Frac Spread: Midwest Propane Price Responds To Cold, Crops

Conway’s price draws almost even to Mont Belvieu as demand for home heating competes with grain drying.

grain

(Source: Shutterstock)

The price spread for propane between Mont Belvieu, Texas, and Conway, Kan., narrowed to less than half a cent per gallon (gal) last week as shrinking Midcontinent storage and high demand for the fuel to dry grain resulted in a shortage of supply in the region.

Conway propane has trended steadily higher since mid-August and is now 66.1% higher, which was the low for the year. At that time, the Mont Belvieu premium was about 8 cents/gal.

A late harvest has been complicated by ongoing colder than normal temperatures. That placed propane demand for home heating in competition with demand for grain drying and prompted Wisconsin Gov. Tony Evers to declare an energy emergency in late October. Another challenge: ONEOK’s propane pipeline has experienced outages and deliveries to Midwest customers have been almost two weeks behind.

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Joseph Markman

Joseph Markman, senior editor for Hart Energy, covers markets and provides data analysis for all Hart Energy editorial products.