Overseas propane exports at all-time high
WHEELING – The U.S. is producing about 200,000 more barrels of propane daily compared to the same time last year, but most of this additional propane is headed overseas as exports of the natural gas liquid are at record levels.
Therefore, in the midst of a particularly cold winter when domestic demand is unusually high, U.S. Energy Information Administration statistics show there are approximately 410,000 barrels of propane being shipped abroad every day.
As recently as January 2013, only 168,000 barrels of American propane left the country every day.
While processors working in the Marcellus and Utica shale formations continue refining more propane, it seems this is having little affect on retail prices, as residential retail rates now hover around $3.90 per gallon. This reflects an increase of about $1.10 per gallon since prices were $2.80 per gallon on Dec. 30.
However, representatives of MarkWest Energy and Williams Energy said they make every attempt to market propane and other forms of NGL locally.
“We typically sell the propane produced to local and regional markets,” said MarkWest spokesman Kevin Hawkins.
Hawkins also said MarkWest accelerated the scheduled opening of the Hopedale fractionator, the device that separates propane, ethane, butane, isobutane and pentane from one another. David Ledonne, vice president of operations for Utica and Appalachia for MarkWest, said propane derived in Hopedale is being sold to Ohio wholesalers for distribution to Buckeye State consumers.
Williams spokeswoman Helen Humphreys emphasized her company does not own the gas sent to it via pipeline by drillers such as Chesapeake Energy, Chevron, Gastar Exploration and others.
“We do, as a service to our customer, contract with a third party to sell the product in the marketplace,” she said.
In addition to the increased exports, Mike Chadsey, spokesman for the Ohio Oil and Gas Association, said one reason supply is low is because farmers used a usually high amount of propane during the fall to remove moisture from their corn in order to make it marketable.
Tim Carr, Marshall Miller professor of geology at West Virginia University, also said even propane that is not going to foreign nations is likely going for use along the Eastern Seaboard because of the higher population.
“Propane is priced as on a national market. It does not cost a lot to ship it via rail or pipeline to Wisconsin or New York. So you can blame the cold weather and the increased national demand for the increase over last year,” he said. “Everyone is calling for a tank refill.”
Carr also said cold weather creates problems for the local distributing trucks from the local fuel supply company in getting propane out to the individual customers.
According to the EIA, 36 percent of households in Midwest states use propane as their primary heating fuel, as do 34 percent of those in southern states.
Although these percentages are lower in northeastern and western states, extremely cold temperatures continue driving national demand.