FERC OKs pipeline tariff changes to aid Midwest propane needs

The Federal Energy Regulatory Commission (FERC) accepted two oil pipeline tariff amendments aimed at helping to move propane to the Midwest.

Propane demand in the Midwest has soared in recent weeks, as farmers faced an extremely wet harvest combined with an early blast of winter-like weather that required propane use for space heating.

Both ONEOK North System (ONEOK) and Enterprise TE Products Pipeline Co. (Enterprise TE) said they had received requests from shippers for the changes after the start of the alternative dispute resolution (ADR) process initiated by FERC last month to alleviate propane pipeline constraints in Midwestern states.

FERC Chairman Neil Chatterjee announced the ADR process on Nov. 19, and the pertinent parties met on Nov. 25. Both companies filed their requests on Nov. 26, and FERC issued notices Nov. 27, with a shortened comment period that ended Dec. 4. FERC accepted the pipeline tariff changes on Dec. 5.

In the ONEOK case, FERC approved a revised pipeline transportation capacity allocation policy allowing shippers to transfer allocated capacity to other shippers through the end of this month, and to receive credit to their allocation history for barrels moved by replacement shippers. In the Enterprise TE case, the company is extending emergency transportation service of propane to the Midwest region. The company had received requests from third-party shippers to continue propane service to Monee, Illinois, for a period of time beyond the original date on which it intended to terminate the service. The service will continue until canceled or modified by Enterprise TE.

Steve Kaminski, president and CEO of the National Propane Gas Association, addressed the issue in the association’s NPGA Reports newsletter.

“With respect to supply logistics in the Midwest, on Nov. 25 I attended an alternative dispute resolution process at the Federal Energy Regulatory Commission (FERC) where pipelines undertook certain actions to assist: Enterprise will extend its transportation of propane into Chicago and ONEOK has temporarily waived its restrictions against qualified shippers transferring allocated capacity to one another. We have a follow-up meeting with FERC, Enterprise, ONEOK and other interested parties in mid-December to assess conditions and needs,” he writes.

FERC says it continues to monitor the Midwest propane situation, and the ADR process is continuing.

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