EIA: LPG Production Grows in All U.S. Regions Except West Coast

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Researched by Industrial Info Resources (Sugar Land, Texas)--Production of liquefied petroleum gases (LPG) rose in all U.S. regions except for the West Coast from 2010 through 2016, according to the Energy Information Administration (EIA).

Total U.S. production of LPG (propane and butanes), increased to 2.1 million barrels per day from 1.2 million barrels per day in 2010, according to the EIA. LPG rose in all PADD (Petroleum Administration for Defense District) regions except for PADD V, which encompasses California, Oregon, Washington and Alaska, as well as Arizona, Nevada and Hawaii. Production in PADD V totaled 80,000 barrels per day in 2016, 10,000 barrels per day less than in 2010.

Much of the increase in U.S. LPG production stems from growing production at natural gas processing plants, which has nearly doubled to nearly 1.8 million barrels per day since 2010, the EIA said.

Shane Mullins, Industrial Info's vice president of product development for energy markets, said at Industrial Info's 2017 Industrial Market Outlook in January that budgets for natural gas processors have been restrained to only necessary inspection and maintenance work during the past couple of years. But with the natural gas liquids (NGL) barrel price at a two-year high and more LPG demand on the way from overseas users and the U.S. petrochemical sector, better margins will allow some purse strings to open up in 2017. Industrial Info is tracking NGL recovery train projects in the U.S., worth $4.7 billion, that could kick off construction this year. This amounts to 5.9 billion cubic feet per day, more than double the amount of new capacity that started construction last year.

However, the West Coast region (PADD V) has seen relatively low levels of in-region production and a lack of LPG pipeline infrastructure, leaving it behind the rest of the U.S. in growth, particularly along the Gulf Coast region, the EIA said in a Thursday report.

As a result, rail shipments have grown as a way to move LPG to the West Coast region. In 2016, the West Coast received 46,000 barrels per day of LPG by rail from Canada and other PADDs, up from 16,000 barrels per day in 2010. At the same time, exports of LPG from the West Coast rose by nearly 5,000 barrels per day in 2016 to more than 37,000 barrels per day, with most of the increase bound for Asia markets.

Total LPG exports from the U.S. between 2010 and 2016 increased from 131,000 barrels per day to 908,000 barrels per day, according to the EIA. Asia is the primary destination for these exports, accounting for 44% of all volumes.

Mullins said propane exports are expected to increase by another 400,000 barrels per day by 2020. The overseas demand is coming from countries such as China, India, Singapore and Japan, according to Mullins. Japan now gets 35% of its propane from the U.S., and India is embarking on a program to enable 50 million people to use propane instead of wood or kerosene as a heating fuel.

The West Coast only has one major LPG export terminal, according to the EIA, but others have been proposed as exports continue to increase. A proposed $45 million LPG storage and export terminal addition is under economic evaluation at Petrogas Incorporated's (Calgary, Alberta) facility in Ferndale, Washington. The project would include construction of a 525,000-barrel propane storage tank at the existing 750,000-barrel terminal. For more information, see Industrial Info's project report.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.