OREANDA-NEWS. The Marcellus region could see propane seasonally devalued relative to natural gas unless a new propane line is built out of the region, Houston-based Enterprise Products Partners argued in a presentation today at the RBC Capital Markets MLP conference.

Enterprise projects propane production in the region will exceed export takeaway capacity and demand by 70,000 b/d during the summer of 2016. This seasonal oversupply could widen to 90,000 b/d by 2020, it said.

"Northeast storage is inadequate to handle excess seasonal supply," the company said. The situation "could result in periods where propane values are less than natural gas, similar to ethane."

Enterprise is seeking customer support for a proposed repurposing of the Centennial products pipeline to carry up to 100,000 b/d of NGLs from the Marcellus to Beaumont, Texas. The 800-mile line between Beaumont and Bourbon, Illinois, has been idle since 2011 and is jointly owned by Enterprise and Marathon.

However, it's unclear whether Marathon would support the project. Marathon is in the process of acquiring rival midstream operator MarkWest, which is expanding LPG export capacity from the Marcellus via the Marcus Hook terminal near Philadelphia. The Mariner 2 project, led by MarkWest and terminal operator Sunoco Logistics, will expand Marcellus takeaway capacity to the Marcus Hook export terminal to 275,000 b/d by the end of 2016.

Enterprise, operator of the largest US LPG export terminal on the Houston Ship Channel, is slated to finish its latest expansion of that facility by year end. When complete, it will be able to export 9mn bl per month of LPG, or 29 VLGCs.

Enterprise exported 84mn bl during the first 10 months of 2015. Of that amount, 24pc shipped to the Caribbean and Central America, 30pc shipped to South America, 11pc went to Europe and 34pc moved to Asia.