Why and Where NGLs Can be Exported

Posted by PortVision

LNG Carrier

According to Bloomberg Business, the United States exported an average of 475,000 barrels a day of natural gas liquids (NGLs) in 2013. That’s nearly a 200% increase in exports from 2010.

Natural gas liquids are components of natural gas that are separated from their gaseous state and stored in liquid form. They are classified based on their vapor pressure; low pressure liquids are referred to as condensate, intermediate pressure liquids are referred to as natural gas, and high pressure liquids are referred to as liquified petroleum gas.

With the market booming, questions have been raised about the safety of transporting these chemicals. In 2014, a fuel spill in the Houston Channel shut down transportation of NGLs out of the port, forcing other ports around the nation to compensate. In response to this accident and the continuing growth of NGL exports, the industry has planned nearly $35 billion in investments for NGL shipping. The majority of this money is slated to be spent in ports along the Gulf Coast, where an existing pipeline carries NGLs to ships for international export.

For people unfamiliar with the industry, however, there are a lot of questions about why NGLs are allowed to be exported and a similar substance, liquid natural gas (LNG) is restricted. For years, the United States has had rules in place that prohibit the export of crude oil and condensate. The sale and export of refined products, however, is not nearly as restricted.  

Essentially, LNG is allowed to be exported to Canada and Mexico with very few restrictions.  Exports to other countries are allowed as long as the shipment leaves from an approved port terminal.  Determining how a terminal gets approval, however, can be a difficult and complex process.

According to the law, LNG can be exported to countries with which the United States has a free trade agreement without an additional approval process. Exports to countries without a free-trade agreement require an approval process known as a “public interest determination.” This term does not have a standard definition causing many critics to state that approval is based on secret criteria.

As Breaking Energy's website reports, NGLs, on the other hand, are largely free from these types of restrictions. This makes them much easier to transport, and can at least partially explain the dramatically increasing rate at which these substances have been exported. Propane, butane, and natural gasoline can be sold to nearly any country that does not have federal laws in place banning or limiting their sales. Currently, this includes only a handful of countries.

PortVision 360 AIS Vessel Tracking

Posted on Nov 3, 2015 7:05:00 AM

Topics: Blog, LNG