Inside Out – the UK LPG market
Continued from page 21
the chemicals industry. The table on page 21
gives a breakdown of main sector consumption
of LPG over recent years:
With its green credentials as a clean
burning, low emissions fuel, LPG has obvious
attractions in industrial applications where
such attributes are particularly required – such
as process heating and in furnaces/ovens in the
production of food, in kilns to produce pottery
as well as in glass making.
For heating and cooking it is a source of
domestic fuel for just under 200,000 homes
which do not have access to the natural gas
grid (Around 1.1 million off-grid homes use
oil).
In agriculture it is used principally in
greenhouse heating and poultry rearing.
The commercial and leisure sectors –
hotels, restaurants, pubs, sports facilities and
retail outlets/ suppliers – use LPG for heating,
hot water, cooking etc but prior to 2015 this
was not recorded as a separate category in the
DECC statistics
Excepting leisure use (cylinders purchased
through retail outlets/suppliers), a common
strand in the foregoing sectors is the choice of
LPG as a clean burning/low emissions fuel and
as a closer alternative to natural gas when off
grid.
In spite of the promotion of LPG’s lower
emissions and much lower duty level than
either diesel or petrol – 15.80 ppl vs. 57.95ppl –
LPG has not to date gained significant traction
as an automotive/ transport fuel.
Currently available at 1,484 sites, LPG is
used by approximately 160,000 vehicles (out
of a total of 35 million) with demand in steady
decline over the past 10 years. In Germany
around half a million vehicles use LPG whilst
just under two million vehicles use LPG in Italy
Unfortunately there is no data available
which splits total LPG deliveries into the two
main supply categories – bulk/mini-bulk tanker
delivery in to a fixed storage installation or by
way of cylinders that are portable,returnable or
refillable.
What is the future for LPG?
While a combination of higher petrochemical
demand, an apparent recording oversight
(commercial users) and a one-off movement
contributed to the uptick in consumption
in 2015, the higher level of overall LPG
consumption was sustained in 2016. The
January-October 2016 trend suggests a full
year out-turn of around 3.5 million mt, albeit
with no details yet available of the market’s
drivers.
In the absence of any further extensions
to the natural gas grid, it seems reasonable to
expect that the four sectors/users described will
have a continuing requirement for LPG as an
alternative to natural gas. This suggests that
a market of 800,000-900,000 mt per year is
sustainable.
LPG’s future as a transport fuel is more
questionable, especially with the growth of
electrically powered vehicles which are seen to
be the focus for emissions lowering efforts and
initiatives.
As always, the key determinant to LPG’s
usage as a petrochemical feed stock – its
principal outlet – will be the price relativity
between LPGs and naptha, the latter being the
principal olefins feedstock.
At Grangemouth, INEOS recently
completed an ethane storage facility to ensure
the continuity of feedstock supply to the
cracker plant. The increased availability of
ethane from US shale gas production could
be a potential new source of disruption and
challenge in the LPG market. No doubt, all will
be clearer in the course of time….
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22 Fuel Oil News | February 2017