Volumes of propane moving southeast via rail

OREANDA-NEWS. May 21, 2015. Volumes of propane from the northern regions of the US have been heard moving by rail to southeast areas as it is cheaper to transport and lift Marcellus product via rail as opposed to Mont Belvieu, Texas, terminal connected to pipelines.

Enterprise Products Partners' Dixie pipeline transports propane from fractionators and refineries in Texas, Louisiana and Mississippi to various customers throughout the southeast regions of the US. Retailers are finding it cheaper to rail lower-priced Marcellus propane south than to lift from the terminals connected to the Dixie pipeline, market sources told Argus.

Propane can be railed from the Marcellus to Hattiesburg, Mississippi, at about a 4-6?/USG discount to Mont Belvieu. After railing, unloading and storage costs, the product comes in at about flat to Mont Belvieu.

Railed volumes of propane have also been heard being shipped to Georgia and West Virginia. The volumes coming off of the railcars either go to retail districts for sale or into storage.

The flood of rail cars moving into the southeast regions of the US led to an embargo on inbound railcar movements into Hattiesburg earlier in the month.

Since then, special permits have been heard granted to railcars as to prevent shippers from flooding pipeline activity, according to market sources.

Since the beginning of May, Hattiesburg propane's discount to LST propane has narrowed, from 3.5?/USG on 1 May to 1.375?/USG on 19 May. Hattiesburg propane reached a narrower 0.75?/USG discount to LST barrels on 18 May.