Argus Live: 2020 likely a record for US LPG exports

  • Spanish Market: LPG, Petrochemicals
  • 28/01/21

The year 2020 was a record year for US LPG exports as global demand for the fuel, particularly for residential uses in Asia, remained strong, Enterprise Products co-chief executive Jim Teague told the Argus Live crude conference this week.

Enterprise, which operates the largest 835,000 b/d US LPG export terminal on the Houston Ship Channel, shipped an estimated 27mn bl in December, Teague said.

"Our LPG docks have been chock-a-block full throughout this pandemic," he said. "December was a record month for [natural gas liquids] exports, I think we did 27mn bl in the month of December, and if I am not mistaken 2020 will be a record year for exports."

While US upstream oil and gas producers faced consolidation following the March 2020 crash in crude prices, Teague said he does not foresee the same trend for US midstream operators. Enterprise, which has a wide pipeline footprint throughout the Permian basin and into the US midcontinent, is focused instead on repurposing underutilized assets to other products and focused on downstream production. Teague said the Houston-based company is particularly focused on expanding its petrochemicals segment, which produces propylene and exports ethylene out of its Morgan's Point, Texas, dock near Houston.

"A lot of people do not appreciate that Enterprise is the largest merchant producer of propylene in world," Teague said. "Now we have got an ethylene system, we are going to expand that, and that ties into our value chain, and we can leverage that all the way back to the gas plants in the Permian."

In April 2020 Enterprise announced it would hold off on a planned 260,000 b/d expansion of LPG and propylene export capacity out of its Houston terminal, but Teague noted this week further expansions are always on the table.

"Yes we can expand our capacity pretty cheaply, and we have to look at it as we have been chock-a-block full," Teague said.

Teague also touched on recent efforts under President Joe Biden's administration to curb US oil and gas production on federal land. US production is "the biggest geopolitical weapon we have ever had," he said, and called efforts to curtail US production on federal lands "foolish." Sustainability initiatives to curtail plastics production would also have unintended consequences, he noted.

"We've got 90bn lbs of ethylene capacity in this country, those jobs in those plants are $40 an hour jobs," Teague said. "There is a domino effect to this."


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02/05/24

Canadian rail workers vote to launch strike: Correction

Canadian rail workers vote to launch strike: Correction

Corrects movement of grain loadings from a year earlier in final paragraph. Washington, 2 May (Argus) — Workers at the two major Canadian railroads could go on strike as soon as 22 May now that members of the Teamsters Canada Rail Conference (TCRC) have authorized a strike, potentially causing widespread disruption to shipments of commodities such as crude, coal and grain. A strike could disrupt rail traffic not only in Canada but also in the US and Mexico because trains would not be able to leave, nor could shipments enter into Canada. This labor action could be far more impactful than recent strikes because it would affect Canadian National (CN) and Canadian Pacific Kansas City (CPKC) at the same time. Union members at Canadian railroads have gone on strike individually in the past, which has left one of the two carriers to continue operating and handle some of their competitor's freight. But TCRC members completed a vote yesterday about whether to initiate a strike action at each carrier. The union represents about 9,300 workers employed at the two railroads. Roughly 98pc of union members that participated voted in favor of a strike beginning as early as 22 May, the union said. The union said talks are at an impasse. "After six months of negotiations with both companies, we are no closer to reaching a settlement than when we first began, TCRC president Paul Boucher said. Boucher warned that "a simultaneous work stoppage at both CN and CPKC would disrupt supply chains on a scale Canada has likely never experienced." He added that the union does not want to provoke a rail crisis and wants to avoid a work stoppage. The union has argued that the railroads' proposals would harm safety practices. It has also sought an improved work-life balance. But CN and CPKC said the union continues to reject their proposals. CPKC "is committed to negotiating in good faith and responding to our employees' desire for higher pay and improved work-life balance, while respecting the best interests of all our railroaders, their families, our customers, and the North American economy." CN said it wants a contract that addresses the work life balance and productivity, benefiting the company and employees. But even when CN "proposed a solution that would not touch duty-rest rules, the union has rejected it," the railroad said. Canadian commodity volume has fallen this year with only rail shipments of chemicals, petroleum and petroleum products, and non-metallic minerals rising, Association of American Railroads (AAR) data show. Volume data includes cars loaded in the US by Canadian carriers. Coal traffic dropped by 11pc during the 17 weeks ended on 27 April compared with a year earlier, AAR data show. Loadings of motor vehicles and parts have fallen by 5.2pc. CN and CPKC grain loadings fell by 4.3pc from a year earlier, while shipment of farm products and food fell by 9.3pc. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US southbound barge demand falls off earlier than usual


01/05/24
01/05/24

US southbound barge demand falls off earlier than usual

Houston, 1 May (Argus) — Southbound barge rates in the US have fallen on unseasonably low demand because of increased competition in the international grain market. Rates for voyages down river have deteriorated to "unsustainable" levels, said American Commercial Barge Line. Southbound rates declined in April to an average tariff of 284pc across all rivers this April, according to the US Department of Agriculture (USDA), which is below breakeven levels for many barge carriers. Rates typically do not fall below a 300pc tariff until May or June. Southbound freight values for May are expected to hold steady or move lower, said sources this week. Southbound activity has increased recently because of the low rates, but not enough to push prices up. The US has already sold 84pc of its forecast corn exports and 89pc of forecast soybean exports with only five months left until the end of the corn and soybean marketing year, according to the USDA. US corn and soybean prices have come down since the beginning of the year in order to stay competitive with other origins. The USDA lowered its forecast for US soybean exports by 545,000t in its April report as soybeans from Brazil and Argentina were more competitively priced. US farmers are holding onto more of their harvest from last year because of low crop prices, curbing exports. Prompt CBOT corn futures averaged $435/bushel in April, down 34pc from April 2023. Weak southbound demand could last until fall when the US enters harvest season and exports ramp up southbound barge demand. Major agriculture-producing countries such as Argentina and Brazil are expected to export their grain harvest before the US. Brazil has finished planting corn on time . unlike last year. The US may face less competition from Brazil in the fall as a result. Carriers are tying up barges earlier than usual to avoid losses on southbound barge voyages. Carriers that have already parked their barges will take their time re-entering the market unless tariffs become profitable again. The carriers who remain on the river will gain more southbound market share and possibly more northbound spot interest. By Meghan Yoyotte and Eduardo Gonzalez Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Norwegian Cruise swings to 1Q profit


01/05/24
01/05/24

Norwegian Cruise swings to 1Q profit

New York, 1 May (Argus) — US-based cruise ship operator Norwegian Cruise Line's (NCL) swung to a profit in the first quarter on record bookings. The company posted a $69.5mn profit in the first quarter, compared with a $127.7mn loss during the same period of 2023. Revenue rose by 20pc to $2.19bn in the quarter from a year earlier as the cruise operator reported record quarterly bookings. Cruise operating expenses were up by 8pc at $1.39bn in the quarter from a year earlier. Norwegian rerouted some of its voyages that were previously expected to sail through the Red Sea. But demand from other regions offset the effect of the redeployed voyages. The company spent $197.7mn on marine fuel in the first quarter, 1pc up from $194.9mn in the first quarter of 2023. The company burned 269,000t of marine fuel and did not disclose its fuel consumption for the first quarter of 2023. It expects to burn about 245,000t in the second quarter and 995,000t for full 2024, split evenly between residual fuel oil and marine gasoil. Currently, it has hedged about 35pc of its fuel oil consumption at $395/t and 75pc of its marine gasoil consumption at $746/t for the entire 2024. Starting this year, Norwegian had been applying to the EU innovation fund with the goal of accelerating the transition of six of its vessels from being methanol ready to being fully methanol capable. Biomethanol was pegged at $2,223/t very low-sulphur fuel oil equivalent (VLSFOe) or 3.7 times the price of VLSFO average in April in the Amsterdam-Rotterdam-Antwerp bunkering hub, Argus assessments showed. Methanol was assessed at $699/t VLSFOe or 1.2 times the price of VLSFO. The company also has half of its fleet equipped with shoreside technology allowing it to use port electricity and minimize emissions during port stays. Norwegian has ordered eight new vessels for delivery from 2025-2036. Separately, its subsidiaries Oceania Cruises and Regent Seven Seas will take delivery of three new vessels from 2025-2029 and two new vessels from 2026-2029, respectively. By Stefka Wechsler Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Flogas opens Teesside LPG terminal


01/05/24
01/05/24

Flogas opens Teesside LPG terminal

London, 1 May (Argus) — UK distributor Flogas Britain has officially opened a new LPG terminal at Teesside in northeast England, which it says will boost the UK's security of supply by absorbing previously exported LPG. Flogas, a subsidiary of Dublin-based DCC Energy, developed the terminal alongside midstream companies North Sea Midstream (NSMP) and Exolum. The facility will use LPG produced at NSMP's Teesside gas processing plant (TGPP) and stored at Exolum's tanks. The terminal will supply around 90,000 t/yr to households and businesses in northern England, Scotland and Wales, Flogas says. Supplies from the facility started in February as part of its commissioning, with maximum capacity projected at 120,000 t/yr — volumes will depend on North Sea production and run rates at TGPP, the company says. The terminal — which is located near renewable DME firm Dimeta's Teesside plant project — can also be a gateway for renewable gases in the future, Flogas says. Around 1.2mn t of LPG was exported from Teesside in 2023, accounting for 40pc of the UK's total. Supplies in the northern UK could become more vulnerable after Petroineos announced the planned closure of its 150,000 b/d Grangemouth refinery in Scotland earlier this year, although a large proportion of its supply was exported. The UK consumed 2.4mn t of LPG in 2023, with demand forecast to rise to nearer 2.5mn t this year and in 2025, Argus Analytics data show. Domestic output stood at 3mn t, of which 1.4mn t came from refineries and 1.6mn t from gas processing. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

LPG World editorial: Tight spot


01/05/24
01/05/24

LPG World editorial: Tight spot

Consumption growth could briefly outpace rising supply but an influx of Middle Eastern LPG should help to balance the market longer term London, 1 May (Argus) — Slowing US LPG production growth, the continuing increase in petrochemical feedstock use and a more recent jump in gasoline sector demand will push the global LPG market into deficit by 2025, according to ArgusConsulting's latest Short-term Quarterly Update . But any tightness is likely to ease again the following year as consumption slows and new production in the Middle East is brought on line. US output is still anticipated to climb in 2024 after yields from gas processing exceeded expectations in the fourth quarter of 2023. The country's natural gas liquids (NGL) output from gas processing surged to 6.7mn b/d in the fourth quarter from just under 6mn b/d a year earlier, and while it eased to 6.3mn b/d in January-February, that was up from 5.5mn b/d on the year, the latest EIA data show. Many US upstream and midstream companies operating in the NGLs area are upbeat on the continuation of rising US supplies and the corollary boost this will give to US LPG exports. But LPG production growth is nevertheless expected to begin to slow as the industry matures and as the natural gas market enters a more challenging period, the latest Short-term Quarterly Update finds. What should counterbalance this deceleration, if not by next year, will be a 3mn t/yr increase in Middle Eastern LPG supply over 2024-30. This is being driven by several projects intended to support the region's ambition to ramp up LNG exports. Notable projects include the Jafurah field in Saudi Arabia, the three North Field developments in Qatar, the Meram project in the UAE, and ongoing expansions in Iran, ArgusConsulting says. But over the next 1-2 years, consumption could overtake supply. China has been enthusiastically mopping up rising US LPG output since 2010 in line with its aggressive petrochemical expansion, in particular the country's growing fleet of propane dehydrogenation (PDH) plants. This too may slow over the long term, but several new PDH plants and LPG-fed ethylene crackers in China and Asia should keep consumption on an upward trajectory. US demand for cracking is also expected to rise to 17.3mn t by 2027 from 14.6mn t in 2023 as downstream economics improve, as will use in Europe after weak consumption in 2022 and 2023, the report finds. New PDH and cracker projects outside Asia, as well as raised flexibility at existing crackers, will further bolster demand. For LPG's use as an energy source, the global market "has probably already peaked" and is forecast to contract slowly, tied to expanding gas grid networks, rising temperatures and the energy transition. But renewed investment in LPG subsidies in India and market expansion to poorer rural areas should largely offset declining residential use in large markets such as China. Demand for energy use will decline by just 2pc by the end of this decade as a result, the report says. Gasoline pump Much of China's recent LPG demand growth has more specifically been for propane at PDH plants. Butane has found support from increasing cracker rates, largely in Asia, but not to the same degree, while growth in butane's traditional market as a fuel in the global south has slowed despite India's expansion and the huge potential for markets in sub-Saharan Africa. It is butane's use in gasoline that has increased significantly in the US and China, tightening global supply. A widening discount for butane against gasoline and strong premiums for high-octane components have compounded demand, as too has China's ramping up of MTBE exports. Yet Argus Consulting forecasts gasoline demand to peak soon in the US and China, meaning this support may be relatively short-lived. Where butane could find long-term growth is as a cooking fuel in sub-Saharan Africa where LPG expansion is being targeted under clean cooking directives. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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