Seasonal Demand

Production growth, new processing infrastructure and increased use of rail are shifting traditional flow patterns in the propane industry. New production and processing is adjacent to historic centers of consumer demand in the Northeast and Mid-Continent – reducing seasonal risks of shortage. Rail distribution improves delivery flexibility. The supply chain has to be flexible enough to balance seasonal consumer demand with increased chemical processing and high export volumes. Today we describe improved regional interconnectivity.

Prices for non-TET propane at Mont Belvieu yesterday fell to their lowest level in 13 years at 31.0 cnts/Gal (source: OPIS). A big part of the recent price decline is to do with surging propane storage inventory. Last Wednesday’s data from the Energy Information Administration (EIA) showed U.S. propane inventory levels increased by 3.8 MMBbl to 77MMBbl during the last week of May 2015. If storage injections increase at that rate for another couple of weeks then levels will surpass the record of 81.6 MMBbl set in October 2014. The trouble is – that record was set at the start of winter – traditionally the end of propane storage build season - but we are still only in June – with several months of storage build left. Today we discuss the growing propane surplus.

As if there weren’t enough reasons to add new natural gas pipeline capacity through New England, it’s time to consider another: the Sable Island and Deep Panuke gas production areas off the coast of Nova Scotia are quickly losing their oomph, and soon the Canadian Maritimes will need to rely more heavily on gas from other, more distant sources, including the Marcellus. Developing pipelines to move large volumes of Marcellus gas through New England to New Brunswick and Nova Scotia will not be easy though. Today we continue our look at the challenges of supplying gas to New England and its northern neighbors.