1. Analysis on US LPG
Exports: 2014-2015
Jonathan Hidalgo – Clarksons - ESADEUniversity

2. Overview
 Task?
• Identify major changes inWTI Crude price since Summer 2014
• How has this price change affected exports of LPG from the US
Gulf
• WillWTI/LPG remain competitive to Crude producing markets
with limited or no domestic consumption

3. Identifying the “What andWhy” of the
major price changes in Crude:
Source Image: http://articles.latimes.com/2014/feb/15/nation/la-na-texas-oil-boom-20140216

4. Crude Price 2010-2015
Source Data:http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RWTC&f=D
R² = 0.5547
$'0.00
$'20.00
$'40.00
$'60.00
$'80.00
$'100.00
$'120.00
J-10 J-11 J-12 J-13 J-14 J-15
Cushing, OK WTI Spot Price FOB (Dollars per Barrel)
Cushing, OK WTI
Spot Price FOB
(Dollars per Barrel)

5. A Closer Look
R² = 0.8867
$'0.00
$'20.00
$'40.00
$'60.00
$'80.00
$'100.00
$'120.00
$'140.00
J-14
A-14
O-14
D-14
F-15
A-15
J-15
A-15
Cushing, OK WTI Spot Price FOB (Dollars per Barrel)
Cushing, OK WTI Spot
Price FOB (Dollars per
Barrel)
Source Data:http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RWTC&f=D

6. Significant Factors affecting price ofWTI
Crude
Affecting Demand:
 Weak Economic Environment affecting Global Demand –
Asia, Europe
Affecting Supply:
 Shale Revolution
 Global Oil Glut

7. Influence of Low Crude Price on LPG
Exports
Source Image: http://www.wsj.com/articles/rivals-hit-oil-exporter-that-opened-u-s-spigot-1424824973

8. US LPG Exports in 000’s tons on a
Monthly basis:
R² = 0.7367
0
500
1000
1500
2000
2500
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
000'sTons US LPG Exports per Month
000's Tons US LPG
Exports
Source: Clarksons Database

9. TargaTerminal:
 Expansion in Crude, LPG,
LNG, andVessel Capacity
 Predicted 190% in
Fractionator Capacity (2010-
2017)
 $25 Million expansion for
Acquisition of Property and
Dock Upgrade
Source Image: http://comptroller.texas.gov/comptrol/fnotes/fn15Q1/fuel.php
Source Data: Targa Resources IHS Presentation

10. EnterpriseTerminal
 2014: $4B into major capital
projects
 2014: $6B into US energy
infrastructure-completion
2016
 Existing Capacity: 7.5
MmBbls/Mo
 Capacity + Expansion: 16
MmBbls/Mo
Source Data: IHS International LPG Seminar: Enterprise Presentation
Source Image:

11. EnterpriseVessel Building Estimates
Source: IHS International LPG Seminar Presentation: Enterprise

12. Thoretical: Spot Arb vsTerm Arb
-15.00
-10.00
-5.00
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
Arb: Cents/Gallon
Spot Arb
Term Arb
Source Data: Clarksons

13. US Export Details per Month
 Targa: 8
 Shell + Nederland: 8
 Enterprise: 17
 Sources state that 95% (approx) of traders dealing with US
exports are long contracts
 Enterprise has contracted forward 90% of 2016 and 60% of
2017

14. Will US LPG remain Competitive with
other Crude-NGL producing Countries?
Source Image: http://www.lngworldnews.com/lpg-industry-in-south-africa-needs-competition/

15. Competitive toWho… orWhat
 US Crude price is directly affected by many factors, and
affects many others
 US LPG will start to compete against other global LPG
markets
 US LPG will challenge other fuels for energy production: High
Sulfur Fuel Oil, Diesel, LNG

16. Schematic of Possibilities for US Crude
Producers
Source: Jonathan Hidalgo Paint

17. 0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0
0.2
0.4
0.6
0.8
1
1.2
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Mont Belvieu, TX Propane
Spot Price FOB (Dollars
per Gallon)
Henry Hub Natural Gas
Spot Price (Dollars per
Gallon)
Source Data: http://www.eia.gov/dnav/ng/hist/rngwhhdM.htm
Source Data: http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=eer_epllpa_pf4_y44mb_dpg&f=m
MtB Propane vs HH Natural Gas:

18. Forward Contracting: Securing Minimum
Losses
 Terminalling fee 12.5 c/pg
 Cancellation Fee 9 c/pg
 Fee only taken into consideration if loss is sustained
 When is continued lifting of future vessels cheaper than the
cancellation fee?
  Marginal Cancellation Fee vs Marginal Lifting Cost

19. Date
Mont
Belview
Propane
USD/MT
Mont
Belview
Propane
cpg
FEI Propane
USD/MT
FEI Propane
cpg
Freight cpg
Spot ARB
cpg
Term Cost
cpg
PnL cpg
Marginal
Cancellation
Cost
Jun-14 545.59 104.7197697 911.40 174.9328215 34.73 35.48 12.50 22.98 n/a
Jul-14 539.49 103.5489443 894.16 171.6238004 34.73 33.34 12.50 20.84 n/a
Aug-14 530.25 101.7754319 825.38 158.4222649 34.73 21.92 12.50 9.42 n/a
Sep-14 553.63 106.2629559 830.68 159.4395393 34.73 18.45 12.50 5.95 n/a
Oct-14 488.23 93.71017274 741.57 142.3358925 34.73 13.90 12.50 1.40 n/a
Nov-14 419.74 80.56429942 646.80 124.1458733 34.73 8.85 12.50 -3.65 -3.65
Dec-14 285.17 54.73512476 479.82 92.09596929 34.73 2.63 12.50 -9.87 -9.00
Jan-15 249.36 47.86180422 461.83 88.64299424 34.73 6.05 12.50 -6.45 -6.45
Feb-15 298.01 57.19961612 573.47 110.0710173 34.73 18.14 12.50 5.64 n/a
Mar-15 283.13 54.34357006 539.16 103.4856046 34.73 14.41 12.50 1.91 n/a
Apr-15 285.95 54.88483685 531.67 102.0479846 34.73 12.43 12.50 -0.07 -0.07
May-15 245.39 47.09980806 506.75 97.26487524 34.73 15.44 12.50 2.94 n/a
Jun-15 201.86 38.74472169 492.55 94.53934741 34.73 21.06 12.50 8.56 n/a
Jul-15 213.71 41.01919386 456.89 87.69481766 34.73 11.95 12.50 -0.55 -0.55

20. Conclusion
 According to the total LT contracts made, no improvement
on arb economics should be expected
 People sustaining losses, trying to get out of LT position
 No improvement of market situation, only deterioration
 All traders trying to hedge their losses
 Only new players without a position able to benefit
 Price will remain low until traders may operate without
continuous losses, due to freight costs, decreasing arb

21. Thanks!
Source Image: http://galatynminerals.com/mineral-rights-blog/faqs/leasing-vs-selling-mineral-rights-examining-pros-cons/

22. Other Sources:
 http://www.emergingkerala2012.org/pdf/Gas%20based%20Industries/14-Project%20Profile-
LPG%20Bottling%20Plant.pdf
 http://www.brighthubengineering.com/power-plants/40017-lng-cng-and-lpg-what-is-the-difference/
 http://www.infomine.com/investment/metal-prices/crude-oil/1-year/
 https://ycharts.com/indicators/wti_crude_oil_spot_price
 http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RWTC&f=D
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTNTUS2&f=M
 http://quotes.ino.com/charting/index.html?s=CLRP_C0.N15.E&v=d12&t=l&a=50&w=1
 http://quotes.ino.com/charting/index.html?s=NYMEX_CL.U15.E&t=&a=&w=&v=d12
 http://www.ibtimes.com/why-are-oil-prices-falling-here-are-four-reasons-crude-prices-continue-trend-lower-1848742
 http://www.nytimes.com/2015/08/05/us/politics/netanyahu-appeals-to-american-jews-to-oppose-iran-nuclear-
deal.html?_r=0