By BEN LEFEBVRE and HIROYUKI KACHI
Tokyo Electric Power Co. said Wednesday it will import
200,000 tons of liquefied petroleum gas from US-based
Enterprise Products Partners over the next three years, a sign
that the US shale revolution is reaching past oil and natural
Tokyo Electric, known as Tepco, this year will begin
importing LPG from the US for the first time as it tries to
diversify its sources for fuel supply, the company said.
Tepco is in need of less costly fuel to operate its thermal
power plant, due to a greater dependency on fuel imports after
the nuclear disaster at its Fukushima Daiichi nuclear plant
caused a shutdown of the nation's reactors.
Drilling innovations such as hydraulic fracturing, or
fracking, has created a boom in US energy production from
formerly unproductive shale formations. Although most attention
has been paid to the oil and natural gas found in the shale,
the US is also becoming a major source for low-cost LPG and
other natural-gas liquids, the cocktail of chemicals found
alongside oil and gas.
"We can expect high-cost efficiency with US-produced LPG,"
Tepco said in announcing the deal.
LPG is chemically similar to propane and can be burned as a
fuel or used as a raw material for plastics.
The companies didn't disclose the total cost of the deal.
The LPG price would be linked to Mont Belvieu propane prices,
Tepco said. The Mont Belvieu propane price was $36.62/bbl
Monday, down from $51.99/bbl a year ago.
Tepco would use the LPG at its Anegasaki thermal power plant
in Chiba prefecture, where it already imports LPG from
Australia and the Middle East, the company said.
Enterprise, a major NGL supplier, processed a company record
of 707,000 bbl, or 60,800 tons, a day of NGLs in the fourth
quarter. The Houston-based company is putting the finishing
touches on nearly doubling its propane-export capacity to 7.5
million bbl/month, which it says will bring its LPG export
sales to more than those for Saudi Arabia.
The deal's three-year term bodes well for US NGL suppliers,
who may be starting to gain more attention from foreign buyers
looking for lower prices, said Raymond James analyst Darren
"This tells you that (Tepco executives are) convinced that
they have supply assurance for a lower-price LPG for a longer
amount of time than they could have found elsewhere," Mr.
Dow Jones Newswires