UPDATE 2-Sunoco signs up Shell to its propane pipeline, export plan
New York May 6 (Reuters) - Sunoco Logistics Partners LP said on Monday Royal Dutch Shell Plc's trading unit has joined its Mariner South project to transport propane and butane to an export hub in the U.S Gulf Coast, joining a trend of shipping the fuel abroad.
The project will take liquefied petroleum gases (LPG) from a storage complex run by Lone Star in Mont Belvieu, Texas, via Sunoco's existing pipeline to its terminal in Nederland, Texas, which has round-the-clock access to vessels in the Gulf Coast.
STUSCO, Shell's petroleum trading arm in the United States, has committed to becoming an anchor customer of the project, allowing it to go ahead, Sunoco and Lone Star said in a joint statement.
"The development of this world class Gulf Coast LPG operation is in response to continued growth in North American NGL (natural gas liquids) production and international demand for LPG supplies," said Steve Spaulding, executive vice president of Lone Star NGL.
Production of LPG such as propane has surged in recent years alongside the U.S. shale oil boom which extracts a sweeter form of crude oil prone to producing lighter refined products.
Used primarily for heating and cooking, demand rises for propane during the winter months.
Exports of propane and propylene have quadrupled in the past five years, according to U.S. Energy Information Administration data, reaching an all-time high last November.
Sunoco and Lone Star's plan mirrors that of Enterprise Product Partners' LP project to expand export facilities on the Houston Ship Channel that take LPGs from Enterprise's storage and fractioning complex, also in Mont Belvieu.
Enterprise finished the project in March, expanding its LPG export capacity to 7.5 million barrels a month from 4 million barrels. Capacity of the Mariner South project is expected to be 6 million barrels per month.
Mariner South is expected to begin operations in the first quarter of 2015. At the Mont Belvieu storage and fractionation complex, Lone Star will build a 100,000 barrel per day (bpd) de-ethanizer to convert propane to international specifications.
The LPGs will then be shipped on a 200,000 bpd pipeline to the Nederland terminal. There, refrigerated storage tanks will be built. The terminal will have a load rate of up to 30,000 bpd an hour to vessels that can carry up to 550,000 barrels.
EIA data showed average monthly exports of propane and propylene amounted to 184,000 bpd in February and 168,000 bpd in January after hitting the November peak of 233,000 bpd.
It was unclear how many barrels of propane a day will actually be exported under the Mariner South project.
"In addition to export grade propane and butane, the pipeline will be available for other natural gas liquids and petroleum products depending on shipper interest," the statement said, adding its capacity could be scaled up.
Lone Star NGL LCC is a joint venture between Energy Transfer Partners LP and Regency Energy Partners LP. It operates 47 million barrels of storage capacity at Mont Belvieu as well as natural gas liquids pipelines.
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