Shale-driven natural gas liquids (NGL) supplies are pushing midstream companies to pursue additional capacity to export propane and/or butane from the Gulf Coast. Two new projects would offer combined loading capacity of 36,000 bbl per hour for export.
Enterprise Products Partners LP (EPD) last Wednesday announced plans to construct its second liquefied petroleum gas (LPG) export terminal on the Gulf, and a day earlier Williams and Boardwalk Pipeline Partners LP said they had struck a joint venture (JV) for an LPG export facility of their own in the Lake Charles, LA, area.
U.S. exports of propane and propylene have been running well above historical levels as the commodities seek higher-value markets overseas, according to Energy Information Administrationdata.
LPG is enjoying increasing demand from ethylene producers, as is ethane. "By 2023, nearly half of the world's ethylene will be produced from ethane and LPG, at the expense of naphtha," said a recently completed study by ESAI Energy LLC. "Global ethylene production will expand from 127 million tons per year in 2012 to 174 million tons per year by 2023...Of this growth, 24 million tons of production will be ethane- and LPG-based, and 15 million tons will be naphtha-based production."
The Williams-Boardwalk facility would enable export of some of the liquids that would be carried from the Marcellus Shale by the proposed Bluegrass Pipeline, another project of the JV partners (seeNGI, March 11).
EPD said its Mont Belvieu, TX, complex, as well as its Appalachia to Texas Express, or Atex Express, and Aegis ethane pipelines would complement its planned LPG export facilities.
Atex is expected to come online early next year to carry ethane from the MarkWest Liberty Midstream & Resources LLC fractionation, processing and storage complex in Houston, PA, to Mont Belvieu (see NGI, March 26, 2012). Aegis is a 270-mile pipeline header system to deliver ethane to petrochemical plants in the Gulf Coast that is expected to begin operation next year. Two years ago it was envisioned as project to allow Marcellus ethane to flow throughout the Gulf Coast (see NGI, Aug. 15, 2011).
The EPD LPG terminal is to have the capability of handling up to VLGC (very large gas carrier) class ships. The initial loading rate for export-grade propane or butane is expected to be about 11,000 bbl per hour, which would equate to about 6-6.5 million bbl of 2015. Upon completion of the terminal and the expansion of the partnership's existing terminal on the Houston Ship Channel, Enterprise would have aggregate capacity to load about 15-16 million bbl per month of low-ethane propane and/or butane at its LPG marine terminals.
Each of EPD's terminals is to have a separate, dedicated pipeline to supply LPG from Mont Belvieu, where EPD's eighth fractionator is expected to come online during the fourth quarter, bringing the partnership's fractionation capacity there to 650,000 b/d.
"The development of the new terminal was driven by continued demand from our international customers for additional supply of propane and butane," said Michael A. Creel, CEO of Enterprise's general partner. "These facilities are supported by over 25 customers and associated long-term contracts, some of which extend into 2024. Just as with our other LPG export projects, we expect that the terminal will be operating at or near its capacity upon startup.
"In addition to the strong demand for our LPG export services, we are also seeing interest in ethane exports. This new LPG marine terminal is designed with the flexibility and footprint to expeditiously add the necessary facilities to provide ethane export services as this market develops."
As for Williams and Boardwalk, their JV is proposing the Moss Lake LPG Terminal to be located on the Calcasieu River and serve tanker ships transporting LPG to Asian, Latin American and European markets. The facility is being designed to store 900,000 bbl of fully refrigerated propane and butane with a load-rate of 25,000 bbl per hour. Williams and Boardwalk are working with a number of parties to reserve off-take capacity, they said.
The terminal would allow a portion of the propane and butane components of the NGLs to be transported on the proposed Bluegrass Pipeline and separated at the Moss Lake Fractionation plant, both of which are also being developed by a JV of Williams and Boardwalk. In August Kinder Morgan Energy Partners LP and MarkWest Utica EMG LLC (MarkWest Utica) launched a project to compete with Bluegrass (see NGI, Aug. 12).
The partners said producers should benefit from the option to export propane and butane, which constitute 30% of the liquids in an average NGL barrel. The other NGL components -- ethane, isobutane and natural gasoline -- are expected to serve U.S. industrial and refinery demand.
"The proposed Moss Lake LPG Terminal, Moss Lake Fractionation Plant and Bluegrass Pipeline represent critical infrastructure designed to support the ability of producers to economically develop the resources in the Marcellus and Utica shale gas areas," the companies said.
"In addition to the variety of domestic markets that would be served by the Bluegrass Pipeline and Moss Lake Fractionation projects, Moss Lake LPG would offer our customers access to attractive global markets for propane and butane, which in turn allows for continued production of natural gas, crude oil and other products that are integral to helping the U.S. gain its energy independence," said Boardwalk CEO Stan Horton.
During an April conference call, Horton was asked whether the LPG terminal would proceed if Bluegrass is not built. "Right now, "the [LPG export] project is somewhat tied into the Bluegrass pipeline project," he said then (see NGI, May 6). "Is it possible to do something outside of it? Right now, at this point, I don't want to say yes or no, but right now it's tied into the Bluegrass project."