US to become top exporter of liquefied petroleum gas, experts say

HOUSTON — The U.S. is poised to become the top exporter of liquefied petroleum gas — more commonly known as propane or butane — within just a few years, officials with research analyst IHS said Monday.

By the 2020s, the U.S. likely will displace top LPG exporters including Qatar and the United Arab Emirates, said IHS Senior Director Walt Hart, during the IHS International LPG Seminar in Houston. The domestic supply of propane and butane is on the rise, produced along with the booming output of U.S. shale gas. But the domestic market for propane and butane is relatively flat, several experts said.

That’s not the case abroad. While most U.S. LPG exports go to Latin America today, a growing portion likely will go to Asia as demand there rises, in part due to its use as a fuel source for heating and cooking but also because of its role as a feedstock for the manufacture of petrochemicals.

Chuck Carr, a senior director at IHS, said China is increasing production of propane dehydrogenation units, equipment designed to convert propane into propylene, a component used to make plastics.  Meanwhile, the expansion of the Panama Canal could help facilitate exports of LPG to Asia.

Experts discussed the trend at an IHS conference on the global LPG market in Houston Monday.

Jim Webster, general manger of midstream at Phillips 66, said it’s unclear just how much U.S. production of natural gas liquids — of which propane and ethane are components — will increase. But, he said, it’s clear that “there’s going to be significant more volume to deal with in the U.S., and the demand in the U.S. for natural gas liquids are flat, at best, and probably declining in numerous areas.”

His company is spending more than $3 billion on infrastructure in and around Brazoria County in hopes of tapping into the expanding foreign market for LPG. Other companies like Targa Resources Partners, Sunoco and Enterprise Products Partners also are looking at expanding their footprint in LPG exports.

In addition to rising demand for LPG in Asia, Webster said there could be rising demand  in northwest Europe, since natural gas production in the North Sea — typically a source of that region’s LPG use — is on the decline.

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