EIA Monthly Data Paints A Clear Picture of Propane Production

Here in Texas, the snow is melting, the power is back on, and some of us even have drinkable water.  We’ll be dealing with the aftermath of the 2021 Deep Freeze for months, and talking about the insane natural gas and power prices for as long as gas and power markets exist. One thing you have not heard much about during these crazy few days is propane. And given what we’ve been through, no news is good news. Sure, it was impossible to exchange a tank at the local Quickie Mart, and there were sporadic reports of delayed propane deliveries and local shortfalls. But even up in the coldest Midwest states, there were no market meltdowns, no skyrocketing prices. Instead, propane has been the go-to fuel to keep folks warm, to get energy production moving again by defrosting wellheads and pipeline valves, and even to get restaurants back on their feet. It’s always dangerous to declare a winter victory with a few weeks left to go in the season, but today we’ll take that risk.

Understanding whether propane production is up or down over the past few months is a bit more difficult than you might think, depending on which set of EIA numbers you choose to look at. The U.S. Energy Information Administration provides monthly numbers on the last day of the month lagged by about two months, and weekly numbers on Wednesdays, lagged by only five days. Both time series are closely watched by the propane market to assess the availability of supply for retail customers, petrochemical feedstock demand, and exports. Usually, these two sets of numbers move in tandem. But not always. The monthly numbers show production down by about 70 Mb/d from April to June, which is what you would expect given what was happening with crude and gas production at that point in time. Yet EIA weekly production numbers showed production increasing by about 90 Mb/d for the same period. So which way is propane production really trending? If you want to understand what’s going on, and you don’t mind delving into some deeply wonky NGL analytics, hang on for today’s blog.

Crude oil and natural gas production growth stalled in 2015 and has declined this year in some of the big shale basins.   But we may be seeing a turnaround.  The latest EIA Drilling Productivity Report, released on December 12, 2016, included upward revisions to its recent shale production estimates and also projects an increase in its one-month outlook for the first time in 21 months (since its March 2015 report). Today we break down the latest DPR data.