EIA: Propane inventories reach all-time high

Inventories of propane and propylene reached 97.7 million barrels in the United States on Sept. 11, according to the U.S. Energy Information Administration (EIA).

This is the highest level of propane inventory in the 22 years EIA has collected weekly propane inventory data.

In the first six months of 2015, U.S. propane and propylene inventories were 24.3 million barrels higher on average compared to the same period in 2014. Additionally, production of propane at natural gas plants was 31.3 million barrels, or 172,000 barrels per day (bpd), higher during the first six months of 2015 compared with the same 2014 period. Exports increased by 33.3 million barrels, or 182,000 bpd, over the same period.

Inventories began to increase this year in mid-February, which is more than six weeks earlier than the historical average, according to EIA. With domestic consumption relatively flat, growing propane production at natural gas processing plants contributed to this year’s strong inventory build, while also supplying more propane to the global market. Expanding shale gas and tight oil development continue to be the main drivers of propane production growth, with refinery propane production remaining relatively constant.

EIA reports it expects propane and propylene inventories to reach a high of 99.1 million barrels by the end of September to start the heating season. EIA also anticipates stronger-than-average inventory draws beginning in the fourth quarter, as gas plant production slows and exports continue to expand.

Natural gas plant production of propane, which reached a monthly high of 1.13 million bpd in April, is forecast to decline slightly in the first quarter of 2016 before rising to 1.19 million bpd by the fourth quarter next year. EIA projects net exports, which reached a monthly high of 518,000 bpd in April, to continue to increase and reach 702,000 bpd in the fourth quarter of 2016.