Help is on the way for crashing propane prices.
The Mariner East 2 pipeline, called a game-changer at the recent Marcellus-Utica Midstream Conference in Pittsburgh by Amol Wayangakar, principal and founder of Enkon Energy Advisors, will ultimately increase the Marcus Hook terminal’s export capacity by 275,000 barrels per day (bbl/d). Sunoco says the pipeline is on schedule to go online in second-quarter 2018.
Local opposition may delay Mariner 2 until the third quarter, says En*Vantage Inc., but the effect will be the same: an anxious market will wonder if propane will be available in sufficient quantities for winter 2018-2019. Result: upward pressure on prices.
At the moment, however, the pricing pressure is downward for NGL in general. The hypothetical NGL barrel at Mont Belvieu, Texas, dipped below $30 for the first time in five months as the prices for butanes have plunged 24.3% (butane) and 16.5% (isobutane) since the start of the year. During the past five-day price-tracking period, the Mont Belvieu margin for butane narrowed by 10.3% and the margin for isobutane narrowed by 7.73%.
Mont Belvieu propane has dropped 15.3% since the start of the year, with the price at Conway, Kan., down 23.8% during that time. Mont Belvieu’s price is its lowest since early September and Conway’s dropped below 70 cents per gallon (gal) for the first time since August.
With half of winter in the rearview mirror, En*Vantage sees propane markets as more relaxed about the adequacy of supply for the remainder of the season. More than that, the analysts say, is the effect from falling prices in Northwest Europe and Asia since mid-November. En*Vantage estimates that the U.S. must export 600,000 barrels per day (bbl/d) to avoid a winter oversupply. With Europe experiencing its fourth-warmest January on record, propane demand for heating would naturally decline. Russia, incidentally, has been hit with very low temperatures at various times this winter.
In the week ended Feb. 9, storage of natural gas in the Lower 48 experienced a decrease of 194 billion cubic feet (Bcf), the U.S. Energy Information Administration reported, more than the Bloomberg consensus of a 187 Bcf draw and well above the five-year average of 154 Bcf. The figure resulted in a total of 1.884 trillion cubic feet (Tcf). That is 23.4% below the 2.461 Tcf figure at the same time in 2017 and 18.7% below the five-year average of 2.317 Tcf.
Joseph Markman can be reached at jmarkman@hartenergy.com and @JHMarkman.
Recommended Reading
Exxon’s Guyana Gas Project a “Win-Win,” Set for Hook-up by Year-end ‘24
2024-04-26 - Exxon Mobil Corp. CEO Darren Woods said the company’s gas-to-power project in Guyana as a “win-win proposition particularly for the people of Guyana” when completed and hooked-up by year-end 2024.
Segrist: The LNG Pause and a Big, Dumb Question
2024-04-25 - In trying to understand the White House’s decision to pause LNG export permits and wondering if it’s just a red herring, one big, dumb question must be asked.
Texas LNG Export Plant Signs Additional Offtake Deal With EQT
2024-04-23 - Glenfarne Group LLC's proposed Texas LNG export plant in Brownsville has signed an additional tolling agreement with EQT Corp. to provide natural gas liquefaction services of an additional 1.5 mtpa over 20 years.
US Refiners to Face Tighter Heavy Spreads this Summer TPH
2024-04-22 - Tudor, Pickering, Holt and Co. (TPH) expects fairly tight heavy crude discounts in the U.S. this summer and beyond owing to lower imports of Canadian, Mexican and Venezuelan crudes.
What's Affecting Oil Prices This Week? (April 22, 2024)
2024-04-22 - Stratas Advisors predict that despite geopolitical tensions, the oil supply will not be disrupted, even with the U.S. House of Representatives inserting sanctions on Iran’s oil exports.