The iso-normal price spread (Mont Belvieu non-TET) has skyrocketed over the last month reaching a peak of 34 cents/gal on April 8, the highest level for the differential since hitting 47 cents/gal on August 23, 2022. As shown on the left-hand chart below it has been stronger isobutane prices driving the spread up. The OPIS non-TET isobutane price (orange line, left-hand chart) has rallied ~18 c/gal since March 11 to 127 cents/gal as of April 15, while normal butane (blue line, left-hand chart) is down about 1 c/gal over the same period. The iso-normal differential has been volatile this year narrowing to just 1.5 c/gal (red line, right-hand chart) in mid-February before widening sharply in early March and averaging nearly 30 c/gal April month-to-date.
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Mont Belvieu Iso-Normal Spread Soars To Record High
Mont Belvieu Isobutane – Normal Butane Price Differential Soars
We're Not in Kansas Anymore - The Conway vs. Mont Belvieu Propane/NGL Differential Blowout
For 10 years prior to 2018, the differential between propane prices at the Conway, KS, hub averaged less than a nickel per gallon below Mont Belvieu. In fact, between 2013 and 2017, the price spread was only 3.5 c/gal — excluding a winter 2014 Polar Vortex aberration — which basically reflects the cost of moving barrels 700 miles north-to-south. Not this year, though. After starting 2018 at 3 c/gal, the propane price spread took off, and has averaged 18 c/gal since April, some days moving above 26 c/gal, far above the per-bbl cost of transporting propane 700 miles south to Mont Belvieu. Is it pipeline capacity constraints? In part. But there is a much more significant factor driving this differential wider, not only in the propane market, but across all five of the NGL purity products. What is this mysterious factor? To find out, read on. But here’s your first clue: the problem is not in Kansas anymore.
