The US could add more than a million barrels per day of new LPG export capacity in the next few years, which could reduce some of the volatility in terminal fees while providing importers in Asia with greater security in supplies for the chemical feedstock.
In addition to its use as a fuel, LPG is used to make ethylene in crackers and propylene in propane dehydrogenation (PDH) units. In particular, China has built a fleet of PDH units, and those plants should remain the main driver of its LPG demand during the second half of 2026.
In Asia, disruptions to LPG exports during the wars in the Middle East caused prices to hit records during the first half of the year. The prospect of additional LPG exports from US terminals could provide some relief from future disruptions.
But in the US, the prospect raised concerns that companies are adding too much export capacity.
US LPG TERMINAL EXPANSIONS CONTINUE
Over the years, the US has had a steady cadence of projects that expanded export capacity at LPG, and that trend will continue through at least 2028.
Enterprise Products recently completed an expansion project in May at its Neches River Terminal in Orange county, Texas. This project added a flexible refrigeration train that can handle 180,000 bbl/day of ethane or 360,000 bbl/day of propane.
The midstream producer remains on track to start operations at its expanded Enterprise Hydrocarbons Terminal (EHT) by the end of 2026, the company said. The project will increase the terminal’s LPG export capacity by 300,000 bbl/day.
Including the Neches river expansion, ICIS estimates that Enterprise and other midstream companies will increase LPG export capacity by more than 1 million bbl/day.
“There’s a fair amount of export capacity that’s come online and will be coming online,” said Tyler Cott, Enterprise senior vice president, hydrocarbon marketing. He made his comments during an earnings conference call.
“Obviously it’ll take the market a little bit of time to absorb that capacity,” he said. “So, we may see a period of time where we have less volatility in terminal fees and just overall lower rates than we’ve seen the last couple years.”
However, Enterprise has contracted about 90% of its LPG exports, so that should limit its exposure to any excess terminal capacity, Cott said. “We feel good about where we’re at given how things look the next couple of years.”
US PROPANE SUPPLIES GROW FASTER THAN DEMAND
Throughout this decade, US propane production has grown faster than demand, and the country has relied on exports to balance the market.
The following chart shows US propane output and consumption over the years, including forecasts for 2026 and 2027. Figures are in millions of barrels/days.
At times, US LPG terminals had run at full capacity to clear the market of excess propane.
The EIA expects the US surplus of propane should continue growing at least through 2027.
On the supply side, propane is often a byproduct of shale oil production. As a result, wells will continue making propane as long as crude prices are high enough to justify oil production.
On the demand side, the US has few plans for new petrochemical plants. Heating demand fluctuates with the weather.
MID-EAST WAR DISRUPTS LPG SHIPMENTS
This year, US LPG exports found a ready market in Asia, where the war in the Middle East and the subsequent closure of the Strait of Hormuz disrupted LPG shipments.
China’s LPG imports fell by nearly 40% month on month to 1.56 million tonnes in April before recovering to 2.03 million tonnes in May, according to customs data. Imports remained well below the first-quarter average of 2.46 million tonnes/month.
Following the decline in supply from the Middle East, the US has since become the primary alternative LPG supplier to Asia.
Before the conflict, US cargoes accounted for around 20% of China’s LPG imports. Since then, that share has increased steadily to 56.5% in June.
If disruptions in the Middle East continue, then the expanded export capacity from the US should provide chemical producers in China and other Asian countries with some relief from constrained supplies.
US LPG PROJECTS
The following table breaks down the LPG expansion projects on the Gulf Coast, starting with the recently completed Neches River Terminal expansion project.
Source: ICIS by Al Greenwood,
