
products
◦ Unannounced,
unconfirmed
Vopak Terminal
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West coast rumors
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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?
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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?
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What projects make sense?
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illuminating the markets
• VLGC access
◦ Large vessels require 40’ draft
• LPG storage facilities
• Access to LPG supplies, fractionators
Requirements for successful projects
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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
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Propane Mt Belvieu Non-LST $USD/t, pipeline fob
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Any questions?
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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
Johannesburg
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