And Yet Another Story Involving The Bakken: Propane; A Must-Read For Those Interested In The Bakken

I can't remember if I posted the story about farmers being short of propane to dry their corn, and yet, until I heard that story, I thought there was a huge surplus of natural gas liquids in the US. Some thought it was due to exports.

This is why I love RBN Energy. I consider it a "must-read" for folks interested in the Bakken. Even if their posts are not always about the Bakken specifically, there is almost always something that helps one understand the energy revolution in the US, of which the Bakken is a huge part. And despite the subject, this one is about the Bakken.

Today, RBN Energy provides a great background story to the "shortage" of propane.

Corn drying in the Midwest is finally wrapping up, but farmers and grain elevators are still short of propane supplies even after emergency orders were imposed by several Midwestern governors. The shortage has contributed to a spike in propane prices and the Conway, KS market jumped above Mont Belvieu last week for the first time since February 2011. 

But, there is more to the story.   The upper Midwest is enjoying the largest bumper crop of corn in the record books, and due to recent weather it is “wet” corn needing more drying, thus more propane.  With the U.S. “bumper crop” of propane from processing shale gas flooding the market, you might wonder why there is a problem.  Clearly the answer is logistics – having the barrels at the right place at the right time.  And that’s the reason for more concern when we get to next year.  Because one of the primary propane supply conduits to the Midwest – Cochin pipeline - goes away in early 2014.  Today we start a series to look at what’s going on with Midwest propane and how that market is likely to change when Cochin is reversed and turned into a diluent pipeline.

Later:

Crop drying is an important seasonal source of demand for propane.  Like 90% of all propane in the U.S., most of the supply that feeds Midwestern farmers moves by pipeline at some point in its journey to end users.  A lot of that propane supply comes from Conway, KS the #2 NGL hub in the U.S. that feeds propane up to the Midwest market.  In addition, these days there is a lot more propane coming into the corn drying market via rail and truck from Bakken production in North Dakota.  And Canadian production has traditionally supplemented U.S. supplies coming in from Alberta.