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Outlook for US Propane Exports Argus Houston webinar

Amy Strahan, editor, NGL Americas April 24, 2013

Propane supply outlook


• 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


Lower 48 shale plays



• 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


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


• 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


Source: Enterprise Product Partners estimates


• 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


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


US arbitrage with Europe, Far East narrowing


$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


• 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


Photo courtesy of Panama Canal Authority


• US prices are currently low, but will the economics

make sense beyond 2015?

Japanese, Chinese buyers weighing options


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


Existing US propane export facilities



• 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


Announced terminal projects


• 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



• Nederland, TX

◦ Lone Star storage

◦ 40’ draft

◦ Five docks

connected to

refineries, rail

facilities

◦ Slated for

completion in 2015

Sunoco/Lone Star



• Houston Ship

Channel

◦ Near Deer Park

terminal

◦ 40-45’ draft

◦ Includes barge, rail

access

◦ Slated for

completion

in 2015

Intercontinental Terminals Co



• Perth Amboy, NJ

◦ 37’ draft

◦ 4mn bl total

storage

◦ Near Linden

refinery

◦ Four docks,

pipeline,

rail access

Buckeye Terminal


Unannounced/prospective terminal plans


• Ingleside, TX

◦ 45’ draft

◦ Supply agreement

with DCP’s Sand

Hills pipeline

◦ Near VCM complex

◦ Fractionator

planned

◦ Regulatory

permits

on file

Occidental Terminal



• Lake Charles, LA

◦ 40’ draft

◦ Near LNG terminal

◦ Unannounced,

unconfirmed

BG Americas Terminal



• Houston Ship

Channel

◦ 40’ draft

◦ Near Deer Park,

TX marine

terminal handling

petrochemical

products

◦ Unannounced,

unconfirmed

Vopak Terminal


West coast rumors


• 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?



• Kitimat, BC

◦ Three deep-sea

marine terminals

◦ Near Pacific

Northern gas

pipeline

◦ Feasibility study

underway

◦ Proposed

completion by

2016

AltaGas/Idemitsu Terminal?


What projects make sense?


• VLGC access

◦ Large vessels require 40’ draft

• LPG storage facilities

• Access to LPG supplies, fractionators

Requirements for successful projects


• 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


200

400

600

800

1000

1200

Propane Mt Belvieu Non-LST $USD/t, pipeline fob

Any questions?

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illuminating the markets Copyright © 2013 Argus Media Ltd. All rights reserved.

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