Thursday, September 24, 2015
The U.S. Energy Information Administration (EIA) reports that primary U.S. propane and propylene inventories reached 97.7 MMbbl as of Sept. 11, the highest level in the 22 years that EIA has collected weekly inventory statistics. In the first six months of 2015, propane and propylene stocks were 24.3 MMbbl higher on average compared to the same period in 2014. In the past year, nearly all of the increase in volumes occurred in the Gulf Coast region, PADD 3. As production of propane and other hydrocarbon liquids has grown, notes the agency, the ability to transport store, and export the commodities has expanded. During the first six months of 2015, propane production at natural gas plants was 31.3 MMbbl, or 172,000 bbld, higher than during the first half of 2014. Exports increased by 33.3 MMbbl, or 182,000 bbld, over the same period.
EIA comments that in the U.S. propane is mainly used for space heating and as a feedstock for petrochemical plants, as well as for drying agricultural crops. Relatively small amounts of propane are also used for fueling vehicles. Its heating and agricultural uses make propane consumption highly seasonal and weather dependent, rising in the fall and peaking in the winter. In addition to heating and agricultural use, propane is used by petrochemical plants to produce ethylene and propylene, key building blocks for the manufacture of chemicals and plastics. Petrochemical propane consumption has little seasonality but can vary significantly based on plant operations.
Traditionally, propane and propylene stocks increase from the start of April to the end of September and are drawn down from October to March, when agricultural and heating demands increase. In 2015, inventories began increasing in mid-February, more than six weeks earlier than the historical average. With domestic consumption relatively flat, growing propane production at natural gas processing plants contributed to this year’s strong inventory build, while also supplying more propane to the global market through exports. Expanding shale gas and tight oil development continues to be the main driver of propane production growth, with refinery propane production remaining relatively constant. The natural gas share of annual production rose from 62% in 2008 to 76% in 2014.
EIA’s “Short-Term Energy Outlook” expects propane and propylene inventories to begin the October heating season at record levels. Stronger than average inventory draws beginning in the fourth quarter of this year are forecast as gas plant production slows and exports continue to expand. Natural gas plant production, which reached a monthly high of 1.13 MMbbld in April, is expected to decline slightly in the first quarter of 2016 before rising to 1.19 MMbbld by the fourth quarter. EIA projects that net exports, which reached a monthly high of 518,000 bbld in April, will continue increasing, reaching 702,000 bbld in the fourth quarter of 2016 as export facilities expand and transportation costs to export markets decrease with the rising number of oceangoing LPG tankers and the opening of the widened Panama Canal.
EIA comments that in the U.S. propane is mainly used for space heating and as a feedstock for petrochemical plants, as well as for drying agricultural crops. Relatively small amounts of propane are also used for fueling vehicles. Its heating and agricultural uses make propane consumption highly seasonal and weather dependent, rising in the fall and peaking in the winter. In addition to heating and agricultural use, propane is used by petrochemical plants to produce ethylene and propylene, key building blocks for the manufacture of chemicals and plastics. Petrochemical propane consumption has little seasonality but can vary significantly based on plant operations.
Traditionally, propane and propylene stocks increase from the start of April to the end of September and are drawn down from October to March, when agricultural and heating demands increase. In 2015, inventories began increasing in mid-February, more than six weeks earlier than the historical average. With domestic consumption relatively flat, growing propane production at natural gas processing plants contributed to this year’s strong inventory build, while also supplying more propane to the global market through exports. Expanding shale gas and tight oil development continues to be the main driver of propane production growth, with refinery propane production remaining relatively constant. The natural gas share of annual production rose from 62% in 2008 to 76% in 2014.
EIA’s “Short-Term Energy Outlook” expects propane and propylene inventories to begin the October heating season at record levels. Stronger than average inventory draws beginning in the fourth quarter of this year are forecast as gas plant production slows and exports continue to expand. Natural gas plant production, which reached a monthly high of 1.13 MMbbld in April, is expected to decline slightly in the first quarter of 2016 before rising to 1.19 MMbbld by the fourth quarter. EIA projects that net exports, which reached a monthly high of 518,000 bbld in April, will continue increasing, reaching 702,000 bbld in the fourth quarter of 2016 as export facilities expand and transportation costs to export markets decrease with the rising number of oceangoing LPG tankers and the opening of the widened Panama Canal.
