Again, A Reader Is Ahead Of The Buzz -- Propane -- August 12, 2021

This is pretty cool. This from RBN Energy today:

RBN Energy: propane exports continue to pull US inventories lower.

The EIA report on propane inventories that came out yesterday was a shocker. This time of year, stocks are supposed to be building toward the levels needed to get U.S. propane markets through the winter season. But the numbers released on Wednesday showed an inventory decline, resulting in inventory balances now below the five-year minimum.

The culprit, of course, is exports, with 1.4 MMb/d of them reported last week, a 17% gain over the year-to-date average. And these cargoes to overseas markets are happening even with propane prices in the stratosphere: more than double where they stood this time last year.

Propane marketers were hoping that higher prices would slow down exports, but so far that is not happening. In today’s blog, we examine U.S. exports of LPG — propane plus butane — and discuss what may be ahead for these markets.

From a reader a few days ago:

There has been SO much hydrocarbon info coming out these past several days, one has a difficult time keeping up.

One of the odder data points came from Energy Transfer's conference call when the CEO said a Memorandum Of Understanding has been reached with the government of Panama to study the feasibility of building propane terminals on either coast of Panama and a pipeline to connect them.

To say I was taken aback would be an understatement, but the more I pondered the current and future scenarios, it actually may make a lot of sense.

Condensed 'story' ...

There are now small fleets of HUGE ships csrrying propane (LPG) non stop to new, HUGE petchem  plants in China and India. 

This is in addition to the robust push for  expanded heating/cooking applications to propane from wood, coal, etc. 

These big ships (using onboard propane for fuel) can 'zip' back and forth reliably from a west coast terminal. 

The LPG can, somewhat, be economically ferried down to the  east coast of Panama from Texas terminals using older, smaller ships that are  increasingly becoming obsolete for longer voyages.

Amazing example of global ripple effect that has its origins in the free market economy and adventurous risk takers like Harold, et al.

US Overtakes UAE To Become Biggest LPG Supplier To China -- Platts -- October 3, 2020

Link to S&P Global Platts.

This is huge, absolutely huge. Think back twenty years. Did anyone see this coming? 

And in the big scheme of things, no one knows this.

Upodate On Propane Shortage -- November 5, 2019

Updates

November 9, 2019:

Original Post

Wettest September on record in North Dakota? Propane seems to be the big story in North Dakota right now.

• today, from Reuters: scramble for propane marks Mother Nature's -- this is not global warming -- latest challenge for US farmers --  what little I know -- this was not supposed to happen with global warming -- that was all about droughts
• yesterday: propane shortage the latest challenge for farmers; "energy emergency"; but the story is everywhere -- it looks like there are two stories -- first the propane that is needed by farmers to dry their harvest; and the early winters in the upper midwest, to include Wisconsin, Michigan, Iowa. One state governor has declared a "propane emergency." Global warming? Hardly. Apparently propane is becoming an issue for Californians affected by the wildfires. 
• what I find most interesting about this, this shortage was all predicted back as early as July, 2019
• from two days ago:

Propane, two stories:

• back in July, 2019, farmers were warned
• two days ago, propane delivery crisis plagues the midwest
• do you remember this story, from December, 2013? the US propane shortage
• from an earlier post, just a couple of days ago -- 
• RBN Energy: don't bank on a boring propane market this winter.
  

  U.S. propane production has been on the rise for most of 2019, but propane consumption by steam crackers has been reined in by poor economics, and propane exports have been constrained by export-capacity shortfalls. That’s led to a big buildup in propane inventories, which stand at near-record levels as the market prepares for a winter heating season that is forecasted to be milder than normal. So we’re in for only a modest draw on propane stocks between now and spring, right? Not necessarily. There’s change in the air regarding propane supply, cracker demand and export capacity and, as we learned in the balmy winter of 2016-17, the U.S. propane market isn’t nearly as dependent on the weather as it used to be. Today, we assess recent market developments and explains why a big decline in propane stocks is a real possibility.

  Propane is an NGL purity product that has two primary uses: as a fuel (mostly for heating, but also for cooking and crop drying, and occasionally for cars, trucks and buses) or as a feedstock for petrochemical plants (steam crackers to make ethylene, or propane dehydrogenation -- PDH -- plants to make propylene). Propane also has two primary sources of supply: refineries and natural gas processing plants, the latter of which separate out mixed NGLs from natural gas streams. These mixed NGLs from processing plants (also known as y-grade) then are sent to fractionators, where y-grade is divvied up into what are called “purity” products (ethane, propane, normal butane, isobutane and natural gasoline). The Shale Revolution has enabled the U.S. to produce more than enough propane to meet its own heating and petchem needs, and to become a major exporter of propane.

Map Time -- August 23, 2019

Remember that Pembina / Kinder Morgan story earlier this week? Quick: what was the most important "word" in that story? Hint: it was a hyphenated word. From the link:

Pembina Pipeline, based in Calgary, is snapping up Kinder’s Canadian assets and a cross-border pipeline in a $3.3 billion deal. For Houston-based Kinder, the deal completes an exit from a country that has frustrated more than a few companies -- from ConocoPhillips and Royal Dutch Shell to Marathon Oil.

Yup: cross-border. Those easements are nice to have.

Anyone wonder where that pipeline crosses the border? Look no further:

Buried in this Reuters article that no one is talking about:

The Cochin pipeline can carry 95,000 barrels per day of U.S. condensate - an ultra-light oil - into Alberta to dilute the heavy crude it produces. Reversing that pipeline would ease constraints on Canadian export pipelines, and Dilger said the company may consider that option. 

Wow, I love this blog.

Now to find that 44-mile pipeline carrying propane from a natural gas processing plant in central McKenzie County to "Andeavor/Belfield."

This is a map of the natural gas processing plants in North Dakota. The article said that the pipeline originated at a natural gas processing plant in "central McKenzie County." That's possible but there is no such plant "44 miles" from Belfield. However, there is a natural gas processing plant exactly "44 miles" from Belfield in central Dunn County.

It matters not at all. The exercise was undertaken to remind / re-acquaint readers of the location of natural gas processing plants in North Dakota.

By the way, where is the 60-well Long Creek Unit that CLR is developing?

How Much Propane Would A Propane Skimmer Skim If A Propane Skimmer Could Skim Propane? -- August 22, 2019

See this post for background: propane unit trains from Fryburg, ND, to Mexico.

A reader asked me a question I could not answer, so I am posting it to see if readers have the answer.

Two questions:

• does anyone know how the propane is getting to Fryburg in the first place: rail, pipe, truck?
• regardless of how it gets there, does anyone know from where the propane is coming (from throughout the Bakken; predominantly from wells in the local area)?

***********************************************

The Answer

Again, the question: how is propane getting to Fryburg for those 100-car unit trains?

The short answer: a 44-mile pipeline from a natural gas processing plant in central McKenzie County to to a fractionation complex near Belfield formerly known as the Andeavor Logistics Belfield Complex or something to that effect. 

Wow, I'm getting burned out, lazy, or senile -- or a combination of all three.

I posted the above note/question earlier this evening and then went to bed about 10:00 p.m. -- I was exhausted -- actually not exhausted but that's another story for another time ...

I woke up shortly after midnight and had my answer. A regular reader of the blog said the answer was here:

Andeavor to invest $150 million in Belfield, ND, NGL Logistics Hub -- February 19, 2018.

LOL. Are you kidding?  That's what the reader wrote me.

I had completely forgotten.

Several other links continue the story, all of which I knew at one time and all of which I probably blogged and all of which I have forgotten.

I'm too tired to put together the story, so just the links for now, but I think it pretty much paints the story to answer the reader's question above:

• a new pipeline proposed by Andeavor Logistics would transport growing volumes of natural gas liquids from the core of the Bakken to a rail terminal west of Belfield. The company, formerly known as Tesoro Logistics, has applied to the North Dakota Public Service Commission to construct 44 miles of new pipeline in McKenzie, Billings and Stark counties. -- February 20, 2018
• Andeavor (ANDX) 3Q18 earnings conference call, Motley Foot, November 7, 2018
• MPLX to acquire ANDX Logistics LP, May 8, 2019
• Andeavor Logistics sale expected to close without issue, July 1, 2019

Okay, so that's a start. So much more, but let's move on to a note that I just received from a reader at 1:06 a.m. CT (it's now 1:11 a.m. CT):

Having some fun with a twist on the RBN Energy report of propane riding the rails from the Bakken to Mexico, after sending the following to a friend (see below), a further bit of potential irony occurred to me:

If unit trains are being loaded with Bakken crude in Fryburg, in all likelihood the facility would also include or be close to the required pre-treater to remove the offending volatiles such as propane, before the tankers give Bakken crude a ride down the rails.

Wouldn't putting that propane right into Mexico-bound tankers be the right thing to do, since crude not propane is the bad guy on the block?

How many tankers would a crude skimmer skim, to fill a tanker with the skimmed propane skimmings?

How much propane would a propane skimmer skim if a propane skimmer could skim propane?

The note this reader sent to his friend:

Just read that, in May, 2019, the first 100-car train of propane-filled tanker cars made its way from the Bakken in ND to its destination in Mexico. Since then, three more such unit trains have made it.

Pardon me, Sir, but it kinda, sorta strikes me that, after the media couldn't get enough replays of tankers with Bakken crude in flames and off their rails squeezed into their news cycles, it was revealed that ND's Bakken crude was more volatile than other crude.

Is it really out on a limb to say that oil that will burn has the desired quality?

But, no matter. The stoked fears, public and political reaction called for "North Dakota" crude to be pre-treated,---in effect, somewhat "denatured"---prior to shipment, as if the crude itself was the demon that had made itself burn and explode. Well, the time and cost of pre-treatment must have taught Bakken crude a lesson.

Can't remember when I saw the last tanker of ND Bakken crude in flames. So,---Thank goodness!---the fire from tankers being side-swiped, slipping off sagging rails undercut by a stream, or taking a trip to town without an engine or conductor wasn't the result of human error or mechanical failure.

Note, when crude rises or is brought to the surface from great depths, some of its components, no longer under other than atmospheric pressure to stay bound to the oil, separate and "bubble up" as natural gas, which also has liquid and gas components, one of which is propane. Like the crude oil, propane derives some market value from its inflammability. And, in an engine, also from its ability to explode with great force.

So, let's see if I have this straight. Propane is one of the components that must now be removed from ND crude by pre-treatment, in order to make crude safe to put in tanker trains for shipment. And such volatile component as has been removed from crude is now being put in enough tankers to make up at least 4 unit trains of 100 cars each, all making the trip from Fryburg, ND, to Mexico, without a fire or explosion.

Conclusion: Teaching ND crude oil a lesson has paid off. 

Wow,  I love the milliondollarway blog. I just wish I could remember what I've posted. LOL

But, again, the best thing from all this: feedback from the readers. 

This note and derivatives of this note will be posted and re-posted for awhile.

It is simply too rich (pun intended) to forget. 

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.]

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

Peak oil? What peak oil? oilprice rewrites Global Witness article with headline that "US will drown the world in oil." Global Witness is an international NGO established in 1993 that works to break the links between natural resource exploitation, conflict, poverty, corruption, and human rights abuses worldwide -- according to wiki. Wiki states the organization does not have any political affiliation. I'm resisting posting links, etc. but I've given up. Good, bad, or indifferent, it's an interesting article -- I'll re-post as a stand-alone.


Headline at Rigzone today, no links:

• GoM leases: 
• BHP, largest bid; $42 million; 20 tracts
• Anadarko: $23 million; 14 tracts
• Chevron: $23 million; 17 tracts
• Equinor: $17 million; 23 tracts
• BP: $15 million; 21 tracts
• Pipe: Pembina to buy Kinder Morgan's Canadian unit and the US portion of the Cohin Pipeline system; $3.3 billion
• Alberta: extends oil output cuts to end of 2020

Fracking sector disappoints: 2Q19 -- Rigzone staff --

A review of 29 fracking-focused oil and gas companies revealed “meager” cash returns in the second quarter of 2019.

The report, which was carried out by Sightline Institute and the Institute for Energy Economics and Financial Analysis (IEEFA), noted that only 11 of the 29 companies under review registered positive free cash flows and that the 29 companies combined generated $26 million in aggregate free cash flows.

These aggregate free cash flows were said to be “far too modest to make a significant dent in the more than $100 billion in long-term debt owed by these companies, let alone reward equity investors who have been waiting for a decade for robust and sustainable results”.

***********************************

Back to the Bakken

Only one well coming off the confidential list today -- Thursday, August 22, 2019: 60 for the month; 107 for the quarter:
35935, conf, XTO, Badlands Federal 21X-13H, North Fork,
Active rigs:

$56.13	8/22/2019	08/22/2018	08/22/2017	08/22/2016	08/22/2015
Active Rigs	64	62	52	32	76

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.]

Mexico: Keeping North Dakota Great -- August 19, 2019; Part 2 -- August 22, 2019

RBN Energy: the economics of Bakken-to-Mexico propane unit trains, part 2. Archived. Part 1 was here. August 22, 2019

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.]

RBN Energy: unit trains now delivering US propane to Mexico. Archived. August 19, 2019

In May 2019, Twin Eagle Liquids Marketing shipped a 100-car train filled with propane from North Dakota to Mexico, marking the first-ever single-commodity train — i.e. “unit train” — between the Bakken and the U.S.’s southern neighbor. As it turns out, it was also the first of what appears to be a regularly scheduled run to Mexico. Since May, three more unit trains have made the journey south from the Bakken’s first unit train terminal for propane. Rail shipments of propane to Mexico as part of mixed-goods trains aren’t new, but figuring out how to economically ship large quantities of propane via unit trains has long evaded NGL marketers and producers — that is, until now. What are the economics and other factors that finally made it possible, and what are the prospects and challenges ahead for unit-train exports to Mexico? Today, we look at how the first all-propane train to Mexico came to pass and what the outlook might be for these shipments to continue.

Eleven Wells Coming Off Confidential List This Weekend, Today -- Monday, August 19, 2019

Not on my radar scope: if one just read the mainstream media, one would never know -- this caught me by surprise -- US petroleum demand strongest since 2007. Just the other day, the US SecEnergy said the oil and gas industry kept the US out of a recession ... don't know if the sector will delay the next "recession that is right around the corner," but if delayed, it will be because of the US oil and gas sector. Even on twitter, the so-called experts are mostly talking gloom-and-doom. It gets tedious. From Rigzone staff, data points:

• year-to-day, July, 2019: total US petroleum demand average its strongest level since 2007
• total petroleum demand: 20.8 million bopd
• 0.9 percent year-on-year increase
• highest demand for the month of July since 2005
• July, 2007: 20.4 million bopd
• US oil supply and NGLs remained near record levels in July at 12 million bopd and 4 million bpd, respectively
• US oil production: 12.2 million bpd
• US crude oil exports: a new all-time high of 3.3 million bpd

Canada: needs more export outlets. From Rigzone, data points:

• Canada, 4th largest oil producer in the world: 5.2 million bopd in 2018
• represents a 65% gain over the last decade (Hubbert peak oil theory?)
• Alberta: 80%
• Saskatchewan: 10%
• for first time since 2010, oil sands (crude bitumen) exceeded conventional supply
• oil sands accounts for 65% of Canadian production
• exports 80% of the oil it produces, most of it goes to the US
• and again, a reminder how Obama killing the Keystone changed everything: 

Over the past decade, U.S. oil imports from Canada have risen almost 75 percent. In fact, Canadian oil is critical for the U.S. because the country’s refining system is configured to process these heavier grades. In 2018, for instance, Canada accounted for half of total U.S. crude oil imports and nearly a quarter of U.S. refinery crude oil intake.

Water: remember that pop quiz some time ago, in which we asked which "uses" more water -- conventional vertical wells or tight, horizontal, fracked wells. Here it is again, from oilprice: conventional wells use 10-times the amount of water that fracked wells use. Again, those stories about all the water fracked wells needed turned out to be fake stories meant to destroy the US shale revolution. Readers were never duped by these stories; they knew that US golf courses used much more water than the fracking industry. and in the Bakken, the amount of water taken from Lake Sakakawea was inconsequential. In fact, during much of the Bakken boom, the Missouri River often flooded the oil fields. Whatever.

Pop quiz: by the way, I never did answer the rock-and-roll pop quiz of a few days ago. I'll do that later today.

*******************************

Back to the Bakken

Wells coming off the confidential list over the weekend, today -- Monday, August 19, 2019: 44 for the month; 91 for the quarter:

• 34156, 1,995, Oasis, Aagvik 5298 14-26 14TX, Banks, t3/19; cum 115K 6/19;

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	6-2019	30	32336	32320	24683	94842	75120	19422
BAKKEN	5-2019	31	31059	31011	25288	89829	88496	1023
BAKKEN	4-2019	30	23898	23762	25611	67781	64615	2866
BAKKEN	3-2019	31	27921	27785	31844	76744	73266	3478
BAKKEN	2-2019	0	0	0	0	2158	1776	252

Sunday, August 18, 2019: 43 for the month; 90 for the quarter:

• 3593, SI/NC,XTO, Badlands Federal 21X-13C, North Fork, no production data;
• 35602, SI/NC,XTO, Cole Federal 44X-32D, Siverston, no production data,
• 35538, 1,833, CLR, McClintock 8-1H1, Pleasant Valley, t2/19; cum 117K 4/19:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	6-2019	30	22245	22340	23008	41922	41228	290
BAKKEN	5-2019	31	27757	27372	29607	42155	39865	1874
BAKKEN	4-2019	30	37674	37739	40642	55270	25213	29669
BAKKEN	3-2019	19	18869	18827	25922	26858	10007	16610
BAKKEN	2-2019	9	10618	10246	15647	14223	4089	10134

• 35349, SI/NC, Hess, RS-State D-155-92-0203H-5, Alger, no production data, 
• 34791, SI/NC, WPX, Sweet Grass Woman 22-15H, Spotted Horn, no production data,  
• 34764, SI/NC, MRO, Jocelyn 14-36TFH, Killdeer, no production data,  
• 32400, SI/NC, Slawson, Atlantis Federal 2-34-35H, Big Bend, no production data,  

Saturday, August 17, 2019: 36 for the month; 83 for the quarter:

• 34790, SI/NC, WPX, Sweet Grass Woman 22-15HZ, Spotted Horn, no production data,  
• 32467, SI/NC, BR, CCU Boxcar 8-8-22MBH, Corral Creek, no production data,  
• 26804 (no typo -- it's really that old), SI/NC, XTO, Cole Federal 44X-32H, Siverston, no production data,  

Active rigs:

$55.15	8/19/2019	08/19/2018	08/19/2017	08/19/2016	08/19/2015
Active Rigs	61	59	53	32	74

RBN Energy: unit trains now delivering US propane to Mexico. Archived.

In May 2019, Twin Eagle Liquids Marketing shipped a 100-car train filled with propane from North Dakota to Mexico, marking the first-ever single-commodity train — i.e. “unit train” — between the Bakken and the U.S.’s southern neighbor. As it turns out, it was also the first of what appears to be a regularly scheduled run to Mexico.

Since May, three more unit trains have made the journey south from the Bakken’s first unit train terminal for propane.

Rail shipments of propane to Mexico as part of mixed-goods trains aren’t new, but figuring out how to economically ship large quantities of propane via unit trains has long evaded NGL marketers and producers — that is, until now. What are the economics and other factors that finally made it possible, and what are the prospects and challenges ahead for unit-train exports to Mexico? Today, we look at how the first all-propane train to Mexico came to pass and what the outlook might be for these shipments to continue.

Note, tag, LPG_By_Rail: 

Propane is LPG but not all LPG (LP) is propane. ... Propane is classified as LPG (LP), along with butane, isobutane and mixtures of these gases. LPG comes from natural gas processing and oil refining. LPG is frequently used for fuel in heating, cooking, hot water and vehicles.

California LPG: reposting. From March 30, 2017 --

California's production of propane and butane continues to decrease; the decrease in production is offset by an increase in rail shipments. This is an interesting story for the archives with regard to many, many story lines. EIA data points:

• many, many story lines including CBR; the state's fossil fuel regulatory environment
• total US production of propane and butanes (liquified petroleum gases - LPG) increases to over 2 million bopd
• increased in all regions of the country except for the West Coast
• unlike other regions, West Coast LPG production has been decreasing since 2010, driven by declining refinery production
• production in the region totaled 80,000 bopd in 2016, 10,000 less than in 2010
• as a result, rail shipments have become a growing means of transporting LPG to the region
• the amount of LPG production in the US has surged (except along the West Coast)
• West Coast import/export data: the increased ability to transport LPG by rail has allowed Western Canadian producers, who can no longer ship LPG by pipeline to the Midwest following the repurposing and reversal of a key pipeline, to ship more LPG to the West Coast, where it can then be exported to overseas markets
• the West Coast has only one major LPG export terminal; it accounts for nearly all overseas LPG exports
• as LPG exports continue to increase, two other terminals on the West Coast have been proposed, but the permitting phase of development is not finished yet

Propane And Butane -- LPG -- Bakken 101 -- June 22, 2017

I track the US LPG export story here. This is truly an incredible story. I remember posting stories about the "great propane shortage" some years ago which was a huge problem for North Dakota farmers who were at risk of losing their crop because they could not dry what they had harvested. That was back in 2013 - 2014, and it was such a big story, it got its own tag. In less than five years, an incredible difference, all due to the Bakken.

From today's RBN post:

Propane and butane — the two natural gas liquids (NGL) products generally referenced as LPG — are produced by the processing of natural gas yielding mixed NGLs and the fractionation of those NGLs into purity products.

Refineries also produce LPG.

U.S. production of propane and butane has skyrocketed during the Shale Era, largely because of rising production of wet natural gas, which contains significant volumes of NGLs.

As result, the U.S. five years ago flipped from its long-time status as a net LPG importer to a net exporter.

By 2016, net U.S. exports had risen to an average of 855 Mb/d, more than 15 times the exporting pace in 2012, and in the first six months of this year, LPG exports averaged just above 1.0 MMb/d.

Where is all this LPG headed?

A lot of it is headed for Asia. In 2016, Asian markets were the destination for 372 Mb/d (or 44%) of the 855 Mb/d exported from the U.S., and so far in 2017 Asia’s share has risen to 50%; Latin America (excluding Caribbean) is second (22% of total exports in 2017 year-to-date), Europe is third (14%), and exports to the Caribbean (receiving 9% of the U.S. exports) account for most of the rest.

The flourishing Gulf Coast-to-Asia LPG trade — 484 Mb/d (51%) of the approximately 950 Mb/d of the propane/butane exported from Texas terminals so far this year went to Asia — was made possible in part by the perfectly timed expansion of the Panama Canal, which with its new, more commodious locks, can now accommodate each and every one of the world’s more than 200 Very Large Gas Carriers (VLGCs), which can carry up to 550 Mbbl of LPG and which because of their size and economies of scale are the LPG-movers of choice, especially for serving mega-markets like Japan. Before the expanded canal opened in June 2016, four-fifths of the world’s VLGCs were too big to squeeze through.

By the way, just like The New York Times hoax story on the US natural gas revolution, The New York Times was convinced that the Panama Canal expansion would fail. By the way, my posts on The New York hoax story was one of the top stories I ever posted, based on number of hits and google searches. Whatever.

But what about LPG exports and the Panama Canal?

But transiting the Panama Canal doesn’t come cheap — tolls, tug fees and other charges can top $200,000 per VLGC, and that's just for the one-way trip from Houston to Asia — and it takes about 25 days to make that journey, and time is money.

Which brings us to Petrogas’s Ferndale, WA, export terminal, which thanks to its West Coast location can reach Japanese and other Asian ports in 10 to 12 days — less than half the time it takes to sail from Texas ports, through the canal and across the Pacific.

For most of its 41-year history, Ferndale — located in the northwestern corner of Washington State, an hour’s drive south of Vancouver, BC — was a minor player in the NGL universe, handling small volumes of seasonal refinery butane storage and occasional exports of butane to Latin America and Asia.

Interest in Ferndale grew, though, as U.S. and western Canadian NGL production increased, as the U.S. flipped from being a net LPG importer to a net exporter, and — for Alberta producers in particular — when a portion of Kinder Morgan’s Cochin Pipeline (which moved up to 95 Mb/d of propane and other NGLs southeast from Fort Saskatchewan, AB, to the U.S. Midwest and Ontario) was repurposed to move diluent northwest from Illinois to the oil sands (for blending with bitumen to make dilbit, a diluent/bitumen combo that can flow through pipelines). Without Cochin, western Canadian propane and butane has to be transported by rail or truck into the Midwest or Northeast and, with U.S. NGL production rising fast, it made more and more sense for LPG producers and marketers to pursue export opportunities.

Much, much more at the linked RBN story. Archived.

US Propane Exports -- One Of The Top US Energy Stories Of The Decade -- July 3, 2016

Flashback: I don't know if folks recall, but during the winter of 2013 - 2014, the US was experiencing a severe propane shortage.

Fast forward to summer of 2016: US propane exports are expected -- by the end of this year -- to exceed those of Qatar, Saudi Arabia, Algeria and Nigeria combined.

Back on  April 29, 2016, RBN Energy provided an incredible update of the US propane story -- this is a huge turnaround story in less than three years -- and very few Americans are even aware of it. For me, it has not sunk in, and I follow energy pretty closely (at least superficially). Look at some of the data points:

• US domestic production of NGLs (like propane and butane is soaring
• US liquified propane gas (LPG) exports in the past three years have rocketed to the top
• US exports of LPG now surpasses exports by the old Big Three: UAE, Qatar ("cutter"), and Algeria
• the rise in LPG exports may be ending
• exports from the Gulf coast may be in for a decline
• more propane and butane from the Marcellus and Utica will be re-routed to Marcus Hook, PA
• demand for new propane dehydrogenation plans and flexible steam crackers will be climbing

And this has only just begun. Remember, this turnaround story occurred before the expansion of the Panama Canal. It was just late last month that the first propane-laden "New Panamax" vessel that transited the canal:

RBN Energy: a propane-laden VLGC inaugurates the expanded Panama Canal.

After the $5 billion-plus expansion of the Panama Canal is dedicated this Sunday, June 26, the first “New Panamax” vessel scheduled to pass through the canal’s new, longer, wider locks will be the Lycaste Peace, a Very Large Gas Carrier (VLGC) that is transporting propane from Enterprise Products Partners’ Houston Ship Channel export terminal to Tokyo Bay in Japan.

What remains to be seen, though, is how many other supersized vessels carrying propane, liquefied natural gas (LNG) or other hydrocarbons will follow, and how soon. Today, we mark the formal opening of the newly enlarged Atlantic-Pacific short-cut with a look both at the game-changing potential of the expanded canal and the realities of today’s energy and shipping markets.

For more on how US ports are prepared for the Panama Canal expansion, see this post.

It Just Never Quits -- The Shale Boom's New Winner: Propane -- Headline Story Over At The Wall Street Journal: US Propane Exports To Exceed Those Of Qatar, KSA, Algeria, Nigeria Combined -- July 2, 2016

US exports account for more than a third of the overall market for waterborne shipments of propane. Regular readers of the RBN Energy blog are well aware of this.

And, again, a reminder that Hillary Clinton has announced that she will do to fracking what President Obama has done to coal.

From the linked article:

The U.S. is exporting record volumes of propane, another way in which the shale boom has made the nation a more dominant force in the global energy trade.

Foreign sales are surging as U.S. producers capitalize on higher prices overseas. That in turn is causing U.S. prices to rise, making Fourth of July barbecues a bit more expensive than cookouts a few months ago.

In a first, U.S. oil-and-gas companies are on track this year to export more propane than the next four largest exporting countries combined—OPEC members Qatar, Saudi Arabia, Algeria and Nigeria, which have long dominated the trade.

U.S. exports already account for more than a third of the overall market for waterborne shipments.

Propane exports hit an all-time high of 884,000 barrels a day in February. Platts Analytic projects that a new record was set in May, for which government data isn’t yet available. The exports have been enabled by a new network of pipelines, shipping terminals and tankers that doubled capacity from a year ago.

After the shale boom made propane more plentiful, exports became a widely sought solution because it is much easier to bottle and ship than other fuels. About half of all U.S. exports wind up in Latin America, while the rest goes to northwest Europe and Asian markets. In 2013, the U.S. overtook Qatar as the world’s top propane shipper.

According to the article, propane is a by-product of natural-gas drilling and refining of crude oil. 

And get this, another reference to the Panama Canal expansion:

The dominant U.S. position could benefit further from the expansion of the Panama Canal, which in June completed a $5.4 billion upgrade. That project allows the large ships transporting propane to make faster and cheaper trips to big Asian markets like Japan, China and South Korea.

All this is a welcome development for U.S. oil-and-gas drillers stung by a rout in commodity prices that has led to dozens of bankruptcies. The fuel came up from shale in such overwhelming supply that producers sometimes had to pay customers to take it off their hands.

Now, investors are betting prices will continue to climb. Propane producers and shippers are among the top performing stocks this year.

But, of course, a downside:

Some analysts warn that pipeline owners and shippers may have already overbuilt and will have to lower the rates they charge to win business.

Tudor, Pickering, Holt & Co. called the expanding export infrastructure business “a little like youth basketball, lots of participation trophies but fewer winners.”

Already daily shipping rates have plummeted to as little as $20,000, down from the $120,000 or so it cost last summer, as dozens of new tankers hit the water.

And to think Hillary Clinton wants to ban fracking.

Propane -- The Next Big Story -- November 27, 2015

Updates

June 22, 2017: in less than five years, the US has flipped from next importer of LPG to net exporter, and exports are surging.

Original Post

From crisis to glut in less than a year. 

John Kemp is reporting:

Liquefied petroleum gases (LPG) are the fastest-growing category of hydrocarbon exports from the United States, with volumes up almost four-fold since 2012.

Some data points:

• US propane exports, 2012: 200,000 bbls
• US propane exports, 2015: nearing one million bopd 
• composition: a range of light hydrocarbons to include ethane, butane, and propane, among others; 
• purpose: petrochemical feedstock to residential heating and cooking
• rules: unlike crude oil, LPG is treated as a refined product and can be exported with few restrictions, a position the U.S. Department of Commerce confirmed in 2014
• traditionally, most LPG has been marketed in neighbouring countries, including Canada, Mexico, Central America and the Caribbean
• in 2012, neighbouring countries accounted for 55 percent of all LPG exports, rising to almost 80 percent if South America is included.
• by 2015, however, the total share of LPG exports to other countries in the western hemisphere had dropped to just 53 percent
• exports to Europe, Africa and especially Asia have surged and now account for nearly half of all the LPG shipped abroad
• China has overtaken Canada and Mexico as the most important export market for U.S. LPG, taking more than 24 million barrels, almost 100,000 bpd, in the first eight months of 2015

Much more at the link.

Previous posts of interest:

• US propane exports, October 29, 2015
• propane rejection, July 12, 2015
• propane update, RBN Energy, December 4, 2014
• tight propane supply reaches crisis, February 10, 2014

The North American Energy Revolution -- October 29, 2015

Before we get to the "main story," here's the weekly natural gas story and gasoline demand data:

Natural gas fill (a dynamic link): 63. In the East Region, stocks were 14 Bcf below the 5-year average following net injections of 33 Bcf.

Gasoline demand (a dynamic link): significant upturn, consistent with historical trends; most recent reporting period, 9.343 million bbls vs 9.157 million bbls one week early and 8.867 million bbls one year earlier. The addiction to crude oil is back, driven by low-priced gasoline.

Now back to the main story.

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North American Oil Revolution

Propane

If there's any doubt in anyone's mind that we are witnessing a North American energy revolution, all one has to do is look at this graphic, and look that our propane exports to even Russia are increasing significantly:

But look at what is going on in the far east.

This is a "big story."

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Every Child Left Behind

Speaking of big stories, this is perhaps the saddest story of the week. This is pathetic. This is criminal. This is beyond belief. Should the NEA be brought up on RICO charges? The only way one gets to 96% failure in education is through a concerted, conspiratorial effort. CNS is reporting (becasue mainstream media won't): in the Detroit Public Shool system, nearly every student fails grade-level reading, math:

In the Detroit public school district, 96 percent of eighth graders are not proficient in mathematics and 93 percent are not proficient in reading.

That is according to the results of the 2015 National Assessment of Educational Progress tests published by the Department of Education’s National Center for Educational Statistics.

Only 4 percent of Detroit public school eighth graders are proficient or better in math and only 7 percent in reading. This is despite the fact that in the 2011-2012 school year—the latest for which the Department of Education has reported the financial data—the Detroit public schools had “total expenditures” of $18,361 per student and “current expenditures” of $13,330 per student.

And that's why President Obama wants to get rid of testing. The truth is very, very inconvenient.  President Obama was provided this data last week; on Saturday, President Obama called for less testing.

State expenditure per student (most recent data from 2011 - 2012):

• California: $58,000
• Iowa: $5,000
• Massachusetts: $14,000
• Michigan: $16,000 (Detroit is in Michigan)
• Minnesota: $9,000
• Mississippi: $4,000
• New York: $52,000
• North Dakota: $1,000
• South Dakota: $1,100 
• Pennsylvania: $23,000

I'm not sure if "free college education" is where our attention needs to be in the 2016 presidential race.

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Notes For The Granddaughters

I am now re-reading Edmund Wilson's Memoirs of Hecate County. I am finally ready to read this book. I've tried reading it twice before, giving up both times.

The first story was "The Man Who Shot Snapping Turtles." Very, very creepy and done the right way, it would be an incredibly good Halloween story.

The second story was a very long short story, "Ellen Terhune." It was a "back to the future story," every bit as good as any Stephen King novel. It was perhaps better, being told in 40 pages vs a 400-page Stephen King ghost story.

The stories are clearly based on personalities Edmund Wilson knew.

Words I've added to the list of works for the oldest granddaughter to add to her list of words to learn (for all I know, she already knows some of these) (page number in parentheses:

• sententious (33)
• dolorous (34)
• vicarious (35)
• Canova Hebe (35)
• plangency (51)
• Gorgon-like (52)

Jack Kemp's Weekly Crude Oil, Natural Gas Update Tweets -- September 30, 2015; Propane Stocks -- Already Sky-High -- Hit New Record

California gasoline emergency is over as West Coast stockpiles return to normal levels.

West Coast refineries start to turn down now that gasoline stocks have returned to normal levels.

Propane stocks hit fresh record, residual fuel oil stocks continue to flat line. Comment: the propane charts will all re-set after this year -- it's quite incredible, the US energy revolution.

US distillate stocks flat at 151.6 million bbl but +26 million bbl above 2014 level and +19 million above 10-yr avg.

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For The Granddaughters

I've pretty much completed The Neandertal Enigma: Solving the Mystery of Modern Human Origins, James Shreeve, c. 1995.

This is the second time through the book. I first read it several years ago.

It's not an easy book to read. It reads as if the author simply took all his notes and turned them into a book, sort of a published journal. If one is interested in following the activities of the various paleo-anthropologists in the late 20th century this might be one way to do it. But if one wants to get a better understanding of hominid / hominin evolution, I would simply recommend a wiki read.

The first third of the book on the genetics and the bones was quite good, though difficult to follow on many occasions. The second third on the stone age was somewhat boring, but that's probably "just me." I was never interested in the "three Bs" that defined the Upper Paleolithic: blades, bone tools, and burins (chisel-like implements made by knocking a spall or two off a flake).

I lost all interest by the time I got to the third section which dealt with evidence of tool-making and tool-using in primates other than humans. There is a huge jump between primates using twigs to grab ants and using fire to cook meat. 

I see on Amazon a hard copy of this book is selling for $84.26. If anyone wants to buy my copy for $75, let me know.

Propane 101 -- July 12, 2015

A reader sent me this link for various reasons. It's a good read.

The best part of the article was the explanation by the president of this Canadian oil and gas company with regard to "shutting in" propane.

Unfortunately, the usual solution for low prices – shutting in production and reducing supply – isn’t so easy for propane. The decision is a bit more complex than that, and so some explanation is required.

Starting back in the reservoir, raw natural gas is typically at a temperature and pressure where propane molecules (C3H8) are in gaseous phase – as are the methane (C1H4), ethane (C2), butane (C4), and many of the heavier hydrocarbon chains (C5+).

As this raw gas is produced up the wellbore, the temperature and pressure drops and the heavier hydrocarbons condense into liquid form. What tends to arrive at the low pressure inlet of our gas plants, for example, is a mix of liquid condensates and pentanes, along with gaseous lighter hydrocarbons.

These gases still contain too much of the heavier hydrocarbons to safely consume in our homes, so Peyto has to process the gas (dry it and cool it) to remove the water vapour and condense even more of the heav ier hydrocarbons out of the gas.

Our sales products, at the out let of our facilities, ends up being stabilized condensates, a mixture of pressurized LPG (Liquid Petroleum Gases), and high pressure lean gas. The LPG is a mix of approximately 1/3 Pentane (C5+), 1/3 Butane (C 4) and 1/3 Propane (C3). This LPG mix is then transported to a refinery where it is “fractionated” or distilled into the pure components.

As you would expect, shutting in just the propane because its price is negative, isn’t possible. You’d have to shut in the entire gas stream. Alternatively, warming up your plant process to condense less propane into liquid form (thereby leaving it in the gas phase) also leaves some butane and pentane in gas phase and those products are still worth more as liquids than gases. Plus, at some point, the gas becomes too rich to make lean gas specifications. So the decision of what to do about negative propane prices, like we’ve had in April and May is a much more complex one.

Our solution at Peyto has been to extract all of the more valuable liquids (C4 & C5+) that we can and then try to “push” an optimal amount of the propane back into the gas stream so that we get paid in increased heat content in the gas rather than liquid barrels. This is often referred to as propane rejection.

In order to find that optimal amount, we have to consider all of the component prices and the liquid recoveries at various process conditions. We are looking for the most optimal combination of gas and liquid recoveries which yields the greatest possible revenues.

This optimal combination won’t necessarily yield the greatest combined production volume. But maximum production is not the point, maximum revenue is. As I’ve said before, this is one of the reasons why owning and operating your own processing facilities is so important.

Propane Update, RBN Energy, December 4,2014

Link here for a must-read article for those interested in propane in the midwest.

Three key paragraphs, broken up for easier reading on the blog:

Until last year significant volumes were delivered to the Midwest from terminals along the 50 Mb/d Cochin pipeline that flowed propane south from Edmonton in Western Canada. You can see the path of the pipeline as a dotted grey line on the map in Figure #1 [at the link] with the terminals marked in blue.

This year, with Cochin out of the picture, pipeline deliveries of propane into the region can still be made from the natural gas liquids (NGL) trading hub at Conway Kansas to the south. The Enterprise Products Partners owned Mid America Pipeline (MAPL) ships to Minnesota and Wisconsin from Conway. The NuStar Energy Partners owned Kaneb pipeline ships barrels from Conway into South Dakota, Nebraska and Iowa, and Oneok ships Conway barrels to Nebraska and Iowa.

But all three of these pipelines have limited remaining capacity to take up the slack left by Cochin. And although production of NGL’s in the Bakken in North Dakota and in the Rockies is expanding rapidly, most of that production ends up being shipped to Conway or Mont Belvieu, TX, as “raw-mix” for fractionation so useful quantities of refined propane have to be redelivered to the Midwest from Conway.

With pipeline supplies constrained and local NGL production shipped off for processing in Kansas or Texas, the main propane delivery mechanism replacing the Cochin pipeline is rail shipments. To that end a number of rail terminal infrastructure improvements have been underway this year to help replace Cochin pipeline supplies – including significant projects by CHS Inc, Alliance Energy Services and Hess Corp that we describe next.

CHS Inc. (formerly Cenex Harvest States), the nation’s largest farmer-owned cooperative and a major wholesaler and retailer of propane has invested $24 million in a “Northern Tier Rail Terminals” initiative to build out and expand capacity and storage at 5 rail terminals in North Dakota, Minnesota and Wisconsin. The five terminals are marked with red dots on the map in Figure #1 [at the link].

At Rockville, MN, CHS upgraded an existing BNSF rail terminal operated by Wenner Gas Co. to include 15 MBbl of propane storage and capacity to unload up to 30 rail tank cars a day as well as to load six trucks an hour (each rail tank car holds enough propane to load three trucks).

The Canadian Pacific (CP) served Glenwood terminal in Pope County, MN, has been upgraded to include 32 MBbl of storage, rail unload capability and six trucks an hour loading capacity.

The Fairmont, ND, terminal, served by CP, has 7 MBbl of storage and can unload 10 rail tank cars a day and load 6 trucks an hour. In addition to these upgrades, CHS is building two new terminals.

The first is at Hannaford, ND, dedicated in September 2014 and served by both BNSF and CP railroads. The terminal will have a rail loop accommodating dedicated 110 tank car unit trains and be able to unload 48 railcars at a time as well as 24 MBbl of storage.

The second new CHS terminal, being built at Hixton, WS, is due online in mid-November 2014 and will be served by the Canadian National railroad with 9 MBbl of storage, 32 rail cars a day unload capacity and two truck racks that can load 6 trucks an hour.

At the link, some neat graphics, including a map of the CHS terminals. 

ONEOK, Wearing The White Industrial Helmet, Rides To The Rescue

Several readers, citing multiple sources, reported the following yesterday. I was too tired to post earlier. For background to the story, search "propane" on the blog, and for even better background, search "propane RBN" on the blog.

From Seeking Alpha:

• ONEOK Partners moves to reverse the flow of a key propane pipeline to help supplies reach the Conway, Kan., storage hub and ease a shortage of the heating fuel suffered by millions in the Midwest and Northeast. 
•  Conway has the second-largest propane storage hub in the U.S., where propane prices spiked recently to nearly $5/gal. as demand soared due to the record-breaking freeze; prices have since dropped to ~$2.50 but remain far above the $1.75 traded earlier this month before the freezing weather settled in. 
• The filing will become effective February 6, but OKS does not say when, or even whether, it would actually reverse the line. 

The request requires FERC approval; it will be interesting to see how fast the FERC can react. I'm not holding my breath. 

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Video

My wife loves movies. I enjoy a few select movies.

I recently bought a three-disc Blu-Ray issue of The Girl With The Dragon Tattoo ($8 at Target; cash, no credit card). The movie was very, very good. I will indeed watch it several times. In addition to the movie, it comes with commentary by the director and an additional four hours of supplemental material.

I asked my wife if she had seen the movie. She said she had not. She said our older daughter loved the book. Both my wife and I started the book but did not finish.

My wife told me that when the movie first came out she was interested in seeing it but after reading the reviews, she decided not to go. She could not remember the specifics, but perhaps it was because of the "severe" scenes.

She was absolutely entranced by the movie last night. It is incredibly long, and, yes, it is quite severe, but probably nothing compared to a graphic battlefield documentary.

My wife and I both agree that Rooney Mara was "robbed" of the Academy Award for Actress in a Leading Role; she lost to Meryl Streep, who simply was a "cover" for Margaret Thatcher that year. 

The US Propane Shortage In The Winter, 2013 - 2014; The Story Behind The Price Spike In Propane; Merry Christmas -- Half Of US Already Covered In Snow -- Sets Record

Updates

February 8, 2014: the government steps in. Orders EPD to prioritize propane shipments to the midwest.

February 7, 2014: human toll due to propane shortage; human interest story out of Missouri. The Los Angeles Times is reporting:

KNOB NOSTER, Mo. — From a bay window in her home on the prairie, Angela Hostetler stares out at the six huge chicken barns out back. They hold 156,000 chickens, and when she and her husband, Mardy, purchased the farm two years ago, it seemed like a good investment.

But this year, the Hostetlers are struggling. That's because their barns, which must be kept at 85 degrees to keep young chickens warm, are heated by 12 1,000-gallon tanks of propane, which are now covered in icy snow.

Propane prices have tripled this year, and the Hostetlers have stopped using propane to heat their home. Now they plug in electric space heaters to counter the 15-degree cold in this unusually brutal winter.

Still, their last propane bill was $26,000, and that covered just a month of fuel. Because of the cold, they've been using more fuel than usual to keep the barns warm. The Hostetlers estimate they'll spend at least $70,000 on propane this winter. Last year's tally: $30,000.

"It's really scary, you don't know how you're going to pay for it," said Hostetler. "It makes you panic when you get those bills." She says the family has considered taking out a loan to pay for propane.

Original Post

For background to this story, see also:

• January 23, 2014, The Duluth News, after the original post; no mention of the Cochin pipeline
• January 22, 2014, The Dickinson Press, after the original post
• November 11, 2013: propane shortage for farmers
• November 29, 2013: the propane story gets more and more interesting

Regular readers saw this coming. I knew some of the story but not all of it.

Now this story sent in by a reader fills in some of the background why propane prices are spiking. The AP via Yahoo!Finance is reporting:

Several states in the upper Midwest are dealing with significantly higher prices for propane because of a supply problem caused by a late harvest, persistent very cold temperatures and the temporary shutdown of a major supply pipeline.

The problem began in October and November when farmers across the Midwest took to the fields to harvest the late developing corn crop before the cold weather set in. Much of the crop was still wet and needed to be run through propane powered dryers to avoid spoilage, creating a surge in demand for the fuel.

And as colder than usual temperatures arrived early in the Upper Midwest, demand for propane increased. The liquefied petroleum gas is used to heat homes in rural Midwestern areas where there are no natural gas lines. About 15 percent of Iowa households rely on propane for warmth.

"We came out of a crop drying season that really took a toll on the amount of volumes available in the industry," said Drew Combs, vice president of propane for Minnesota-based CHS Inc., one of the nation's largest wholesalers. "Now we're looking at a situation where we have a very large demand because of the extremely cold weather ... and it is looking to last into January." 

It may be worse next year:

To compound the issue, a major pipeline was shut down from Thanksgiving to Dec. 18, further reducing the availability of propane in the Upper Midwest.

The 1,900-mile Cochin pipeline carries propane southeastward from Canada, through North Dakota and Minnesota, across northeast Iowa and into eastern Illinois. Its owners, Kinder Morgan Energy Partners, shut the pipeline down to install new pumps that would reverse the pipeline's flow early next year. Instead of bringing products such as propane from Canada, the company plans to move a petroleum product called light condensate from Illinois to Alberta, Canada, where the product is in high demand and more profitable. It is used to dilute bitumen — thick oil taken from Canadian oil sands — so it can be transported.

Minnesota, which gets about 40 percent of its propane from the pipeline, was hit hard by its closure, which forced propane suppliers to send trucks to northern Iowa terminals for fuel. Add additional traffic from North Dakota, South Dakota, and Wisconsin to the Iowa terminals and the stress on Iowa's propane supply became a serious issue, said Harold Hommes, an energy analyst for the Iowa Department of Agriculture and Land Stewardship. 

This repurposed pipeline will have far-reaching consequences:

The propane industry is preparing for the long-term loss of 50,000 barrels per day the Cochin pipeline provided. Kinder Morgan plans to shut down propane transport early next year as the pipeline is repurposed.

Combs said CHS is building railroad terminals in Minnesota, North Dakota, and Wisconsin and is significantly increasing rail car leases to transport more propane to areas that will see a loss when the pipeline shuts down.

Farmers and the retailers that sell them propane likely will need to increase storage capacity for propane to ensure they have a 10- to 14- day supply on hand, Combs said.

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US Snow Record

Merry Christmas

The Washington Post is reporting:

Last week, snow covered more than half of the continental United States, the highest this measure has reached by this date in a decade, according to government scientists.

As of Dec. 15, snow covered 53 percent of the Lower 48, the National Oceanic and Atmospheric Administration (NOAA) reported. That’s a significantly higher portion than in recent years. In 2006, for example, snow covered just 12 percent of those states on the same date, according to Climate Central, a climate news Web site.

November and early December have also been quite chilly for much of the country, below the 20th-century average, Climate Central noted. “With the noteworthy exception of Alaska, nearly every state was affected by the unusually cold air at some point during the November-to-December timeframe,” Climate Central reported.

What’s going on?

An unusual configuration blah, blah, blah, but it's not a sign that global warming is going away blah blah blah...

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.