Viewpoint: Canadian propane exports poised to rise

Spanish Market: LPG
31/12/24

Canadian propane exports to Asia are expected to continue growing in 2025, driven by increased export capacity and natural gas liquids (NGL) production, as producers ramp up drilling to meet rising demand ahead of the LNG Canada export facility start up.

Propane and butane exports from Canada to Asia average about 153,000 b/d in the third quarter of 2024. AltaGas exported 128,272 b/d of propane and butane to Asia during the quarter, with about 50,000 b/d leaving its Ferndale, Washington, terminal and 70,000 b/d from the Ridley Island Propane Export Terminal (RIPET) in British Columbia (BC). Additional exports came from Pembina's 25,000 b/d propane export terminal at Watson Island near Prince Rupert, BC.

Midstream operators are investing in an additional 70,000 b/d of propane and butane export capacity in the next few years. AltaGas is advancing the construction of its Ridley Island Energy Export Facility (REEF) adjacent to RIPET, which will have an export capacity of 55,000 b/d in its first stage, potentially operational by 2028. Pembina is also considering a 15,000 b/d expansion of its propane export terminal, but a final investment decision (FID) has not yet been made.

Another potential increase in export capacity could come if Trigon Terminals repurposes its 18mn t/yr coal export terminal on Ridley Island for NGL exports. There has been no FID on this project, and the company is in litigation with the Prince Rupert Port Authority (PRPA) over export rights. If approved, the project could be operational by 2028, according to the company.

The growth in export capacity is driven by rising natural gas production, stemming from expectations of increased LNG exports from Canada. The 14mn t/yr LNG Canada export terminal began commissioning in late August and is expected to start shipping LNG cargoes by mid-2025. Located in Kitimat, BC, it is only 120km from the country's Pacific coast LPG export hub near Prince Rupert.

Another LNG facility under construction is the 2.1mn t/yr Woodfibre LNG export terminal near Squamish, BC, north of Vancouver. This joint venture between Canadian midstream operator Enbridge and Singapore-based Pacific Energy is expected to be completed in 2027. Additionally, the Indigenous Haisla Nation and Pembina Pipeline reached a final investment decision for their 3.3mn t/yr Cedar LNG floating facility in Kitimat, which is set to open in late 2028.

Fractionation capacity also grows

The increase in natural gas production will result in higher NGL output, with about 90pc of Canada's NGL production coming from natural gas. This has driven increased demand for fractionation services in western Canada.

Keyera plans to debottleneck its second fractionation unit at Keyera Fort Saskatchewan (KFS) in Alberta, adding 8,000 b/d of capacity to the existing 66,000 b/d. Keyera expects to make a final decision early next year, with potential completion by late 2026. The company has also secured customer backing to build a third KFS fractionator, which it hopes to commission in 2028.

Pembina continues to advance its 55,000 b/d Redwater IV fractionation facility at its Redwater complex (RFS) in Alberta, which is expected to be online in the first half of 2026. Currently, RFS has three fractionators with a total capacity of 210,000 b/d. Calgary-based Wolf Midstream reached an FID in July to build phase two of its NGL North complex, which will include a 90,000 b/d fractionation facility, including 60,000 b/d of ethane capacity.

Canadian propane exports increased to 64.9mn bl in January-October, compared with 58.7mn bl during the same period in 2023.

By Yulia Golub

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

30/12/24

Viewpoint: US LPG exports to LatAm poised to grow

Houston, 30 December (Argus) — US LPG exports to Latin America are expected to rise in 2025 because of ongoing efforts by governments to transition low-income residences away from cooking with firewood. The International Energy Agency (IEA) estimates in 2023 more than 70mn consumers across Latin America lacked access to clean cooking fuel. Industry groups promote the use of LPG as an alternative to firewood owing it its lower emissions and ease of transport into remote regions unable to be served by electricity or natural gas. Much of the LPG consumed in Latin America is imported from the US, and US exports to the region stood at around 10.6mn metric tonnes (t) from January to mid-December 2024, already surpassing the 10.48mn t shipped from the US in 2023, according to data from commodity tracking firm Vortexa. The largest demand center for US LPG in Latin America was Mexico, accounting for 35pc of US shipments to the region, down by 2.2 percentage points from 2023. The Dominican Republic accounted for 12pc of shipments, Ecuador 11pc, and Chile took 9pc. Brazil was among countries seeing the largest increase in its share of US LPG supplies, rising by 2.6 percentage points to 8.7pc this year. The Brazilian government is working to expand subsidies for LPG, also known as cooking fuel, by another 20mn low-income households next year. If the bill is passed, the measure could increase Brazil's LPG consumption from 7.6mn t to 7.7mn t next year. An estimated 5.4mn households currently benefit from the existing LPG subsidy program. LPG restrictions in Brazil — which limit the use of LPG in saunas, pool heating, commercial boilers, and as autogas in vehicles — may soon change, under a measure under consideration by Brazil's hydrocarbons regulator, ANP . Brazilian LPG association Sindigas expects a 5pc boost to LPG demand in the next five years if restrictions on commercial uses are lifted. The prospect of additional LPG demand in Brazil has already spurred investments in new infrastructure, including two new import and distribution terminals. Brazilian LPG distributor Copa Energia is part of a consortium of companies investing in a new 71,000t LPG storage facility in Suape on the country's northeast coast. Brazilian fuel distributor Ultrapar has also applied to antitrust regulators to build a new LPG terminal in Pecem port, in northeastern Ceara state, with 62,000t of storage, tentatively planned for operations in 2028. In Colombia, LPG import are also forecast to grow, largely due to its own diminishing production at Ecopetrol's Cusiana and Cupiagua fields. Colombia's LPG imports are forecast to increase to an average of 22,000 t/month in 2025, based on demand growth of 0.6pc per year, up from the average 6,900 t/month imported in January-June, Gasnova president Alejandro Martinez told Argus earlier this year. Colombia, like neighboring Brazil, is gearing up to accommodate growing demand. LPG distributor Colgas has started building a terminal at the existing 16,000 t/month Okianus port in Cartagena, scheduled to be ready in late 2025. Canadian oil company Frontera and Chilean LPG supplier Gasco plan to build a $50mn-$60mn LPG terminal at the Caribbean port of Puerto Bahia, which will include 20,400t of storage capacity and will be able to offload two very large gas carriers (VLGCs) a month. In Guatemala, Mexico's Grupo Tomza subsidiary Tropigas opened a new 1.3mn USG (31,000 bl) LPG storage and distribution facility in Escuintla in November to accommodate growing demand in the region and mitigate logistical disruptions. The Planta Palin facility in Escuintla comprises 20 storage tanks for propane and butane, and will be supplied from seaborne shipments arriving at Guatemala's Santo Tomas and Honduras' Omoa ports. Latin American LPG importers may also benefit from expanding dock capacity in the US. Both Enterprise and Energy Transfer projects are expected to add a combined 550,000 b/d of LPG export capacity out of Houston and Nederland, Texas, by the end of 2026. Enterprise's new Neches River terminal project near Beaumont, Texas, will add another 360,000 b/d of either ethane or propane export capacity. The US projects will ease tight dock capacity and the premiums for spot cargoes of propane and butane at the US Gulf coast are expected to wane by the end of 2025, incentivizing buyers in Latin America to purchase more US sourced LPG supplies. The curve ball Yet US LPG exports to Latin America could be stymied by growing supplies from Argentina, home to the prolific Vaca Muerta shale formation that holds an estimated 308 trillion cf of shale gas. Natural gas production in Argentina increased to 138mn m³/d in October, up from 130mn m³/d a year earlier, according to the latest Argentinian government data. Argentina exported 591,000t of LPG from January to mid-December, with nearly 85pc of it routed to Brazil. But Argentina also exports LPG to Brazil by tanker truck, which could also weigh on seaborne arrivals. By Giovann Rosales Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: US ethane to be oversupplied for 2025

24/12/24

Viewpoint: US ethane to be oversupplied for 2025

Houston, 24 December (Argus) — US ethane production growth will likely continue to outpace exports and domestic demand into the first half of 2025, keeping US inventories of the natural gas liquid in record territory until export capacity expands late next year. Ethane, which is widely used for ethylene production at US steam crackers, has emerged as the lowest-cost petrochemical feedstock worldwide, spurring infrastructure investments in Asia, particularly China, to receive US ethane exports. Still, US ethane production from gas processing continues to outpace the country's ability to ship it into demand centers in Europe, India and China. Mont Belvieu, Texas, EPC ethane spot prices fell relative to natural gas in 2024 due to record ethane production, leaving ethane stocks oversupplied entering 2025. EPC ethane's premium to its fuel value in Nymex natural gas at the Henry Hub averaged 3.25¢/USG during 2024, 54pc lower than in 2023. It also averaged a 1.75¢/USG premium to its fuel content in the second half of 2024, 77.5pc lower than the same period last year, as spot ethane prices fell on ample supplies. Cheaper natural gas in the Permian basin spurred higher rates of ethane recovery from the natural gas stream and led to a disproportionate rise in ethane production. Spot prices for natural gas at the Waha hub in west Texas across the year averaged -$0.10/mmBtu, with prices remaining negative for eight of nine months from March-November. Prices were consistently positive in 2023, averaging $1.66/mmBtu across the year. Negative Permian gas prices allow ethane recovery from the gas stream at a much lower cost. US natural gas production in 2024 is poised to be steady to slightly down, having averaged 3.14tcf in monthly production from January to September, according to US Energy Information Administration (EIA) data. Meanwhile, ethane production is set to reach a record high for the 11th consecutive year, with monthly production averaging 2.78mn b/d over the same period, up from a 2.65mn b/d average over the whole of 2023. Waha gas prices turned positive in the second half of November and spiked to a multi-month high of $2.56/mmBtu on 2 December, pushing ethane prices to a 13-month high of 25.625¢/USG the following day as downstream buyers bid higher to fulfill contracts for the month . Ethane's rally was brief, however, with Mont Belvieu prices falling to 22.5¢/USG over the next week even as Waha climbed further. Record ethane inventories Ethane inventories hit record highs in 2024, according to EIA data, including a peak of 80.89mn bl in July, 79.5mn bl in August and 77.23mn bl in September. Mont Belvieu ethane has also been in backwardation in December, with January prices at a 2-4c discount to prompt December prices, encouraging selling interest. Sustained cold weather and additional surges in natural gas spot prices may further draw down ethane supplies as higher volumes are rejected into the gas stream, market participants suggest, but as it stands, ethane supplies are likely to remains at or near record highs for the first part of the new year. In the EIA's most recent Short Term Energy Outlook (STEO), the agency projects ethane inventories to end 2024 at 74.1mn bl , which would be a year-end record following a seasonal draw down, and 12.6pc higher than a year earlier. In that same report, including projections for the fourth quarter, domestic consumption of ethane is estimated to be 2.26mn b/d in 2024, up by about 98,000 b/d on the year, and net exports are estimated at 483,000 b/d, up by around 13,000 b/d, whereas production of ethane from natural gas processing is expected to be 113,000 b/d higher at 2.77mn b/d. Playing catch-up If projections are accurate, 2024's record end-of-year ethane supply will exceed the peak previously set in 2020 of 69.6mn bl, based on EIA data. The first VLEC loadings at Energy Transfer's 180,000 b/d Nederland, Texas, export terminal began in January of 2021, resulting in year-end inventories reaching a relative trough in 2022 at 53.55mn bl before rebounding by nearly 50pc in the last two years. Domestic ethane consumption growth has kept pace with or fallen behind growth in production since 2020. Conversely, ethane exports in 2021 jumped by 98,000 b/d to 369,000 b/d on the opening of the Nederland terminal and grew more slowly in 2022 and 2023. Exports of US ethane are limited by infrastructure at receiving terminals abroad and the specialized vessels required to ship the lighter feedstock. Overseas markets are gearing up to take ethane imports over the next few years , and US ethane inventories are likely to continue building ahead of of an expansion to domestic export infrastructure as US production grows further. Enterprise's Neches River export terminal in Beaumont, Texas, is the next scheduled US expansion and is set to complete its first phase in the third quarter of 2025 , adding 120,000 b/d of ethane export capacity. Completion of the second phase in the first half of 2026 would take this capacity to a total of 180,000 b/d. The project, if it remains on track, should curtail ethane inventory growth at the back end of 2025. Until then, abundant supply probably will continue to weigh on spot prices, and the first half of 2025 may see ethane prices fall further, both outright and relative to natural gas, especially since the EIA's outlook also forecasts gas prices to rise through the winter. By Joseph Barbour Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: US LPG cargo premiums poised to fall

23/12/24

Viewpoint: US LPG cargo premiums poised to fall

Houston, 23 December (Argus) — The booming US LPG export market has fueled record spot fees this year for terminal operators that send those cargoes abroad, but those fees are poised to fall next year as additional export capacity comes online. US propane exports surged over the past two years, hitting an all-time high of 1.85mn b/d in the first quarter of this year, according to data from the US Energy Information Administration (EIA). Terminal fees for spot propane cargoes out of the US Gulf coast hit an all-time high of Mont Belvieu +32.5¢/USG (+$169.325/t) in mid-September. US propane production is expected to grow by another 80,000 b/d in 2025 to 2.22mn b/d while the outlook for domestic consumption is fairly steady, at 820,000 b/d next year — meaning even more propane will be pushed into the waterborne market. But that is dependent on US infrastructure keeping up with the pace of production. US export terminals in Houston, Nederland and Freeport, Texas, have run at or above capacity for the last two years given the thirst for cheaper US feedstock, largely from propane dehydrogenation (PDH) plant operators in China. This demand has created bottlenecks at US docks, and midstream operators like Enterprise, Energy Transfer, and Targa have rushed to ramp up spending on both pipelines and additional refrigeration to stay ahead of the wave of additional production. US gas output spurs LPG exports As upstream producers have ramped up natural gas production ahead of new LNG projects, most producers are counting on LPG demand from international outlets in Asia to offload the ethane and propane the US cannot consume. For the past four years, Asian buyers have been more than happy to oblige. US propane exports to China rose from zero in 2019, when China imposed tariffs on US imports, to an average of 1.36mn metric tonnes (t) per month in January-November 2024, according to data from analytics firm Kpler, making China the largest offtaker of US shipments. US exports to Japan averaged 480,000t per month throughout most of 2024, and exports to Korea averaged 460,000t per month in the first 11 months of 2024. China, Korea, and Japan received 52pc of US propane exports in 2024, up from 49pc in 2020, according to data from Vortexa. Strong demand in Asia has kept delivered prices in Japan high enough to sustain an open arbitrage between the US and the Argus Far East Index (AFEI). Forward-month in-well propane prices at Mont Belvieu, Texas, have remained well below delivered propane on the AFEI. In 2020, Mont Belvieu Enterprise (EPC) propane averaged a $143/t discount to delivered AFEI — a spread that has only widened as additional PDH units in Asia have come online. During the first 11 months of 2024, the Mont Belvieu to AFEI spread averaged a hefty $219/t, leaving plenty of room for wider netbacks in the form of higher terminal fees for US sellers, especially as a wave of new VLGCs entering the global market has left shipowners with less leverage to take advantage of the wider arbitrage. The resulting wider arbitrage to Asia has kept US export terminals running full for the last two years. So when a series of weather-related events and maintenance in May-September limited the number of spot cargoes operators could sell and delayed scheduled shipments, term buyers willing to resell any of their loadings could effectively name their price. This spurred the record-high premiums for spot propane cargoes in September. New projects may narrow premium An increase in US midstream firm investments in additional dock capacity and added refrigeration in the years ahead could narrow those terminal fees, however. Announced projects from Enterprise and Energy Transfer, in particular, will add a combined 550,000 b/d of LPG export capacity out of Houston and Nederland, Texas by the end of 2026. Enterprise's new Neches River terminal project near Beaumont, Texas, will add another 360,000 b/d of either ethane or propane export capacity in the same timeframe. These additions are poised to limit premiums for spot cargoes by the end of 2025. Already, it appears the spike in spot cargo premiums to Mont Belvieu has abated for the rest of 2024. Spot terminal fees for propane sank to Mont Belvieu +14¢/USG by the end of November. The lower premiums come not only as terminals resume a more normal loading schedule, but at the same time a surplus of tons into Asia ahead of winter heating demand has narrowed the arbitrage. The spread between in-well EPC propane at Mont Belvieu fell from $214.66/t to $194.45/t during November. A backwardated market for AFEI paper into the second quarter of 2025 means US prices are poised to fall more in order to keep the spread from narrowing further. By Amy Strahan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

WLGA calls for immediate action in African LPG roadmap

17/12/24

WLGA calls for immediate action in African LPG roadmap

The roadmap identifies 11 high-opportunity markets in sub-Saharan Africa where LPG consumption could significantly increase, writes Yasmin Zaman London, 17 December (Argus) — The growth of LPG as a clean cooking fuel in sub-Saharan Africa will remain limited without immediate and considerable advancement in regulation and investment, according to a new roadmap released by the World Liquid Gas Association (WLGA). The report, commissioned by the WLGA's recently formed Cooking For Life Africa Task Force (CFLA), calls for clear, enforceable regulatory frameworks, financing and payment plans to reduce cost barriers, and investment in infrastructure including roads to better support distribution. The roadmap identifies 11 high-opportunity markets in sub-Saharan Africa where under favourable conditions per capita LPG consumption could increase to 25kg/yr by 2030 and 40kg/yr by 2050. In seven markets, including Nigeria, Kenya, Ghana and Cameroon, policies are already in place that will drive growth opportunities, leaving four that need to address this challenge, according to the roadmap. Affordability is an issue in all countries except Ghana. In Nigeria, this is considered a "major roadblock" because of the depreciation of the naira. The roadmap was released after the UN's Cop 29 climate conference, where major European oil firms pledged $500mn to energy access in sub-Saharan Africa and south and southeast Asia. The WLGA established the CFLA at the IEA's summit on clean cooking in Africa earlier this year. Its founding members include TotalEnergies, Norway's Equinor, Nigerian state-owned oil firm NNPC, LPG trading firm Petredec and regional LPG distributor Oryx Energies. "The LPG roadmap, which targets about 60pc of the continent's population without access to clean cooking solutions, will simultaneously address economic, health and environmental challenges across Africa," NNPC's managing director Huub Stokman said. TotalEnergies' vice-president of LPG Biova Agbokou added that the CFLA and the roadmap can also act "as another lever to reach more end-users". Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: VLGC market faces uncertainties in 2025

16/12/24

Viewpoint: VLGC market faces uncertainties in 2025

London, 16 December (Argus) — Looming tariffs, Panama Canal's new dynamics, limited US export capacity and a continued cap on Mideast Gulf LPG production will bring uncertainty to the VLGC market next year and may keep rates well below 2023's record levels. VLGC freight rates were largely suppressed in 2024 compared with the previous year because of smoother transits at the Panama Canal as water levels rose. Full capacity at the canal resumed mid-year, and this weighed on freight rates because it resulted in global higher tanker availability as it reduced voyage length between the US and Asia-Pacific. Panama Canal transits in 2025 will continue to affect rates with the kick off of the long term slot allocation system, where 40pc of slots available have already been allocated. This will mean there could be fewer available slots in the usual Neopanamax daily auctions, and could make it more difficult for vessels without bookings needing immediate passage. Another crucial factor that pressured VLGCs in 2024 was the reduction of available US spot cargoes because of weather related delays and maintenance at US terminals halfway through the year. High demand for export cargoes matched with a surplus of ships drove premiums for US cargoes to record highs in September, effectively capturing a larger share of the arbitrage and weighing on freight rates. This has since dialled down once terminals caught up with their schedules, but higher premiums for US cargoes is likely to remain a factor weighing on freight until further export capacity comes online in mid-2025 — when Energy Transfer's Nederland export terminal will add 250,000 b/d of export capacity with a new LPG dock. In the east of Suez market, Opec+ has voted to maintain the recent production cuts rather than unwinding them as previously intended. This will continue to cap LPG output and cargo availability in the Pacific Basin market this year, and free up ships to compete in the US Gulf instead. Fewer Mideast Gulf cargoes could add pressure over freight rates in the first half of 2025, before more US Gulf shipments are made available mid-year. This will absorb ships on the long haul Houston to Chiba route and likely support freight rates in the second half of the year. This may be boosted on occasion by short term shortages of ships while a large portion of the fleet is expected to be temporarily out for mandatory maintenance this year, reducing tanker availability. Shipowners BW LPG and Dorian LPG said 80 ships are scheduled to drydock in 2025, double the number of this year. This will match 13 expected newbuild deliveries in the year, and the outcome could support rates. Trump's tariffs But global LPG flows could be significantly disrupted in the case of another trade war between the Washington and Beijing if US president-elected Donald Trump fulfils his campaign promise to impose a tariff on Chinese goods. Should Beijing introduce retaliatory tariffs on LPG, a two-tiered market for US exports to Asia-Pacific could emerge as seen in 2018, when Mideast Gulf cargoes were bought and sold by Japanese and South Korean importers and traders and then resold to China at $15-20/t premiums. Back then several US shipments ended up redirected to Europe as US traders reduced exports to China — although such actions remain speculative for now. A potential trade war remains a significant risk for the VLGC freight market along with further disruptions at the Panama Canal and the continued Opec+ cuts, which could keep 2025 freight rates to levels recorded in 2024. By Yohanna Pinheiro Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more