10:58 AM | June 24, 2020 | Masayuki Kitano
|HE: US NGL production expected to drop.|
Liquefied petroleum gas (LPG) production in the US is likely to be lower in the next few years as crude oil and associated gas production are expected to be weighed down by the effects of COVID-19, based on IHS Markit forecasts. "The global LPG market growth, the trajectory of the growth, is being reset by the pandemic situation," Yanyu He, executive director at IHS Markit, said in an online presentation on Wednesday at the IHS Markit Asia NGLs and Naphtha conference.
Global refinery production of LPG and natural-gas-processing–related output over the next few years are likely to be lower than previous IHS Markit forecasts, he said.
In the US, crude oil production in 2023 is currently estimated at about 10 million b/d, down by about 4 million b/d from an earlier IHS Markit forecast, a chart in the presentation slide showed. "According to IHS Markit upstream colleagues, we're losing US crude oil production by almost 4 million b/d in the next few years. This year, we're not seeing too much of it, but really the biggest cut is still to come," and this would lead to a slowdown in associated gas output, He said.
As a result, total US natural gas liquid (NGL) production in 2023 is expected to drop to about 5 million b/d, down about 1 million b/d from IHS Markit's previous forecast, a chart in the presentation slides showed. "Now out of this 1-million [b/d] overall NGL production, about two-thirds are LPG so roughly 600,000-b/d level, which is a huge amount. That number translates into roughly 20 million metric tons per year. If you recall, last year, the US exported 40 million metric tons," he said. "If indeed this is how much we're losing, we're going to lose a lot of exports from the US in the coming years."
Turning to LPG demand in Asia, China is likely to see an increase in propane consumption over the next few years as new propane dehydrogenation (PDH) projects come onstream. "In the coming years, China is expecting to add another dozen or so PDH projects. If all materialize, we should expect another 7–8 million metric tons of propane consumption in the coming 3–4 years," he said.