Shale LPG poised to make U.S. net exporter for first year

The U.S. is poised to become a net exporter of liquefied petroleum gases for the first year ever as shale-based energy production jumps, prompting new orders for specialized ships to haul propane and butane.

Daily LPG shipments equated to a record 194,000 barrels in last year’s first 11 months, outpacing imports at 169,700 barrels, U.S. Energy Information Administration figures show. That’s the first time the country was a net exporter in records going back to 1973, according to data compiled by Bloomberg.

Total seaborne trade in LPG will come to 100.6 million metric tons this year, up about 16% from 2010, estimates by German transportation lender DVB Bank SE show. U.S. exports will exceed 5 million tons this year, against 3.7 million tons in 2012, before reaching 7 million tons next year, London-based shipbroker Braemar Seascope Ltd. predicts.

“After that, it’s anybody’s guess,” Nick Wright, a shipbroker at Braemar who specializes in organizing charters for gas carriers hauling LPG, said by phone Feb. 13. “Some have predicted they’ll be as much as 20 million tons by 2020.”

LPG is a byproduct from refining oil and purifying natural gas, according to the EIA. Hydraulic fracturing, known as fracking, of shale rock formations from Texas to West Virginia has boosted U.S. supplies of gas. LPG, used to manufacture petrochemicals and also for heating and cooking, is converted to liquid form for shipping by pressurization and cooling to minus 42 degrees Celsius (minus 44 degrees Fahrenheit).

More Vessels

Increased U.S. production is leading to orders at shipyards for vessels designed to transport LPG as well as other petrochemical gases including ethane, said Stephen Wilson, director of Braemar Seascope’s gas department.

“We are seeing a game-changer because of this era of shale gas,” Wilson said in a Feb. 8 interview. “The extra production planned of LPG and petrochemical gases is going to have a major impact, but nobody’s 100 percent sure of what types of ships will be needed and numbers required.”

BW Group Ltd. has 12 very large gas carriers that haul propane and butane, the biggest fleet, data from IHS Fairplay show. The Bermuda-based shipowner owns 47 gas carriers of all types, according to its website.

Billionaire John Fredriksen was among shipowners who ordered eight VLGCs in the last six months as shipyard prices fell as low as $62 million from the high of $95 million in 2006. Each vessel can hold 80,000 cubic meters (2.83 million cubic feet) of cargo.

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