US ethane production rises to record: EIA

Spanish Market: LPG
31/08/20

US ethane field production rose to a record high in June as producers moved to recover more product late in the second quarter.

Ethane output rose to 2.1mn b/d, a 14pc increase from the prior record 1.8mn b/d produced in May and a 16pc increase from the previous June, the Energy Information Administration (EIA) reported today in its monthly data.

Production fell sharply in March and April as shut-in natural gas wells reduced output of associated gas. By late May, rising prices supported recovery of more ethane from the gas stream. Mont Belvieu, Texas, EPC ethane averaged 12.97¢/USG in April, before rising to 22.36¢/USG in May and 21.88¢/USG in June.

Ethane inventories also rose, climbing to 52mn bl in June, up 9pc from the previous month, but a 14pc drop from the 60mn bl reported in June 2019. June ethane exports of 308,000 b/d were up by 3pc from May and up by 12pc from June last year.

US butane exports stood at 301,000 b/d in June, down from 352,000 b/d last month and up slightly from the 296,000 b/d during the same month last year. June butane exports mainly went to destinations in Indonesia and South Korea.

Butane stocks stood at 55.4mn bl in June, up by 20pc from May when production fell sharply, but down from 58.2mn bl of inventories in June last year.

The US produced 13.4mn bl of butane in June, down from 13.8mn bl in May, but up from 12.7mn bl last June.

By Marialuisa Rincon and Kelly Strickland

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29/10/24

LPG bunker demand lags despite competitive pricing

New York, 29 October (Argus) — LPG is seen by shipowners as one of the least expensive fuels for meeting new low-carbon emission rules, but spotty safety rules, a lack of bunkering infrastructure or four-stroke engines able to use it is holding back demand. LPG has been price-competitive with LNG and at a significant discount to B30 biodiesel, bio-methanol and blue ammonia and green ammonia this year, according to Argus . ( see chart ). Taking into account the cost of CO2 traded on the EU emissions trading system (ETS), northwest Europe LPG was pegged at $577/t from 1-28 October compared with LNG at $614/t average ( see chart ). The EU's ETS for marine shipping started this year and requires ship operators pay for 40pc of their greenhouse gas (GHG) emissions generated on voyages in the EU. Next year, ship operators will have to pay for 70pc of their CO2 emissions. LPG is one of the fuels that can help ship operators comply with the FuelEU for the next ten years. Starting on 1 January 2025, the EU's FuelEU regulation will require a 2pc cut in the lifecycle greenhouse intensity for bunker fuels burned in EU territorial waters compared with 2020 base year levels. The reduction jumps to 6pc from 2030 and gradually reaches 80pc by 2050. LPG's lifecycle GHG emissions footprint varies depending on its production pathway. It is pegged at about 81.24 grams of CO2-equivalent per megajoule (gCO2e/MJ), according to technical support documentation from the California Air Resources Board. At this carbon intensity level, LPG is compliant with FuelEU's GHG limit set at 85.69 gCO2e/MJ through year 2034, similar to LNG. There are 151 operational ships with LPG-burning engines, with another 109 vessels on order by 2028, according to vessel classification society DNV. LPG bunker demand more than doubled to 242,292t in 2023 compared with 101,447t in 2022, according to the latest International Maritime Organization (IMO) data collected from vessels of 5,000 gross tonnes and over. But LPG bunker demand was dwarfed by comparison with LNG bunker demand, which was at 12.9mn t in 2023, up from 11mn t in 2022, according to the IMO. There were over 700 LNG burning vessels operational this year, with the number growing to 1,162 by 2028, according to DNV data. LPG accounted for 0.1pc and LNG for 6.1pc of global marine fuel demand from vessels with 5,000 gross tonnes and over in 2023. LNG as a marine fuel has been around longer than LPG. The World Liquid Gas Association, a trade association, began exploring the use of LPG as a marine fuel in 2012. The first LPG-fueled very large gas carrier BW Gemini was retrofitted to burn LPG in 2020. By comparison, LNG for bunkering by LNG carriers have been around since the 1960s. The first LNG-powered container ship was delivered in 2015. The bulk of the global LPG bunker demand came from LPG carriers. LPG carriers outfitted with LPG-burning engines can burn their own cargo, taking advantage of the ships' existing infrastructure and safety systems and minimizing their operating costs. But LPG demand from other major types of bunker-consuming vessels, such as container ships, dry bulk carriers and oil tankers, is lagging. One reason is only two-stroke LPG-burning marine engines are commercially available, says vessel classification society Lloyd's Register . Typically, large vessels use two-stroke engines for propulsion and four-stroke engines as auxiliaries, meaning auxiliary engines on vessels would need to be decarbonised through an additional fuel, says Lloyd's Register. LPG has a well-developed global network of import and export terminals. But LPG for bunkering port infrastructure, such as dedicated bunkering storage tanks and LPG bunkering barges, is mostly lacking. Unlike LNG for bunkering, LPG for bunkering regulatory guidelines are currently patchy. If leaked onto water, LPG rapidly vaporises and then sinks to the surface of the water given it is heavier than ambient air. If it ignites, it can create a "pool fire" that can spread and cannot be extinguished, continuing to burn until all the LPG is consumed, Lloyd's Register says. By Stefka Wechsler NW Europe selected alternative marine fuels $/t VLSFOe NW Europe, 1-28 Oct avg $/t VLSFOe Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Brazil's LPG market seeks alternatives: Correction

29/10/24

Brazil's LPG market seeks alternatives: Correction

Corrects national LPG demand in fifth paragraph. Rio de Janeiro, 29 October (Argus) — Brazil's LPG distribution business will change significantly and look toward alternatives such as compressed natural gas (CNG) and biomethane in the near future thanks to a growing number of industry mergers and an expected surge in demand from new federal laws. In March, Copa Energia, Brazil's largest LPG distributor with 25pc the market share, acquired small-scale CNG distributor Companhia de Transporte de Gas (CTG) as part of its strategy to expand distribution of natural gas and biomethane. Copa is looking to acquire at least three other companies, including biomethane producers, to increase margins as biomolecule prices are still higher. Ultragaz — which has 17pc of Brazil's LPG market share — acquired Neogas, another CNG distributor, in 2022 and progressed on to biomethane distribution. Essencis Biometano, a southeastern Sao Paulo state partnership between renewable energy companies MDC and Solvi Essencis Ambiental, will supply 68,000m³/d of biomethane to Ultragaz, and Rio de Janeiro GNR Dois Arcos' biomethane plant will supply 10,000 m³/d to Ultragaz. "This is a rush to capitalize on an opportunity to offer a mix of energy products to the market, hence not only securing one's clients portfolio but also moving ahead of the market and perhaps growing the clientele," one LPG market executive said. The trend of looking into other markets is especially strong in Sao Paulo as well as in southern and central-western states. The federal government's Gas for All social program — expected to deliver one 13kg cylinder/month to 20mn families by the end of 2025 — will also change the LPG market's dynamics by driving demand while including new consumers into the LPG market. Some participants say it will help decrease usage of firewood for cooking, which is still prominent in the countryside and unlikely to be replaced entirely. Delivered cylinders could replace up to 40pc of wood consumption, a consultant told Argus, thus increasing national demand for LPG by 216,000-312,000 metric tonnes (t)/yr, up from about 7.6mn t/yr currently used nationwide. The program is most likely to increase LPG use in rural areas, helping major distributors in those areas increase their market shares even further. By Betina Moura Brazilian LPG market share Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Pennsylvania drilling drops to 17-year low

25/10/24

Pennsylvania drilling drops to 17-year low

New York, 25 October (Argus) — Pennsylvania oil and natural gas drilling this week fell to the lowest in 17 years, signaling dimming producer sentiment in the second-largest US gas producing state. The number of rigs drilling for oil and gas in Pennsylvania this week fell to 12, the lowest since July 2007, as the state's rig count lost one from a week earlier and fell by 10 from a year earlier, according to oil field services company Baker Hughes. There were 101 gas-directed rigs in the US this week, down by 16 from a year earlier, implying that the majority of the gas-rig decline was due to the drop in Pennsylvania, where wells produce plentiful dry gas but little crude and natural gas liquids (NGLs). The 17-year-low rig count in the regional gas-producing powerhouse, home to the prolific Marcellus shale, is due to three factors: expectations of lower US gas prices after the 2024-25 winter heating season, a lower share of currently more profitable crude and NGLs in Pennsylvania's output compared to nearby West Virginia and Ohio, and the June start-up of a new gas pipeline in West Virginia , where some Pennsylvania production may have shifted. Rig counts reflect expected prices roughly six months in the future, accounting for the lag between when the drilling of a well begins and when its production is sold. The April 2025-March 2026 strip price at the Leidy Line trading hub, a bellwether for Marcellus shale output in northeast Pennsylvania, was $2.63/mmBtu, according to Argus forward curves. Prices for crude and NGLs in 2024 have been more resilient than US gas prices, which have languished after a warmer-than-normal 2023-24 winter left the US gas market oversupplied. This price dynamic may be why the other two main Appalachian gas producing states have not mirrored Pennsylvania's drilling slowdown. The Ohio rig count rose by one this week to 10, the same number as a year earlier, while the West Virginia rig count was unchanged at 10, up by three from a year earlier. Drilling productivity has also improved dramatically in the past 17 years, surging to 21 Bcf/d (595mn m³/d) in July from 471mn cf/d in July 2007, according to the US Energy Information Administration. Above-average temperatures were expected to blanket the US from November to January, according to the National Weather Service, portending another winter with lower gas demand. By Julian Hast Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Range sees 6pc gain in realized 3Q NGL pricing

23/10/24

Range sees 6pc gain in realized 3Q NGL pricing

Houston, 23 October (Argus) — Marcellus gas producer Range Resources received a 6pc higher premium versus Mont Belvieu, Texas, on its natural gas liquids (NGL) production in the third quarter owing to its access to markets in Europe and Asia. The Fort Worth, Texas, based producer received on average $25.96/bl for its NGLs, excluding derivatives, up 6pc versus last year. That exceeded average NGL prices at Mont Belvieu, Texas, by $4.10/bl. "Our ability to market ethane propane and butane into the international markets drove the highest NGL premium in company history, at over $4/bl over the Mont Belvieu index," said chief executive Dennis Degner. Range reported its natural gas liquids (NGL) production rose 5pc year over year to 10.2mn bl, or 111,465 b/d, in the third quarter as its gas production rose by 4pc to 1.5 bcf/d. Range updated its full-year guidance on its NGL pricing to Mont Belvieu plus $2.10-$2.35/bl, up from the 75¢/bl to $1.50/bl estimated in the second quarter, owing to gains in propane and butane prices at Mont Belvieu, Texas and higher spot premiums for exported cargoes out of the US. Range's average NGL estimates assumes 53pc of its production is ethane, 27pc propane, and 8pc normal butane. Mont Belvieu, Texas, LST propane averaged 72.9¢/USG in the third quarter, higher than the average of 68.9¢/USG in the third quarter of 2023. Mont Belvieu butane prices averaged 97.25¢/USG in the third quarter, up versus 83.47¢/USG last year. Range credited its term commitments on Energy Transfer's Mariner East system, which pipes NGLs from Range and other Marcellus producers to its export facility at Marcus Hook, Pennsylvania, with its higher realized prices on NGLs, particularly propane and butane, given higher netbacks from Europe and Asia. "International demand and pricing for NGLs remained robust in the third quarter, leading to near maximum US export capacity utilization," Degner said. "Improving Panama Canal throughput access, and a growing global fleet of LPG ships improved waterborne freight rates, and these factors combined to drive export price premiums to new levels relative to the Mont Belvieu index, and Range's portfolio of transportation and sales contracts provided reliable access to these premium markets." Argus-assessed prices for spot propane cargoes on a fob basis rose above Mont Belvieu +30¢/USG in mid-September, a multi-year high. Degner noted higher premiums on spot cargoes are expected to remain until US Gulf coast terminals expand capacity there in late 2025. By Amy Strahan Netback to Northwest Europe vs Mont Belvieu $/t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

CSX forecasts softer 4Q rail demand

17/10/24

CSX forecasts softer 4Q rail demand

Washington, 17 October (Argus) — Eastern US railroad said it expects that fourth quarter commodity market conditions will be mixed, limiting some freight demand. "Going into the fourth quarter, near-term conditions look modestly more challenging," chief executive Joe Hinrichs said on Wednesday. But the railroad expects "modest volume growth", supported by a few segments including chemicals and agriculture. But lower locomotive fuel prices and the impact of international coking coal prices, which are linked to export rail contracts, could drive a decrease in total revenue during the fourth quarter. He estimated that impact at roughly $200mn compared with last year's fourth quarter revenue of $3.68bn. CSX expects to see a carryover of year-over-year momentum in chemicals, agriculture and food, forest products and minerals, while metals and automotive will continue to be challenged. Demand for metals shipments is predicted to soften through the end of the year. Interest in shipments, particularly steel, is soft because of "sluggish demand, ample supply and low commodity prices", chief commercial officer Kevin Boone said. A weaker-than-anticipated automotive market contributed to the drop in metals demand. Consumer demand for automotive products has been reduced by high retail prices and interest rates, which has led to increased dealer inventories and slower production, Boone said. But CSX expects that an "interest rate easing cycle will help these markets normalize," Boone said. Metals and equipment volume fell in the second quarter, primarily because of lower steel and scrap shipments. Shipments of metals and equipment fell by 9pc to about 64,000 carloads compared with the same three months in 2023. Revenue dropped to $208mn, down by 8pc from a year earlier. Automotive volume dropped in the second quarter because of lower North American vehicle production, CSX said. Automotive traffic fell to 301,000 railcars loaded, down by 2pc from the third quarter 2023. Automotive revenue dropped to $98mn, down by 3pc compared with a year earlier. The outlook for fertilizer shipments is mixed following the third quarter as a decline in long-haul phosphates shipments persisted. Volume was negative, but the railroad was able to haul some profitable spot shipments. Shipments of fertilizer fell to 45,000 carloads in the third quarter, down by 4pc from a year earlier. Fertilizer revenue dropped to $118mn, down by 5pc from a year earlier. CSX expects growth in some market segments. Chemicals freight demand is expected to continue growing following "consistent, broad strength across plastics, industrial chemicals, LPGs, and waste. That demand helped boost chemicals volume by 9pc compared with a year earlier. Chemicals revenue rose to $727mn in the second quarter, up by 13pc compared with a year earlier. Agricultural and food products shipping demand is expected to continue growing, led by demand for grain and feed ingredients from the Midwest for supplies. That follows a third quarter when higher ethanol shipments, as well as increased overall volume helped raise volume by 9pc from the third quarter of 2023. Revenue from shipping agricultural and food products rose to $416mn, up by 11pc from a year earlier. CSX expects intermodal growth to continue with the trucking market falling, which would help drive more container freight to rail. Intermodal shipments are goods shipped in containers and trailers between different modes of transportation. The 1-3 October strike by the International Longshoremen's Association (ILA) did impact intermodal traffic, but the railroad was pleased with the "relatively quick short-term solution", Boone said. International intermodal volume during the third quarter rose because of higher east-coast port traffic. Domestic volume was mostly flat. Overall intermodal volume during the quarter increased by 3pc compared with a year earlier. But lower revenue per container helped reduce total intermodal revenue by 2pc to $509mn. CSX does not expect a major shift in coal volume through the end of the year as coal markets seem relatively stable and utility stockpiles are sufficient, Boone said. Rising natural gas prices are also unlikely to stimulate a "near-term step-up in volumes". Export coal demand has been consistent lately, particularly from buyers in Asia. But revenue per railcar for export coal could make a modest single digit drop, as contracts are tied to international coal benchmarks and prices fell earlier this year. Expport coal voume rose to 11.1mn short tons (10.1mn metric tonnes) in the second quarter on higher demand for thermal and coking coal. But domestic coal deliveries fell to 10.2mn st, down by 12pc from a year earlier, on lower deliveries to power plants and lake and river terminals. Rail coal volume fell by 2pc from a year earlier, while revenue dropped by 7pc to 553mn st. Total CSX profits rose to $894mn, up by 8pc compared with third quarter 2023. Revenue increased to $3.6bn, up by 1pc. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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