Viewpoint: Canadian propane exports set to rise in 2022
Propane exports out of Canada are expected to rise in 2022 and upcoming years as more export capacity is expected to come online.
Growth in Canada's west coast export capacity will be lead by expansions by AltaGas and Pembina at their current terminals. At least 30,000 b/d of additional capacity, combined with growing petrochemical demand, is expected in 2022. Another 30,000 b/d of export capacity is possible within the next few years.
AltaGas plans to expand its Ridley Island (Ripet) propane export terminal in British Columbia to 80,000 b/d in the upcoming years. AltaGas started propane exports through Ripet in May 2019 at 40,000 b/d and increased exports to 58,000 b/d during the third quarter of 2021. AltaGas also exports up to 50,000 b/d of propane and butane via the Ferndale terminal in Washington state.
Pembina is considering an expansion of its 25,000 b/d Prince Rupert export terminal in BC to 45,000 b/d. The company expects to make a final investment decision in the first quarter of 2022.
At the same time, the start up of a new propane dehydrogenation (PDH) unit will bolster domestic demand. Inter Pipeline (IPL) is making progress on construction of its 525,000 t/yr Heartland Petrochemical Complex (HPC) in Alberta, which is on track to start operations in the second quarter of 2022. The Heartland facility will consume 22,000 b/d of propane at the new PDH unit and derivative units to produce 525,000 t/y of polypropylene.
Railed propane exports to the US are expected to remain steady or decrease slightly as higher prices in Asian markets might draw more barrels for seaborne exports. Canada's railed and seaborne propane exports rose this year with railed propane exports to the US averaging 126,000 b/d in January-October compared with 100,000 b/d in January-October of 2020. About 40,000 b/d are shipments to the US west coast with majority being re-exported to Asia via the Ferndale terminal.
Expectations for an increase in demand comes as propane production in Alberta continues to grow with natural gas output, supported by higher commodity prices. Propane production in Alberta averaged 179,000 b/d in January-October 2021 compared with 163,000 b/d during the same period in 2020. Production is expected to continue to grow in 2022 as producers set higher output targets for next year.
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US House to vote on waterways bill
US House to vote on waterways bill
Houston, 22 July (Argus) — The US House of Representatives is expected to vote on 22 July on a waterways bill that would authorize new infrastructure projects across ports and rivers. The Water Resources Development Act (WRDA) is renewed typically every two years to authorize projects for the US Army Corps of Engineers (Corps). The bipartisan bill is sponsored by representative Rick Larsen (D-Washington) and committee chairman Sam Graves (R-Missouri). The full committee markup occurred 26 June, where amendments were added, and the bill was passed to the full House . A conference committee will need to be called to resolve the different versions of the bill. The major difference between the bills is that the House bill does not include an adjustment to the cost-sharing structure for the lock and dam construction and other rehabilitation projects. The Senate Committee on Environment Public Works passed its own version of the bill on 22 May, with all members in favor of the bill. The House version of the bill approves modifications to the Seagirt Loop Channel near the Baltimore Harbor in Maryland, along with 11 other projects and 160 feasibility studies. One of these studies is a $314.25mn resiliency study of the Gulf Intracoastal Waterway, which connects ports along the Gulf of Mexico from St Marks, Florida, to Brownsville, Texas. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Q&A: Petredec pushes LPG to drive Africa clean cooking
Q&A: Petredec pushes LPG to drive Africa clean cooking
London, 16 July (Argus) — LPG trading company and shipowner Petredec was recently unveiled as one of the founding members of the World Liquid Gas Association's (WLGA) Cooking For Life Africa Task Force (CFLA), following the in May. The company was one of the early international entrants to the sub-Saharan African LPG market and continues to pursue opportunities in the region. Argus' Oliver Binks spoke with Petredec's head of downstream, James Bullen, about the company's plans to help expand LPG's use across Africa: Why did Petredec join the CFLA? The task force is a direct response to the IEA's call to action following its summit in Paris in May. The IEA's ambition is to end cooking fuel poverty by making cleaner fuels accessible to all, thereby saving lives. The WLGA created the task force to focus on LPG's role in addressing this challenge. Although the problem itself is acknowledged to be surmountable, and not even particularly costly — in relative terms — the WLGA believes that LPG can largely solve the issue of clean cooking in Africa now. This is a belief that we not only share, but also through our work on the ground in Africa, fully understand first-hand. LPG is well-suited to developing markets, such as those being highlighted as particularly problematic within Africa by the IEA. We believe that LPG's inherent benefits of being accessible, easy to deploy, well-understood and affordable make it the unparalleled choice for meeting the IEA's objectives. What projects are the company involved in within the region? Our strategy onshore has been to invest in markets where LPG is established and understood but market growth is in some way hindered. This is typically owing to a lack of investment in infrastructure, especially import infrastructure. We base our investment decisions on long-term opportunities for LPG and how we can alleviate these bottlenecks to facilitate growth. Affordability is a significant barrier to fuel switching, so being able to import the cheapest possible product is a fundamental pillar of any investment plan we develop. And central to this is the necessity to select locations where the largest LPG carriers, VLGCs, can be accommodated to discharge cargoes. Big ships mean better freight economics, which means cheaper import prices and more affordable LPG for the consumer. We have not announced the specific details of our new investments and are not in a position to do so yet, but the type of projects will come as no surprise to anyone familiar with our record. We have invested more than $200m in the past decade on medium to large-scale LPG infrastructure and it's fair to assume we will do more of the same. What are the challenges to developing infrastructure in sub-Saharan Africa? While working in each developing market has its own specific challenges, there are often common issues to navigate when large-scale infrastructure projects are under development. These include planning and permitting , environmental adherence and acceptance and navigating local bureaucracy, which can be multi-layered and onerous. Delays are common and projects such as designing and constructing import terminals, distribution systems and break-bulk hubs are complicated and time-consuming. The key to overcoming these is consistency, perseverance, patience and commitment. Projects run late, budgets require amendments and remits change, but good opportunities are often difficult by nature. Keeping the end goal in sight and taking a long-term view are key. What specific infrastructure in the supply chain needs the most investment? Different regions and markets have different needs. Some countries have focused on one specific type of infrastructure investment while ignoring other key elements. Other countries are in need of modernisation across their entire supply chains. A problem we frequently come across is outdated and insufficient infrastructure stifling market growth. While market participants' intentions to support the growth of LPG might be there, their efforts can be in vain if they are working with 50-year-old-plus import terminals with inadequate capacity to meet market demands, or an antiquated cylinder filling and distribution system. How much LPG does Petredec supply to sub-Saharan Africa, and where does it source it from? Petredec has supplied LPG to Africa since the 1980s, first in north Africa and then elsewhere around the coast of the continent. Annual quantities vary with supply contracts, but for many years now we have supplied significant volumes to South Africa, which we then distribute via road tankers across the southern part of the continent. From our import hub in Richards Bay, South Africa, our local subsidiary, Petregaz, transports LPG to nine countries across the region, often more than 2,000km in each direction. We have always used our global trading, supply and shipping system to ensure that the most appropriate product is supplied to each market. This means as arbitrage opportunities open and close, product can originate from a number of locations, but for South Africa, we typically utilise our large offtake positions in the US Gulf to supply the market. What other clean cooking options do Africans have apart from LPG, and why not pursue these over LPG? We aren't aware of any alternatives as compelling as LPG when considered holistically as a "through the transition" energy option for developing markets. The IEA itself, in the report A Vision for Clean Cooking Access for All, identifies LPG as the primary solution to deliver clean cooking access, representing nearly half of the households gaining access by 2030. That is not to say that LPG is the answer to every problem in every market. During the summit, we encountered new cooking stoves powered by solar energy and recycled pellets, both intriguing but reliant on electric power as a back-up fuel or for flame acceleration. Where we are talking about markets with limited access to electricity, neither of these are practical. The summit also highlighted a number of biofuels, some of which appear interesting, but developments are very early and at this point unproven. We do not believe that LPG's ready availability, low-cost set-up and easy scale-up can be bettered by any current alternative. Which countries are the company focusing on for LPG market expansion across the region? We are focused on expanding operations in our existing markets and new territories. We already deliver LPG to nine sub-Saharan African countries by road so fully understand the importance of multi-modal logistics. But we are keen to improve supply chain operations and are examining opportunities to utilise alternative forms of transport and enhance existing logistics in order to improve productivity and, most importantly, lower costs. Reduced logistic costs means cheaper deliveries resulting in improved affordability, which is crucial as we and our partners strive for market growth. What are the company's objectives in terms of inland African LPG distribution this year? The current project focus, particularly in South Africa, is on further optimisation of the supply chain to better serve our customers. Having acquired one of South Africa's largest dedicated LPG road logistics operators in 2023, we have now fully integrated that business into our operations and have set about further expanding the freight aspect of our offering. We expect to announce further developments in due course that will improve that level in terms of speed, cost and reliability. Targeting new usage opportunities for LPG is also a key current focus, as we look to leverage the strong foundations we have laid since commissioning the Richards Bay terminal in 2020. Acute shortages of alternative energy options and an ongoing electricity crisis in South Africa have thrust LPG into the limelight as a viable substitute for power generation. We are engaged with several industrial and commercial businesses looking for energy security that are, for the first time, considering using LPG. The company divested its Reunion business in 2023. Why and what lessons were learnt? The business ran profitably throughout our 14 years of ownership, and together with our local partner, we had gradually managed to grow our market share and overall volumes. However, with our investment focus in the region shifting from the southern Indian Ocean to continental Africa, Petregaz Reunion had become somewhat isolated in our longer-term strategic growth plan. With their own growth strategy focusing on market consolidation and integrating operations, the business was a natural fit for Vivo Energy and a transaction suited all parties. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
LPG World editorial: Fragile stability
LPG World editorial: Fragile stability
Subtle shifts in power following months of elections around the world could provide opportunities for the LPG industry London, 16 July (Argus) — The energy policy ramifications of several significant governmental elections that have taken place over the past few months are starting to come into focus. For the LPG market, all presently point to more of the same, while the climate and energy transition objectives that will shape the sector's future have so far escaped derailment from far-right forces in all but the US' yet-to-be-held presidential race. The recent campaigns in India and Mexico, two major LPG markets, ended in the unsurprising re-election of their two governing parties. Indian prime minister Narendra Modi secured a third term in June after a campaign that promised competitive LPG pricing and a recommitment to the expansion of the market to less affluent areas that still lack access to clean cooking. In the same month, Mexico's Claudia Sheinbaum won her race to succeed President Andres Manuel Lopez Obrador as the left-wing Morena party's incumbent. His government has pursued nationalist energy policies that have caused friction with private-sector LPG operators. This is unlikely to deviate, with some concerned that energy reforms could even be repealed. Maintaining LPG price controls and tackling theft and black-market practices should remain priorities regardless when she takes over in October. European Parliament elections, also held in June, saw significant gains for far-right and right-wing groups, seen as a backlash to green policies and rising costs. But the ruling centre-right EPP group ultimately won that race, leaving Ursula von der Leyen on track for a second term as European Commission president. This should keep the EU's bold climate and energy objectives under the Green Deal on track, although a softening, more pragmatic approach could emerge following a broader parliamentary shift of power from the centre left to the centre right, delegates at last month's Liquid Gas Europe Congress in Lyon heard — something that could benefit the LPG industry. France's snap election at the turn of this month, following a surprise surge in French votes for the far right in the European poll, looked at one stage to be ending in victory for the far-right National Rally party. But a coalition of left-wing parties unexpectedly secured enough votes to beat the National Rally into third position, while falling short of securing a majority, ending in a hung parliament. Outgoing president Emmanuel Macron has urged the New Popular Front coalition to ditch the far-left Unbowed party and join his centrist group, which came second, to ensure a majority. What government emerges is uncertain, but for now the country's energy transition and climate policies are secure and legislative stability is likely. The UK had no problem securing a majority, as the incoming centre-left Labour party ousted the centre-right Conservatives in a landslide defeat this month. A huge parliamentary majority will give prime minister Keir Starmer's government free rein to pursue its energy and climate goals, yet these bear a striking resemblance to Boris Johnson's during his premiership in 2019-22. The forming of a new state-owned energy company could be boon or bane for LPG. But the UK LPG sector has wasted no time wooing Labour as it advocates for the protection of gas boilers in rural areas and more support to produce renewable alternatives. American non-fiction The US is conversely heading for another U-turn on its energy and climate policy trajectory as Donald Trump inches nearer to a return to office in a campaign that almost feels unreal. Should he succeed, he is expected to once again pull out of the Paris climate deal and reinstitute a favourable regime for licensing oil and gas wells and LNG projects — a possible boon for LPG supplies. Trump's seeming obsession with economic decoupling from China is also likely to disrupt global trade. Yet Chinese petrochemical firms seem unfazed, as they invest in ethane-fed capacity and ships to import more US supply. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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