Economics Of Bakken-To-Mexico Propane Unit Trains -- RBN Energy -- August 22, 2019

RBN Energy: the economics of Bakken-to-Mexico propane unit trains, part 2. Archived. Part 1 was here.

In May 2019, the first-ever propane unit train from the Bakken to Mexico reached its destination, and since then, three more of these 100-car, single-commodity “bulk” trains have made the same trip. Facilitating these shipments by Twin Eagle Liquids Marketing is Marathon Petroleum Corp.’s (MPC) unit train-loading terminal in Fryburg, ND, which was initially set up to load crude oil but was recently expanded to handle propane too. And soon, the terminal in Torreón, Mexico, that has been receiving these unit trains will have a new loop track too, enabling producers and marketers to take full advantage of the bulk transport option. Today, we look at the economics and challenges of this relatively new propane export route.

As we discussed earlier, Mexico’s need for propane — widely used for cooking and heating water — is on the rise, even as local supply has been dwindling. That’s boosted propane imports to the country, including from the U.S. and Canada in recent years. While most of those imports come to Mexico via ship (~52% or 83 Mb/d in 2018) or are trucked across the U.S.-Mexico border (33 Mb/d or 21%), a good portion (29 Mb/d or 18%) of it is railed in. [Only 14 Mb/d, or less than 10%, of it was transported via pipeline last year, owing to the limited pipeline capacity and routes available to reach key markets in interior Mexico.]