Propane Markets Overview · 2018-06-13 · Jan Mar MayJul Sep Nov Jan Mar Jul Sep Nov. 5-year...

www.eia.govU.S. Energy Information Administration Independent Statistics & Analysis

Propane Markets Overview

For2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC

ByWarren Wilczewski, Industry EconomistOffice of Petroleum, Natural Gas, and Biofuels Analysis

EIA’s revised monthly data tables for HGL affect all natural gas liquids (alkanes) and refinery olefins (olefins)

2

Natural Gasoline

Ethane

+Ethylene (net refinery

production only)

Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC

Liquefied Petroleum Gases

-ethane -ethylene-propane -propylene-n-butane -n-butylene-isobutane -isobutylene

Pentanes Plus

Ethane/Ethylene

Propane

+Propylene

Propane/ Propylene

Normal Butane

+Normal

Butylene

Normal Butane/ Normal Butylene

Isobutane

+Isobutylene

Isobutane/ Isobutylene

Alkanes = Natural Gas Liquids

Olefins = Refinery Olefins

propane n-butaneisobutane


Various days-of supply/disposition measures

Note: *disposition = domestic product supplied + exportsSource: U.S. Energy Information Administration, Weekly Petroleum Status Report, data through June 1, 2018 For more information, please see EIA’s webinar on Propane Market Indicators and Measures of Supply Adequacy

U.S. weekly stocks of propanedays of supply & disposition

3

0

20

40

60

80

100

120

140

Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18

days of supplydays of disposition*days of supply under severe winter conditions

https://youtu.be/OiAMtd__qis

PADD REGIONS

1B2

3

45

1C

1A

0.0

0.2

0.4

0.6

0.8

1.0

Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-185-year range inventory level rolling 5-year Avg

PADD 1A (New England) propane inventories above the 5-year averagePADD1A propane* inventoriesmillion barrels

Source: EIA, Weekly Petroleum Status Report, data through June 1, 2018 *propane/propylene for fuel use only

Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC 4

0

1

2

3

4

5


PADD 1B (Mid-Atlantic) propane inventories above the 5-year averagePADD1B propane* inventoriesmillion barrels



PADD REGIONS

1B2

3

45

1C

1A

0

5

10

15

20

25

30


PADD 2 (Midwest) propane inventories within the 5-year rangePADD 2 propane* inventoriesmillion barrels



-10

-8

-6

-4

-2

0

2

4

6

8

10

Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18

inventory level (difference from 5-year average)

PADD 2 (Midwest) propane inventories below 5-year-average levelsPADD 2 propane* inventories, difference from 5-year averagemillion barrels

above5-year average

below5-year average

7Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC


0

4,000

8,000

12,000

16,000

20,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Kansas propane stocksthousand bbls

5-year range Year ago inventories 5-year average

0

1,500

3,000

4,500

6,000

7,500


Michigan propane stocksthousand bbls


0

500

1,000

1,500

2,000

2,500

3,000


Illinois, Indiana, Ohio propane stocksthousand bbls


0

200

400

600

800

1,000

1,200


Iowa, Minnesota, Wisconsin propane stocksthousand bbls


Selected state propane* inventories

Source: EIA, Weekly Petroleum Status Report, data through June 1, 2018


*propane/propylene for fuel use only; inventories include stocks at terminals, gas plants, and refineries only

0

10

20

30

40

50

60

70


PADD 3 (Gulf Coast) propane inventories within the 5-year rangePADD 3 propane* inventoriesmillion barrels



-40

-30

-20

-10

0

10

20

30

40

Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18

inventory level (difference from 5-year average)

PADD 3 (Gulf Coast) propane inventories below the 5-year averagePADD 3 propane* inventories, difference from 5-year averagemillion barrels

above5-year average

below5-year average



0

1

2

3

4

5

6

7

8

Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov

5-year range5-year average

2016

20172018

propane inventories in Western Canada propane inventories in Eastern Canada


Propane inventories in Canada coming into the heating season were at record highs. While rail challenges tapered ability to deliver out of W. Canada, E. Canadian inventories dropped to 5-year lows at close of winter

Source: Canada’s National Energy Board, May 16, 2018

11

million barrels

2018

2016

2017

http://www.neb-one.gc.ca/nrg/sttstc/ntrlgslqds/stt/lqdptrlmgsr-eng.html

Propane spot prices above same time last year; Conway, KS discount to Mt. Belvieu, TX averaging ~15¢/gal since end of heating seasonPropane spot prices (Conway, KS and Mont Belvieu, TX)dollars per gallon

Source: EIA, Bloomberg, data through May 25, 2018


0.00

0.20

0.40

0.60

0.80

1.00

1.20

Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul

Conway

Conway(2017-18)

Mont Belvieu(2016-17)

Mont Belvieu(2017-18)

This Season(2017-18)

Last Season(2016-17)

-15

-10

-5

0

5

10

15

20

25

2010 2012 2014 2016 20180

50

100

150

200

250

2010 2012 2014 2016 2018

U.S. propane and Brent Dated crude oil prices$/MMBtu

propane spot prices$/U.S. gallon


U.S. propane prices return to historical trend relative to crude and international market propane prices


13

Dated Brent crude price

U.S. propane spot price

U.S. propane premium to Brent crude oil

U.S. propane discount to Brent crude oil

Far East (Japan & Singapore)Northwest Europe

Saudi Aramco Contract

U.S. Gulf Coast

-10

0

10

20

30

40

50

60

-20

0

20

40

60

80

100

120

-5

5

15

25

-20

0

20

40

60

80

100

120

Mont Belvieu Propane Spot Prices¢/U.S. gallon

propane spot prices$/U.S. gallon


Not all price spikes are created equal: some are caused by market imbalances rather than product shortages


14

Mt. Belvieu Propane (ETP)

Mt. Belvieu Propane (non-ETP)

ETP vs. non-ETP spread

Mt. Belvieu non-ETP

Conway

North/South spread

U.S. propane exports by destinationthousand b/d

With expanding capacity and volumes, U.S. exports are reaching more distant foreign markets, with bulk of exports now going to E. Asia

Source: U.S. Department of Commerce, EIA

0

200

400

600

800

1,000

1,200

2011 2012 2013 2014 2015 2016 2017 2018

Annualized

Refrigerated Export CapacityNon-Ref Export Capacity other

AfricaMiddle East

East Asia

EuropeSouth AmericaCaribbean & Central America

MexicoCanada



EIA’s price projection for crude oil suggests a decline through the forecast horizon, affecting petroleum product prices

Source: Short-Term Energy Outlook, May 2018, and CME Group.

16

0

20

40

60

80

100

120

140

Jan 2017 Jul 2017 Jan 2018 Jul 2018 Jan 2019 Jul 2019

Historical spot priceSTEO price forecastNYMEX futures price95% NYMEX futures upper confidence interval95% NYMEX futures lower confidence interval

Note: Confidence interval derived from options market information for the 5 trading days ending May 3, 2018. Intervals not calculated for months with sparse trading in near-the-money options contracts.

West Texas Intermediate (WTI) oil pricedollars per barrel

U.S. propane production, imports, and stock draw U.S. propane consumption, exports, and stock build


Projected production growth drives increased export volumes as well as return to inventory builds

Source: Short-Term Energy Outlook, May 2018.

17

2014 2015 2016 2017 2018 2019

stock draw

imports

refinery production

ngpl production

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2.00

2.25

2.50

2.75

2014 2015 2016 2017 2018 2019

stock buildexportsdomestic consumption

million barrels

U.S. propane inventoriesmillion barrels

deviation from normal%


After two years of significant draw-downs, EIA projects propane stocks to slightly build and return to 5-year average levels

Source: Short-Term Energy Outlook, May 2018.

18

-120%-100%-80%-60%-40%-20%0%20%40%60%80%100%120%

-120-100

-80-60-40-20

020406080

100120

Jan 2014 Jan 2015 Jan 2016 Jan 2017 Jan 2018 Jan 2019Note: Colored band around storage levels represents the range between the minimum and maximum from Jan. 2013- Dec. 2017.

Corn crop planted% progress, by week

Corn crop emerged% progress, by week


Corn crop nearly all in the ground; emerged progress currently tracking a half-week behind last year

Source: USDA National Agricultural Statistics Service

19

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Apr.Week 2

May.Week 1

May.Week 4

Jun.Week 2

Jul.Week 1

2013

2009

2018

2016

2015

2017

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Mar.Week 4

Apr.Week 3

May.Week 2

May.Week 5

Jun.Week 3

2013

2009

2018

20162015

2017

https://quickstats.nass.usda.gov/

0

100

200

300

400

500

600

700

800-2.00

-1.50

-1.00

-0.50

0.00

0.50

1.00

1.50

2.002012/13 2013/14 2014/15 2015/16 2016/17 2017/18

El Niño Region 1+2 Sea Surface Temperature (SST)departure from normal (Co)

average heating season propane product supplied1,000 b/d


El Niño – Southern Oscillation (ENSO) conditions in El Niño Region 1+2 are a reliable predictor of propane heating in PADDs 1 and 2

Sources: U.S. Energy Information Administration; National Oceanic and Atmospheric Administration

20

El N

iño

| La

Niñ

a

SST departure from normal ■PADD 2 propane product supplied■PADD 1 propane product supplied

https://www.eia.gov/dnav/pet/pet_cons_psup_a_EPLLPA_VPP_mbbl_m.htm

http://www.cpc.ncep.noaa.gov/data/indices/

NOAA’s projected temperatures: October – December 2018, and January – March 2019

• Early in the heating season NOAA projects above-normal temperatures all across the country with the exception of the South Atlantic region, where temperatures are expected to be within NOAA’s 30-year normal range

• Further into the heating season, above-average temperatures are expected throughout the west, with equal-chance of above/below normal stretching across much of PADDs 1 and 2, as well as eastern PADD 3


A = temperatures above normal

N = equal chance thattemperatures are above normal, normal, or below normal

B = temperatures below normal

Source: NOAA, May. 17, 2018

12

3

45

Petroleum Administration for Defense Districts (PADDs)

http://www.cpc.ncep.noaa.gov/products/forecasts/

0

100

200

300

400

500


Midwest (PADD 2) product supplied of propane1,000 b/d


Midwest propane product supplied in the summer, an indicator of summer fill, was lower in 2017 than in past 5 summer fill seasons

Source: U.S. Energy Information Administration, Midwest (PADD 2) Product Supplied of Propane

22

2012-16 range2012-16 average2017

summer fill season

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=M_EPLLPA_VPP_R20_MBBLD&f=M

0

400

800

1,200

1,600

0

4,000

8,000

12,000

16,000

2013 2014 2015 2016 2017 2018

PADD 1propane product suppliedthousand barrels/month heating degree days

PADD 2propane product suppliedthousand barrels/month heating degree days


Above-trend January 2018 propane product supplies in PADDs 1 & 2 reflected fast-rising HDDs and low start-of-season inventories

Source: EIA Propane Product Supplied; National Oceanic and Atmospheric Administration, Weighted Heating Degree Days

23

0

400

800

1,200

1,600

0

4,000

8,000

12,000

16,000

2013 2014 2015 2016 2017 2018

12

3

45

propane product suppliedheating degree days

propane product suppliedheating degree days

https://www.eia.gov/dnav/pet/pet_sum_snd_a_EPLLPA_mbbl_m_cur.htm

ftp://ftp.cpc.ncep.noaa.gov/htdocs/degree_days/weighted/legacy_files/heating/statesCONUS/

Generally, tariff on the TEPPCO* pipeline sets the ceiling in the Northeast, unless supplies come from overseas, as was the case this past winter

TEPPCO = Enterprise TE Products Pipeline Company LLCSource: EIA, Bloomberg, data through May 25, 2018; Enterprise Products Partners L.P., Effective Tariffs, FERC No. 54.42.0

propane spot pricesdollars per gallon


propane price spreaddollars per gallon

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

$0.90

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

$1.80

Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18

Selkirk, NYMont Belvieu, TX

approx. TX-NY TEPPCO tariff (RS)

Mt. Belvieu to Selkirk spread (RS)

https://www.enterpriseproducts.com/customers/tariff-information/tariff-documents

With heating season over, Edmonton to Conway spread is back to the cost of rail


propane spot pricesdollars per gallon


propane price spreaddollars per gallon

-$0.40

-$0.30

-$0.20

-$0.10

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

-$1.00

-$0.75

-$0.50

-$0.25

$0.00

$0.25

$0.50

$0.75

$1.00

$1.25

Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18

Conway, KS

Edmonton, ABEdmonton to Conway spread (RS)

approx. AB-KS rail (RS)

State Heating Oil and Propane Program (SHOPP) updates• SHOPP is a collaborative program between states and EIA that provides weekly

wholesale and retail prices for heating oil and propane at the state level

• EIA has extended SHOPP (beginning October 2014) to include 14 additional states in propane price data collection

• 10 new states were added to the wholesale propane price survey in 2016. This should be taken into consideration when comparing the average prices for last year (2015-2016 season) for the U.S., PADD 1, PADD 1B, PADD 1C, and PADD 2 averages

• EIA is providing more granular inventory data to states on a weekly basis since the 2016/2017 heating season

• New winter fuels page provides easier access to state-level information: www.eia.gov/special/heatingfuels


http://www.eia.gov/special/heatingfuels


Maps of states participating in Winter Fuels Survey

27

Source: EIA, Heating Oil and Propane Update

http://www.eia.gov/petroleum/heatingoilpropane/

PADD 1dollars per gallon

PADD 2dollars per gallon


Retail propane prices this heating season in PADD 1 and PADD 2 are above prices reported for the same week last year

Source: State Heating Oil and Propane Program, data through March 27, 2018

28

0.00

1.00

2.00

3.00

4.00

Oct Nov Dec Jan Feb Mar

heating oil (2017-18)propane (2016-17)

propane (2017-18)

heating oil (2016-17)

0.00

1.00

2.00

3.00

4.00

Oct Nov Dec Jan Feb Mar


propane (2016-17)

propane (2017-18)



Conway

Mont Belvieu

Rockies & Bakken production flows to Gulf Coast through

Conway

Increasing rail from Canada

Legend= Market hub= Propane pipeline flow= Y-grade pipeline flow= Y-grade & propane pipeline flow = RailProduction to Mont Belvieu

for fractionation and storage

Increasing focus on moving volumes south

PADD 4PADD 2

PADD 1

PADD 3

Marcus HookExports and storage

at Marcus Hook

Increasing Northeast production seeking storage

UT storage dominates PADD 4

Most infrastructure buildout focused on Gulf Coast

more in-region storage at retail level; more rail-

receipt capacity

AZ storage serves PADD 5

Chesapeakebutane exports and

occasional propane imports

Newington, NHNew England’s sole

remaining import terminal

Source: EIA, public company filings

Propane-oriented infrastructure getting more complex / diversified

Tampa terminal occasionally ships and receives


HGL pipeline Throughput (1,000 b/d) Start

To CanadaMariner West 50 2013 Q4Utopia East 50 2018 Q1To U.S. Gulf CoastATEX 125 2014 Q1ATEX expansion 25 2017 Q4UMTP 430 2019+To overseas export marketsMariner East 70 2015 Q3Mariner East II 275 2018 Q3Mariner East IIx 250 2019 Q2To local marketTeppco 60 2014 Q1Cornerstone 100 2016 Q4Falcon (Shell) 107 ±2020Source: EIA, company filings and public announcements

Projects to ship HGL out precede development of in-region demand

Presenter

Presentation Notes

Proposed pipelines would ship purity as well as mix ATEX – Enterprise Products – in service. Max capacity 125 kb/d, but generally runs only at committed volumes. Pipeline too expensive for producers to use unless they have to, so acts as a disposal outlet for ethane when pipeline gas gets too hot (btu/scf above pipeline limits). Centennial pipeline, currently unutilized, was designed to bring refined products into the Midwest from the Gulf Coast. Proposed by Enterprise and Marathon to flow south, taking unfractionated liquids out of the Appalachian production region to the Gulf coast for fractionation and marketing UMTP – Utica-Marcellus-Texas Pipeline is a proposal by Kinder Morgan to reverse one of the four pipes currently in their Tennessee Gas Pipeline system. The TGP, designed to carry natural gas from the Gulf Coast to the Northeast, is underutilized. One of the lines is proposed to be reversed, and to carry unfractionated NGPL to the Gulf Coast. Maximum capacity set at 430 kb/d, though proposed to start at approximately 150 kb/d Mariner East – Sunoco – ethane/propane batch system, a repurposed pipeline that carried products from the Sunoco refinery inland. Refinery is gone. After over a year of permitting delays, pipeline can now carry both products. Nearly all volumes move to export markets. Ethane committed to Ineos and later, to Borealis, both in Scandinavia operating petchem crackers. Propane also generally moves to Europe, though some goes to Caribbean and one VLGC went all the way to Australia Mariner East II is a mixed and purity system. Sunoco/Energy Transfer is building a fractionator at Marcus Hook. The company is also building an export facility for condensate + natural gasoline, and is expanding its Marcus Hook terminal. No stated daily or monthly capacity, but recently the terminal has added capability to load VLGCs and has a stated loading rate of 25,000 b/hr – enough to load a full VLGC in less than a day. Mariner West – Sunoco - ethane to Sarnia for petrochemicals at Nova’s Corunna, ON cracker Kinder Morgan Utopia East – ethane, propane, and possibly butane to Sarnia, Canada for petrochemicals Kinder Morgan Utopia West – natural gasoline and condensate to Western Canada as diluent TEPPCO – existing pipeline that carried propane and butane from the Gulf Coast (along with other products). Still does. But now also has spur that allows for injection of propane in Houston, PA for shipment north as far as Selkirk, NY (near Albany) Mountaineer NGL storage facility – up to 4 million barrels of new capacity Proposed PDH and fractionator at Marcus Hook Potential for 2 more crackers – now more, not less, likely, since Shell’s move will spur infrastructure and ancillary industry development that will benefit other entrants into the market: the clustering effect Export terminal Sunoco Marcus Hook702014/2016(propane in 2014, ethane in 2016) Ethylene Shell Monaca 962020 Q1 Odebrecht902020+ PTT Global/Marubeni902020+ Propane Dehydrogenation (PDH) Sunoco Marcus Hook30? (2018-2020) Mixed-fuel power plant Moundsville Power82017 Q3

-50

0

50

100

150

200

250

2010 2011 2012 2013 2014 2015 2016 2017 2018

PADD 1 net receipts of propane by modethousand b/d


PADD 1, now a major producer, is both a source of supply and a major consumer of propane

Source: EIA, Movements by Tanker and Barge between PAD Districts, Movements of Propane by Rail between PAD Districts, Movements by Pipeline between PAD Districts

31

net receipts by bargenet receipts by rail

net receipts by pipeline

https://www.eia.gov/dnav/pet/pet_move_tb_a_EPLLPA_BMV_mbbl_m.htm

https://www.eia.gov/dnav/pet/pet_move_rail_a_EPLLPA_RAIL_mbbl_m.htm

https://www.eia.gov/dnav/pet/pet_move_pipe_a_EPLLPA_LMV_mbbl_m.htm

For more informationU.S. Energy Information Administration home page | www.eia.gov

State Energy Portal | www.eia.gov/state

Winter Heating Fuels Site | www.eia.gov/special/heatingfuels/

Movements of Propane by Rail | http://www.eia.gov/dnav/pet/pet_move_railNA_a_EPLLPA_RAIL_mbbl_m.htm

Today in Energy | www.eia.gov/todayinenergy

Short-Term Energy Outlook | www.eia.gov/steo

Energy Explained – Hydrocarbon Gas Liquids | http://www.eia.gov/energyexplained/index.cfm?page=hgls_home

Annual Energy Outlook | www.eia.gov/aeo

International Energy Outlook | www.eia.gov/ieo

Monthly Energy Review | www.eia.gov/mer

U.S. Energy Information Administration 32

http://www.eia.gov/

http://www.eia.gov/state

http://www.eia.gov/special/heatingfuels/

http://www.eia.gov/dnav/pet/pet_move_railNA_a_EPLLPA_RAIL_mbbl_m.htm

http://www.eia.gov/todayinenergy

http://www.eia.gov/steo

http://www.eia.gov/energyexplained/index.cfm?page=hgls_home

http://www.eia.gov/aeo

http://www.eia.gov/ieo

http://www.eia.gov/mer

Propane Markets Overview · 2018-06-13 · Jan Mar MayJul Sep Nov Jan Mar Jul Sep Nov. 5-year...

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