Northeast propane could dip below gas: Enterprise

OREANDA-NEWS. May 14, 2015. Current northeast propane market conditions in the US could lead to periods in which propane values are less than those of natural gas, similar to the current ethane market landscape, according to analysis by Enterprise Products Partners.

The northeast has transitioned from a supply short to a seasonal supply long position, Enterprise said today at the Citi Global Energy and Utilities Conference.

Enterprise sees the supply and demand gap growing to 62,000 b/d in 2016 and up to 137,000 b/d in 2020 as projected Appalachian propane supply firms to the 200,000-250,000 b/d range in 2016 and to 250,000-300,000 b/d in 2020.

"Without an evacuation pipeline, propane is steeply discounted due to growing volumes evacuated by rail, which is limited by railcar availability and destination terminal capacity," Enterprise said, adding that storage capacity in the northeast is insufficient to handle excess seasonal supply.

The analysis is likely an effort to draw support of a midcontinent/northeast propane pipeline takeaway project that the company first suggested in late February. The proposed project would give Marcellus producers access to midcontinent markets. The company would need to build a 150 mile pipeline in order to connect its existing capacity to the Marcellus shale.

Propane production from natural gas processing plants in Appalachia stood at 101,000 b/d in February, according to data from the Energy Information Administration (EIA). Production averaged 79,500 b/d in 2014, and February production has nearly tripled since 2013, when total output stood at 36,000 b/d.