U.S. liquefied natural gas (LNG) exports have been getting a lot of attention in the past few years as LNG import terminals seek to reverse course to compensate for an oversupply of natural gas from shale plays. What has been less detailed is the development of domestic liquefied petroleum gas (LPG) export projects to send out excess propane and butane.

Recently, Enterprise Products Partners LP began operations at its expanded LPG terminal on the Houston Ship Channel. The expansion increased capacity at the facility from nearly 4 million barrels (bbl.) per month to about 7.5 million bbl. per month.

In addition, Targa Resource Partners LP’s Galena Park LPG terminal expansion is scheduled to be completed in the third quarter of this year and will add more than 5,000 bbl. per hour of LPG export capacity. Combined with existing capacity, the terminal will be able to load three to four very large gas carrier-class ships per month, in addition to its existing capabilities for several medium gas carrier-class ships per month.

International LPG demand combined with increased domestic supplies has led to several other companies expressing interest in similar projects in the coming years. Sunoco Logistics Partners and Lone Star NGL LLC signed long-term agreements for their Mariner South project on the Gulf Coast. In addition, Crosstex Energy LP is considering plans to build a new LPG Gulf Coast export terminal.

The Crosstex project would be constructed in 2015 and send volumes to either South America or Far East markets. Butane would serve as the primary export as the company anticipates domestic supplies to overwhelm domestic demand within the next five years. Further details were not disclosed on the project.

The Mariner South project will be a joint venture between Lone Star, which is 70% owned by Energy Transfer Partners with the remaining 30% held by Regency Energy Partners LP and Sunoco Logistics Partners LP. Since all three of these companies are owned by Energy Transfer Equity, it will allow for strong synergy opportunities.

The project has an estimated in-service date of early 2015 and will originate at Lone Star’s fractionation facility in Mont Belvieu outside Houston with volumes transported via Sunoco Logistics’ pipeline to its Nederland terminal between Beaumont and Port Arthur, Texas.

“The goal would be for us to build some tankage at Nederland to support the exporting, which would be very similar to our Mariner East project [in the Marcellus shale] … I think everyone knows that the Gulf Coast needs more NGL [natural gas liquid] export capability,” Mike Hennigan, Sunoco Logistics’ president and chief executive, said during the company’s recent conference call to discuss fourth-quarter 2012 earnings.

“The Gulf Coast is really long on NGLs and our view is it will continue to go longer and longer. We have been looking for an opportunity to get Nederland into the NGL business and have been studying that phenomenon for a while,” he continued.

Wells Fargo Securities noted that two LPG export projects that were once considered abandoned may still be on the books: the Vitol Group is planning to spend $900 million to build the Coastal Caverns LPG storage and export facility in Beaumont and Occidental Petroleum Corp. is drawing up plans to export some combination of LPG and LNG from its recently acquired Ingleside (Texas) Naval Station on Corpus Christi Bay.

The Vitol project would seek to export approximately 37,000 bbl. of propane per day and could take up to six years to complete. “At this juncture, details on the project remain scarce and visibility of the completion remains low, in our view,” Wells Fargo Securities said in its February 2013 NGL Snapshot. The investment firm held a similarly low estimation of Occidental Petroleum’s LPG export project reaching fruition.

However, even if these two projects fail to reach development, both Targa and Enterprise officials have stated they could develop further LPG export projects in the future. Targa acquired the Patriot terminal on the Houston Ship Channel that could be connected to Galena Park and its Mont Belvieu facility to increase its LPG export capacity. The acreage is within two miles of Galena Park and includes a dock, existing rail siding as well as a close proximity to the Colonial and Explorer refined products pipeline hub.

While there are doubts regarding several of these projects, the Wells Fargo Securities report anticipates that there will be some combination of further LPG expansion over the next few years. This assessment is based on global propane pricing differentials that encourage exports over imports, the identification of expansion projects by the aforementioned midstream companies and the continued growth of propane supplies from NGL fractionation expansions.

“While the export margin for normal butane is currently not as compelling as that of propane, we believe that ultimately, normal butane prices will decline to a level sufficient to incentivize meaningful export activity.

“Assuming that only identified LPG export projects by Enterprise and Targa are constructed, we forecast the LPG market could be approximately 125,000 bbl. per day oversupplied by 2015. Hence, we foresee the need for an additional 125,000 bbl. per day of LPG export capacity,” according to the report.