US LPG exports to whittle away oversupply: EIA

OREANDA-NEWS. March 15, 2016. US LPG exports in 2016 will exceed the current overhang in domestic production versus consumption according to the Energy Information Administration (EIA).

NGL production is expected to exceed domestic consumption by 960,000 b/d this year and by 1.21mn b/d in 2017, according to the EIA's latest Short Term Energy Outlook released today. Yet the agency predicts this oversupply will be diminished by exports, which are forecast to average 1.1mn b/d in 2016 and 1.4mn b/d in 2017.

The forecast comes as US propane prices continue to see support from a steady stream of exports leaving the Gulf coast following the completion of additional terminal capacity at the end of 2015. Higher propane prices, which are up 7?/USG since the start of the year, are pressuring the arbitrages with Europe and Asia, which are critical outlets for the current oversupply.

The agency also revised its outlook for 2016 domestic NGL consumption slightly higher versus last month, driven by an uptick in ethane cracking.

US NGL consumption is forecast to average 2.49mn b/d in 2016 and 2.52mn b/d in 2017, according to the EIA, up from the 2.46mn b/d in 2016 and 2.59mn b/d in 2017 predicted in last month's report.

"HGL consumption is forecast to increase by 20,000 b/d (0.8pc) in 2016, as increased ethane consumption more than offsets decreased propane, butanes, and natural gasoline consumption," the agency said. "In 2017, forecast HGL consumption increases by 30,000 b/d (1.4pc). Nearly all of the forecast growth in HGL consumption results from the expected startup of six ethane-consuming petrochemical plants in 2017."

The EIA refers to NGL production as "hydrocarbon gas liquids."