When firing up the backyard propane grill and watching that first propane molecule flash to life, most people don’t think much about what it took to get that fuel to the cylinder they picked up at the store. But that long and winding road from the production well to the tank beneath your grill is actually a fascinating tale of supply-chain logistics involving producers, midstreamers, and propane retailers. In today’s blog, we will take that interesting and sometimes mysterious trip with a molecule of propane. We will travel over 1,000 miles, moving in and out of various facilities, purifying our product and incurring various costs each step of the way. So strap on your seat belt for a selection from our greatest blog hits, in which we track a typical propane molecule’s journey from beginning to end.
Over the years, we’ve written extensively in the RBN blogosphere about the propane market and how the logistics of that market are tied together by gathering systems, gas processing plants, pipelines, storage facilities, fractionators, and distribution networks. Propane makes up about one-third of natural gas liquids (NGL) production from natural gas processing, with U.S. propane production averaging about 1.7 MMb/d so far this year. Over 60% of that volume makes its way to market with a stopover at the Mont Belvieu storage and processing hub — center of the NGL universe — located about 30 miles east of Houston (see our Between Mont Belvieu And The Deep Blue Sea series, our Magical Mystery Tour series, and our Wild Ride Drill Down Report).
Like all energy commodity markets, propane is going through COVID-era changes, with supplies poised to decline and regional exports increasing (see Caught in the Balance and Hold On To Your Hat, Part 3). But even with all these changes in the market, the fundamentals of the propane supply chain remain relatively unscathed, particularly for molecules coming from one of the oldest and most prolific of supply basins: the Permian, which today is the source for about 35% of U.S. propane supplies from gas processing.
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