EIA expects petrochemical expansion projects to boost propane demand

Domestic demand for propane is expected to rise by about 200,000 barrels per day (bpd) between 2014 and 2018 because of U.S. petrochemical capacity expansion projects, the U.S. Energy Information Administration (EIA) says. The increased demand is in response to growing domestic hydrocarbon gas liquids (HGL) supply and favorable petrochemical feedstock prices in the United States relative to the international market, according to EIA.

The petrochemical industry uses hydrocarbon feedstocks such as propane to create plastics, fibers, resins and other consumer and industrial materials.

Increased production of U.S. natural gas has also increased propane supply, which has led to lower propane prices and higher propylene-propane price spreads in the U.S., EIA adds. As a result, propane dehydrogenation (PDH) plants have been planning to increase their capacities to process propane into propylene.

According to EIA, only one PDH plant is currently in operation in the U.S.: the PetroLogistics plant in Houston. EIA estimates that this plant consumes 30,000 bpd of propane. Six new PDH projects are underway, though, and at various stages of development. If completed, EIA says the petrochemical sector would demand another 190,000 bpd of propane by the end of 2018.