EIA: Propane inventory levels decline due to exports

March 20, 2017 By    

Graphic courtesy of the Energy Information Administration

U.S. propane inventories declined by 59 million barrels from October 2016 through early March 2017, according to the U.S. Energy Information Administration (EIA).

This marks the largest decline on record for this period, despite unseasonably mild temperatures. Previously, propane inventories had been above historical norms since May 2014, EIA says.

Inventories at the beginning of October 2016 were nearly 29 million barrels above the previous five-year average. By March 3, inventories fell to slightly below the preceding five-year average for the first time since May 2014, based on data from EIA’s Weekly Petroleum Status Report. The strong inventory draws occurred despite weak heating demand this winter, which mainly reflects rapid growth in propane exports.

Because of the seasonal pattern in propane consumption, propane inventories tend to peak between late September and mid-October and fall to their lowest levels in March. As of March 10, the inventory draw this winter was nearly 23 million barrels larger than the draw during the 2015-16 winter and 19 million barrels larger than during the 2013-14 winter, according to EIA.

Although domestic propane consumption has remained flat, U.S. exports of propane have continued to increase, EIA reports. Rising production and lower seasonal heating demand the past two winters have made propane more available for export. U.S. propane is exported to many countries where it is used as a petrochemical feedstock, for transportation fuel and space heating. However, most of the growth in U.S. propane exports serves the growing demand from the expanding petrochemical sector in Asia.

The past four years, new and expanded export terminals and a growing shipping fleet increased U.S. capacity to export propane, EIA says. In November 2016, Phillips 66 opened a Gulf Coast export terminal capable of sending 150,000 barrels per day (bpd) of propane or butane. Monthly propane exports were 1.05 million bpd in December 2016, the first month that propane exports exceeded 1 million bpd.

Megan Smalley

About the Author:

Megan Smalley is the associate editor of LP Gas magazine. Contact her at msmalley@northcoastmedia.net or 216-363-7930.

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