WORLD'S LPG SUPPLY PICTURE WILL CHANGE BY 2000

Warren R. True
Pipeline/Gas Processing Editor

Middle East LPG producers will continue to dominate world export markets in 1996. Led by Saudi Arabia, the Middle East will produce nearly 26 million metric tons of LPG in 1996, more than 54% of the world's almost 48 million metric tons of export LPG.

In 2000, however, with world exports of LPG expanding to 58.9 million metric tons, Middle East suppliers' share will have remained flat, making up 31.7 million metric tons, or 53.9%. Saudi Arabia's contribution will exceed 15 million metric tons, reflecting essentially no growth since 1995 (Fig. 1)(56325 bytes).

These and other patterns, from data compiled by Purvin & Gertz, Dallas, and published earlier this year, show other suppliers of LPG, especially African (Algeria/Nigeria), North Sea, and Latin American (Venezuela/Argentina), picking up larger shares in the last 5 years of this decade.

This scenario assumes completion of several major supply projects that are either planned, under construction, or nearing start up in most of these areas.

GLOBAL PICTURE

Overall, the world's LPG production through 2000 will grow to 199.7 million metric tons/year (mty) from a projected 173.1 million mty in 1996. The annual rate is 3.8%.

Gas plants will contribute nearly 64% of that amount at the turn of the century; refineries the rest (Fig. 2)(30949 bytes).

In export markets, Purvin & Gertz projects the largest volume growth will be among Middle East producers at 5.7 million mty (5.5%/year) to 31.7 million mty in 2000. Production from Algeria and Nigeria, although totaling only 2.7 million metric tons over the remaining 4 years, will nonetheless grow 16.2%/year.

Growth in these two African countries hinges on completion of major export projects. Assuming their start-up, these countries combined would rank third in LPG exports behind the Middle East and the North Sea.

Production from the North Sea, projected at 7.6 million metric tons in 1996, will grow to 8.5 million mty in 2000, an annual rate of nearly 3%.

Purvin & Gertz also sees potential major growth in Latin American producers Venezuela and Argentina. Combined, these two countries will produce nearly 2.2 million metric tons in 1996. That will grow to more than 3.5 million metric tons in 2000, an annual rate of 15.5%.

And, although potential for LPG production and export is great in the countries of the former Soviet Union, their share of world exports by 2000 will remain small.

Among Middle East producers and exporters of LPG, Saudi Arabia and the United Arab Emirates (U.A.E.) will account for nearly 23 million metric tons in 2000, up from more than 20.5 million metric tons in 1996, and nearly 72% of total Middle East exports at the turn of the century (Fig. 3)(48134 bytes).

In analyzing Middle East exporters, Purvin & Gertz assumed the return of Iraq to the world's markets. Exports from Iraq for 2000 are projected to be 2.7 million metric tons.

Growth at two U.K. locations accounts for anticipated expansion of LPG exports from the North Sea.

In 1996, production for export at Mossmorran, Scotland, Purvin & Gertz projects to be nearly 1.7 million tons and to grow by 2000 to almost 2.5 million metric tons. At Teesside, recipient of gas from the expanding Central Area Transmission System (CATS), LPG production in 1996 will be 389,000 metric tons; in 2000, it will grow to nearly 1.3 million metric tons.

MIDDLE EAST, AFRICAN SUPPLY

In a $1.4 billion project, Abu Dhabi National Oil Co. is expanding its gas processing plant at Habshan, U.A.E., to produce approximately 1.6 million mty from current production capacity of approximately 65,700 mty. The production will split evenly between propane and butane.

Inlet gas capacity will expand to 1.86 bcfd from 540 MMcfd. Gas for Habshan comes from Bab field.

NGL will be pumped through an existing 30 in., 106-km pipeline to Abu Dhabi Gas Industries Ltd.'s NGL plant at Ruwais. Total NGL storage capacity at Habshan in three new spheres is 3,300 metric tons.

LPG production in Algeria will get a considerable boost later this decade when the first of several major projects comes on stream (Fig. 4)(44585 bytes). Table 1 (15080 bytes) provides a look at Algerian LPG from all sources for the last 5 years.

LPG production in 1994 for the fields of Hassi R'Mel and Hassi Messaoud was 3.94 million metric tons.

Sonatrach anticipates new production from Hassi Messaoud, North and South, and Rhourde Nouss (Phase B). These gasfields will begin producing associated LPG in 1996 and 1997, respectively, along with other production from Gassi Touil in 1997.

Algerian LPG production in 1997 will increase by more than 3 million metric tons.

With projects in In Amenas, Alrar (West), Ohanet, and Tin Fouye Tabankort coming into production in 1999 and 2000, additional LPG production should peak in 2001 at nearly 5.6 million mty then decline gradually to 3.9 million mty by 2014.

Sonatrach says gas treatment plants for the production of condensate, LPG, and treated gas will be built in In Amenas, Ohanet, Tin Fouye Tabankort, Rhoude Nouss, Gassi Touil, Oued Noumer, and Hassi R'Mel South.

Moreover, two new plants to separate LPG from produced gas are under construction at Hassi Messaoud North and South.

From newly developed gas fields in the Alrar region in southeast Algeria near the Libyan border a 10 and 12-in. LPG pipeline is under construction. It will extend 988 km (614 miles) to Hassi R'Mel and be able to carry 6.75 million mty (220,000 b/d).

Currently, pipelines varying in size from 12 to 24 in. can carry as much as 7 million mty of LPG 350 km (217 miles) from Hassi Messaoud to Hassi R'Mel and on 509 km to a fractionation plant at Arzew.

Capacity on the Hassi R'Mel-to-Arzew line is being increased by additional pumping to 9 million mty from its current 6 million mty. This new capacity is to accommodate new LPG production further southeast at Alrar.

Another pipeline, 12-16 in. OD and 800 km long, can carry as much as 2.5 million mty from Haoud El Hamra into Arzew.

Sonatrach says debottle-necking of current refrigeration plants (4.4 million mty for Jumbo and 1.2 million mty for Arzew) and current construction of two trains of 1.2 million mty each are required at the Bethioua/Arzew export facilities. These trains will be capable of loading vessels whose capacities range from 1,000 to 48,000 million tons.

Current capacity at Bethioua for fractionating LPG into commercial propane and butane is 4 million mty, at Arzew 800,000 mty, and at LNG plants at Arzew and Skikda a combined 1.2 million mty.

Virtually all of Algeria's LPG goes for export, while refinery production meets domestic demand.

In early 1995, Mobil Producing Nigeria and Nigerian National Petroleum Corp. let a $650 million contact for engineering, procurement, and construction to recover 350 million bbl of NGL from the Oso field, offshore Nigeria.

Oso has been producing condensate since 1992 and is about 35 miles southwest of Mobil's Qua Iboe terminal in Akwa Ibom state.

The contract went to lead contractor ABB Lummus Crest & Associates along with JGC Corp., Bouygues Offshore, and a joint venture of Spie Batigonolles and Fougerolle. Total project costs are estimated at $800 million.

Gross condensate production from the Oso field in 1995 is running at 110,000 b/d, according to Mobil Producing, more than the original target of 100,000 b/d. Gas production is approximately 600 MMcfd.

The rich gas has been reinjected to maintain reservoir pressure and preserve the gas for later production.

When the project is complete in 1998, peak gross production will climb to 50,000 b/d of NGL: 27,000 b/d propane, 14,000 b/d of butane, and 9,000 b/d pentane plus.

The company has plans to build what it believes would be the world's largest offshore extraction plant alongside current gas compression equipment in approximately 50 ft of water.

NGL will be pumped into a 42-mile pipeline to an export terminal on Bonny Island in Rivers state. There, the stream will be separated into C3s, C4s, and C5+s for export into waterborne markets.

Export terminal facilities will include 700,000 bbl each of refrigerated storage for propane and butane and 300,000 bbl of storage for C5+.

NORTH SEA

Increasing LPG production in the North Sea area is being led by ongoing expansions at Enron's Teesside, U.K., gas terminal and processing plant. The terminal began life as receipt point for Amoco (U.K.) Exploration Co.'s Central Area Transmission System (CATS).

Currently, the CATS pipeline is 250 miles of 36 in. which at peak volumes can transport up to 1.6 bcfd from fields in the Central Graben basin. The line operates in a dense phase allowing for relatively high volumes of LPG to be moved in the system, according to Enron.

Initial anchor for the system was Enron's construction of the Teesside power station nominally rated at 1,875 mw of power production and consuming nearly 350 MMcfd from Everest and Lomond fields.

Train 1 of a gas plant was built to process gas headed for the power plant. With the purchase of up to 300 MMcfd of J-Block gas for delivery to Teesside, says Enron, Train 2 was added for more liquids extraction and fractionation (Table 2)(14597 bytes).

Enron reports that liquids recovery from inlet gas has been running at more than 65% for propane and 90% for butane. Most of the production is currently satisfying U.K. markets.

SOUTH AMERICA

Purvin & Gertz estimates Venezuelan LPG exports in 1995 slightly exceeded 1 million metric tons. And the consulting company predicts those volumes will grow to nearly 1.5 million metric tons in 1996 and to almost 2.8 million metric tons by 2000.

Corpoven, subsidiary of Petroleos de Venezuela S.A. (Pdvsa), Caracas, says that first half 1995 production, the most recent period for which firm data are available, was 1.8 million metric tons, 508,000 metric tons of which were exported.

Total 1994 LPG production was 3.5 million metric tons, 813,000 metric tons of which were exported (Table 3)(15575 bytes).

Most of the country's 1994 LPG production (nearly 3.2 million metric tons) was from gas plants, mainly in the eastern section of the country.

In first half 1995, Venezuela exported approximately 426,000 metric tons of propane, 62,000 metric tons of n-butane, and 20,000 metric tons of iso-butane.

In 1994, the country exported approximately 640,000 metric tons of propane, 163,000 metric tons of n-butane, and a nominal 10,000 metric tons of iso-butane (Fig. 5)(75176 bytes).

By 2000, Corpoven estimates that two phases of its eastern cryogenic complex expansion project (Accro: Ampliacion Complejo Criogenico de Oriente) could add 1.280 million mty of LPG production. Each phase will add 640,000 metric tons; Phase 1 will start up in 1996, Phase 2 in 1999.

The Nueva Lama project by Maraven, another Pdvsa subsidiary, will add 89,000 metric tons/year of production in 1998. And an ethane recovery project by Pequiven, Pdvsa's petrochemical subsidiary, will add 400,000 metric tons/year of propane to the country's export volumes.

Corpoven says Venezuelan target export volumes for 2000 are 2 million metric tons of propane, 560,000 metric tons of n- butane, and 200,000 metric tons of iso-butane.

Argentina's YPF S.A. reports that 1994 LPG production was 1.83 million metric tons, of which 548,000 metric tons were exported.

This was the first increase in overall LPG production since 1992 when 1.62 million metric tons were produced. But only slightly more than 193,000 metric tons were exported in 1992.

By 1998, YPF says production could reach as much as 1.9 million metric tons.

Preliminary estimates for 1995 LPG exports are 470,000 metric tons. Exports are expected to begin to decline in 1996, reaching 400,000 mty in 1997, according to YPF.

Purvin & Gertz has estimated Argentine LPG exports for 1995- 1997 at 692,000 mty, rising to 725,000 metric tons in 2000.

YPF has said that, with adequate investment, and especially With expansion of the country's gas processing plants, LPG exports could grow to as much as 760,000 mty by 1999. Total LPG production could reach 2.5 million mty.

Only three gas processing plants operate in the country. These and two refineries are responsible for most of Argentina's LPG production.

In Bahia Blanca, Province of Buenos Aires, Transportadora de Gas del Sur (TGS SA) operates the 706 MMcfd General Cerri turboexpander plant. It processes natural gas from Austral basin (Tierra del Fuego) and Neuquina.

LPG production at the TGS plant in 1994, the most recent year for which firm data are available, was 390,000 metric tons. This was by far the most of the five principal LPG producing plants.

Refinor S.A. operates another turboexpander plant in Campo Duran, Province of Salta. The plant can process up to 564 MMcfd of gas produced from Noroeste basin and purchased from Bolivia.

In 1994, the plant produced 252,000 metric tons, split approximately 3:2, propane to butane.

YPF operates the third gas plant, also a turboexpander plant, in Loma la Lata, Province of Neuquen. With an inlet capacity of 212 MMcfd, it treats gas from the Neuquina basin and in 1994 produced 135,000 metric tons, approximately 72,000 of which was propane.

The Neuquina basin could add 1.06 bcfd of additional natural gas.

Investment possibilities to increase production for export are the General Cerri plant and the Loma la Lata gas treatment plant.

Two YPF refineries produce LPG: La Plata in Buenos Aires produced 320,000 metric tons in 1994; Lujan de Cuyo in Mendoza produced 270,000 metric tons.

Most export volumes move from Bahia Blanca by tanker to Brazil, Uruguay, Peru, and eventually Chile and other countries of Latin America.

LPG exports move by truck to Chile from Loma la Lata in Neuquen province, Lujan de Cuyo in Mendoza province, and San Lorenzo in Santa Fe. They also are trucked form La Plata in Buenos Aires province to Uruguay.