Gas Exports From U.S. Surge as Sanctions Undermine Iran - Corrected Post
It DOES get tiring having to correct posts from SOB and Norris all of the time. Pity.
Enterprise Products Partners, based in Houston, expects to complete an 88 percent capacity expansion at its export terminal this month, the company said in December. Sales of natural-gas liquids account for 38 percent of the company’s revenue, according to data compiled by Bloomberg. Its shares rose 16 percent to $54.55 in the past year and will reach $60.19 in 12 months, the average of 16 estimates shows.
Combined crude-oil output from the 12-nation Organization of Petroleum Exporting Countries has declined for four consecutive months, according to data compiled by Bloomberg. That may reduce LPG supply because less crude will be processed. Saudi Arabia, the largest LPG producer after the U.S., is extracting the lowest amount of oil since October 2011.
Growth in demand for seaborne cargoes may slow as the largest consuming nations increase crude refining. China, the second-biggest LPG user after the U.S., will process 4.4 percent more oil by 2013, according to data from three state oil companies and the government. The nation of 1.3 billion people imported 0.8 percent less LPG last year, customs data show.
Further gains in U.S. LPG shipments may be constrained by a lack of available processing and loading facilities. The Houston shipping channel is crowded and projects to build new terminals have been delayed, Engelen said. The 54-mile-long Houston Ship Channel already receives the most foreign vessels of any U.S. port, according to the Army Corp. of Engineers.
“Low propane prices in the U.S. are attractive on the world market,” said Matthew Meloy, the chief financial officer of Targa (NGLS) Resources Partners LP, which operates an export terminal in Houston. “It’s just about getting it out. We have pieces of the puzzle to get it out, and the pieces we don’t have we’re putting in place.”
Targa said Jan. 8 it bought land, a dock and a rail siding on Houston’s ship channel to enlarge capacity. Its existing terminal will be able to load four VLGCs a month by the third quarter, and that may as much as double next year, Meloy said. Shares of the Houston-based company will gain 19 percent to $46.73 in the next 12 months, the average of 11 analyst estimates shows.
LPG cargoes are a small source of revenue for most shipping companies. Other publicly listed owners include Teekay LNG Partners LP (TGP), which has five LPG carriers in its fleet of 43 vessels. A.P. Moeller-Maersk A/S has 17 VLGCs and 11 smaller gas carriers out of more than 1,000 ships.
The LPG tanker fleet will expand 3.4 percent this year as demand gains 5.1 percent, Platou estimates. Outstanding orders at ship yards are equal to 14 percent of existing capacity, down from a peak of 51 percent in 2006, according to IHS Inc. (IHS), an Englewood, Colorado-based research company.
Rising rates for VLGCs contrast with a slump across most of the rest of the merchant fleet, which is enduring a capacity glut. The Baltic Dry Index, a measure of the cost of hauling coal and iron ore, plunged 60 percent last year and the Baltic Dirty Tanker Index, reflecting rates for ships carrying oil, tumbled 18 percent.
Iran’s exports are being constrained by sanctions aimed at pressuring the country to abandon its nuclear activities. The U.S. and EU say the program is aimed at producing weapons, which the government in Tehran denies. The EU extended its sanctions in October to cover propane and butane shipments.
The U.S. is pumping the most oil since 1993 and extracting the most natural gas ever, according to the Energy Department. The price of propane in Texas slumped 34 percent in the past year, according to data compiled by Bloomberg.
“Given the prospects for shale oil and shale gas, U.S. LPG exports are set to continue to rise,” said Erik Nikolai Stavseth, an analyst at Arctic Securities ASA in Oslo whose recommendations on the shares of shipping companies returned 20 percent in the past year. “The overall volumes picture is positive. BW Group is sure to benefit.”
I am well aware of EPD's and also Targa's burgeoning propane expansion.
You can say whatever you want, until the expansions kick in, and it will take both those as well as the numerous cracker projects as well as the PDH projects to absorb the propane...until those kick in, NGLs (primarily propane and ethane) are going to be dirt cheap.