LPG in World Markets Featured Article

US LPG exports appear on course for yet another year of double-digit y-o-y growth in the current year alongside rising production, stagnating domestic demand and high inventories. However, export terminal capacity expansion to clear out the production overhang has lagged, and market players believe that the installed terminal capacity in the US have hit the ceiling. Although, a few terminal expansion projects have been announced and are under construction, they are still one-to-two years away. As such, export terminals will have to maintain high utilization rates to accommodate for rising exports.

US Gulf LPG Export Capacity

US LPG exports appear on course for yet another year of double-digit y-o-y growth in the current year alongside rising production, stagnating domestic demand and high inventories. According to the Energy Information Administration (EIA) and Poten estimates, US LPG exports reached close to 2.3 MMbbls/d in September, up 3% m-o-m and 7% y-o-y. During the first nine months of 2024, US LPG exports increased 10% y-o-y and averaged 2.2 MMbbls/d.

However, export terminal capacity expansion to clear out the production overhang has lagged, and market players believe that installed terminal capacity in the US have hit the ceiling. Although, a few terminal expansion projects have been announced, they are still one-to-two years away.

US LPG Exports

The US Gulf Coast (PADD3) accounted for 85% of total LPG exports by the country during January-September 2024, compared to 86% during the same period in 2023. A slight decline in the share of PADD3 is mainly due to a rise in exports from the East Coast (PADD1) in recent years. However, PADD3 still remains the most significant export area within the US and boasts of the largest installed LPG export capacity in the country which are owned by the big four, namely Enterprise Product Partners, Energy Transfer, Targa Resources, and P66.

Not surprisingly, the big two, Enterprise Product Partners and Energy Transfer, have announced capacity expansion plans. However, there are two elements that make the latest round of expansion plans different from the previous ones. First, building ethane export capacity has gained prominence, and second, there is an element of loading flexibility between propane, butane and ethane.

Enterprise Product Partners EPD have an installed LPG export capacity of 835,000 bbls/d at its Enterprise Hydrocarbon Terminal (EHT). It plans to add another 300,000 bbls/d (~9 MMt/y) of export capacity by expanding refrigeration capacity at the site. The brownfield expansion works are expected to be complete in 2026, according to EPD.

EPD is also constructing a new LPG/ Ethane terminal along the Neches River (Neches River NGL Export Facility) in Orange County, Texas, next to the Enterprise Beaumont East Refined Products Terminal. Phase 1 of the project, expected to be complete in the second half of 2025, comprises 120,000 bbls/d of ethane refrigeration train, one new loading dock, and 900,000 bbls of refrigerated ethane tank. Phase 2 of the project will have flexible capacity – 180,000 bbls/d of ethane export capacity, or 360,000 bbls/d of LPG (~10.6 MMt/y), or a combination of both. The second phase is expected to be complete in the first half of 2026.

Widening and deepening of the Houston Ship Channel (HSC) is also expected to help increase LPG exports from EHT. Port of Houston Authority has plans to widen HSC from an existing 530 feet to 700 feet, which will lengthen daylight transit hours and allow for more vessels to pass through the waterway by the end of 2026. According to EPD, LPG export from EHT will likely increase by an additional 6-7 VLGC-sized cargoes a month once the wider and deeper HSC is open for traffic.

Apart from LPG/ethane expansion plans, EPD also has plans to add capacity at its Morgan’s Point ethane/ ethylene export terminal. Morgan’s Point ethane/ethylene export terminal can send out 240,000 bbls/d (2 x 120,000 bbls/d) of ethane and 60,000 bbls/d of ethylene currently. By the end of 2024, one of the 120,000 bbls/d dedicated ethane loading facility will be converted into a flexible loading facility capable of loading both ethane and ethylene.

Once these facilities become operational, EPD will have 1.135 MMbbls/ d (~35 MMt/y) of dedicated LPG export facility by the end of 2026, with the maximum LPG export capacity pegged at 1.495 MMbbls/d (~46 MMt/y) if we add the Neches River flexi capacity as well.

For ethane, the maximum export capacity will be 540,000 bbls/d (120,000 bbls/d of dedicated and120,000 bbls/d of flexi capacity at Morgan’s Point; 120,000 bbls/d of dedicated and 180,000 bbls/d of flexi capacity at Neches River) by the end of 2026.

Dedicated ethylene export capacity at Morgan’s will remain unchanged at 60,000 bbls/d. However, the company will have an additional 120,000 bbls/d of flexible ethane and ethylene export capacity by the end of 2024.

EPD’s under construction thirteenth fractionator (Fractionator #14) with a capacity to process 195,000 bbls/d of NGLs is expected to be up and running in the second half of 2025. It currently has a total of 1.667 MMbbls/d of fractionation capacity in Mont Belvieu.

The company is building a 550-mile long 600,000 bbls/d NGL pipeline to move additional NGL volume from EPD’s Delaware and Midland Basin processing facilities to its Mont Belvieu fractionation complex.

Earlier this year, EPD added 0.6 Bcf/d of gas processing facilities in the Permian basin which took its total gas processing capacity to 11.92 Bcf/d. It will add another 1.9 Bcf/d of gas processing capacity in the Permian basin during 2025-26.

Apart from NGLs capacity, EPD is also expanding polymer grade propylene refrigeration capacity by 72,000 bbls/d which is expected to be compete in the first half of 2025.

US Gulf LPG Export Capacity

Another major US Gulf LPG exporter, Energy Transfer (ET), will add 250,000 bbls/d of NGL export capacity at its Nederland terminal by mid-2025. While the company has not given details on product ratio between various NGL components, we believe that it will be used mainly to export LPG and ethane, and the ratio of ethane will most likely increase gradually in coming years.

Refrigeration capacity at its Nederland terminal is also being expanded. Once the expansion works are complete, propane storage is expected to increase by 50% from the existing capacity and butane by 33%. However, the completion timeline is not clear currently.

After commissioning its eighth fractionator in Mont Belvieu in 2023, ET is expected to start its ninth fractionator (165,000 bbls/d) in the fourth quarter of 2026 which will add more purity grade NGLs ready for export to the global markets. It will also add 200 MMscf/d of gas processing capacity (Red Lake IV) in the Permian basin in the third quarter of 2025.

The Lone Star Express pipeline is also undergoing upgradation works which will add 90,000 bbls/d of incremental NGL takeaway capacity from the Permian basin by 2025. Commissioned in September 2020, the 352-mile 24-inch pipeline originates in Winkler County, Texas and connects into the Lone Star Express 30-inch pipeline at the Morgan Junction in Bosque County, Texas, and can move 400,000 bbls/d of NGLs out of the Permian and Delaware basins currently.

ET also is carrying out the first phase of optimization works to enhance its installed NGLs export capacity at its Marcus Hook terminal located along the US East Coast which is expected to be complete in the second half of 2025. However, the exact incremental volume for LPG is not clear currently.

As Poten understands, there are no expansion plans by Targa Resources and P66 at their LPG export terminals along the US Gulf Coast.

Once these expansion plans are complete, installed LPG export capacity along the US Gulf Coast is expected to increase to 3.1 MMbbls/d by the end of 2026, accounting for both dedicated and flexible capacity, from existing 2.2 MMbbls/d. However, the actual LPG export capacity will be somewhere in between 2.5 MMbbls/d (arrived at without accounting for flexible capacity) to 3.1 MMbbls/d at the end of 2026.

While the latest Short Term Energy Outlook (STEO) published by EIA expects gas plant production of LPG to increase from around 3.1 MMbbls/d in 2023 to 3.4 MMbbls in 2025, domestic consumption remains steady at around 1.1 MMbbls/d during this period, thus indicating at higher exports in coming years.

However, with export capacity addition plans several months away, export terminals will have to maintain high utilization rates to accommodate for rising exports. Tight spot cargo availability and firm FOB resale premiums are likely to persist well into 2025.

Meanwhile, a new entrant to the LPG export terminal infrastructure, Oneok, has still not taken final investment decision on its planned NGL export terminal in Jefferson County, Texas. The project will likely have four loading docks for loading onto VLGCs, VLECs and other smaller vessels. TXGC Properties LLC and TXGC Pipelines LLC, subsidiaries of Oneok Inc., had filed an application with the US Army Corps of Engineers.