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Now You See It, Now You Don't - Is Propane Production Increasing or Decreasing?

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.

In recent weeks, we’ve done a few blogs about the changes that the U.S. propane market has been undergoing over the past few months. In our Hold on to Your Hat blog series, we talked about how propane exports from the Ridley Island Propane Export Terminal (RIPET) in British Columbia have tightened up surplus supplies that previously moved out of Alberta to U.S. markets via rail to the Midwest and Pacific Northwest — as well as through the U.S. to Mexico. It’s a similar story on the East Coast, where growing exports out of Energy Transfer’s Marcus Hook terminal near Philadelphia have been ramping up following completion of the Mariner East 2 pipeline from the Marcellus/Utica production area to the terminal in December 2018. Until then, surplus propane from the region had been fanning out by rail to the Conway, KS, NGL hub and across propane-consuming territory, all the way down to Florida. Like Alberta surpluses, exports have since dried up those Marcellus/Utica surplus rail volumes too (see Caught in the Balance).

All of which makes understanding the trajectory of production growth — or decline — critically important as the market prepares for the winter of 2020-21. After all, it might actually get cold this year.

Before getting into the different stories that weekly and monthly numbers are telling us, we need to do a deep dive into what makes these two time series different, both in terms of what gets included and what the data sources for the numbers are.

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