As the Mariner East expansion stumbles toward completion, it is timely to examine how ready Europe is to absorb more U.S. propane.  The Mariner East expansion will enable the U.S. to triple seaborne exports of LPG from Marcus Hook to 115,000 b/d. The ability to export more product from the U.S. East Coast places the European market more firmly in the sights of U.S. exporters.

The U.S. has established itself as the marginal supplier to Europe. The chart below shows the strong relationship between changes in U.S. propane exports to Europe and Europe's overall propane deficit. For example, when Europe's propane deficit falling by 35,000 b/d from 2016 to 2017, U.S. propane deliveries to Europe fell by roughly the same amount, from 130,000 b/d to 90,000 b/d.

Europe's petchem use of propane, swings in residential/commercial use, and North Sea production are the main drivers of changes in Europe's propane deficit. Aside from dynamics affecting the European balance, the ability of U.S. exporters to place propane in Europe depends on developments affecting exports from Europe's traditional suppliers – Algeria, Russia and other Africa/FSU exporters.

In ESAI Energy's newest market update, we examine how developments in Europe and nearby markets shape the outlook for U.S. propane deliveries to Europe. Complicating the outlook for Europe's petchem feed slate is the flow of U.S. ethane to Europe, which will also increase following the Mariner East expansion. The potential for Europe's steam crackers to absorb more propane and butane is no longer a simple matter of competition between LPG and naphtha.

ESAI Energy's Global NGL Outlook provides monthly updates of the trends and outlook for global LPG fundamentals, with granular propane and butane data and forecasts.