NPGA webinar covers crop progress, propane supply forecasts

The National Propane Gas Association (NPGA) held an “agricultural outlook” webinar in August. Participants spoke about the progress being made with the corn crop and the potential for crop drying gallon needs come the fall harvest. They also presented propane supply forecasts.

Mike Newland, director of agriculture business development for the Propane Education & Research Council (PERC) and a webinar participant, says: “The 2022 corn planting season started with a fizzle. We were late planting again due to rains, and everybody started flashing back to 2019. We are not looking at a 2019 usage as far as propane goes across the country. But we did have delayed planting in a lot of the country. We turned dry after that, and some of the states have remained dry and others have gotten unusually wet as the year has gone on.”

According to NPGA in late August, corn development – buoyed by hot and dry weather – caught up to the five-year average, suggesting average moisture content. The association shares the U.S. Department of Agriculture’s crop progress report at npga.org. PERC also offers a grain drying demand model, an online tool that helps propane marketers gauge propane demand and best serve their agriculture customers.

Regional supply forecasts

Rusty Braziel of RBN Energy presented a propane inventory update. Here’s a breakdown of his report by PADD districts.

PADD 1 (East Coast)

The propane supply situation in the Northeast is “looking OK,” according to Braziel. RBN Energy is forecasting inventory above the five-year average in 2022 but below 2021 levels, falling near the bottom of the five-year range in early 2023. U.S. exports from the East Coast addressing war-inflicted energy shortages in Europe are impacting stocks in this region. “They’re looking for anything that will burn as we get into the winter,” Braziel says of the demand across the Atlantic Ocean.

PADD 2 (Midwest)

Propane supply in the Midwest is in better shape than initially expected, but two developments cause some concern for this winter, according to Braziel. A July fire idled ONEOK’s natural gas liquid (NGL) fractionator in Medford, Oklahoma, potentially pushing barrels from the Midwest market to Mont Belvieu for fractionation. The plant can process 210,000 barrels per day (bpd) of NGLs. In addition, a new propane dehydrogenation plant in Alberta, Canada – part of Inter Pipeline’s petrochemical complex – will take 20,000 bpd of propane out of Canadian imports into the U.S.

PADD 3 (Gulf Coast)

Robust exports will keep propane supplies tight in this region, near the bottom of the five-year range, explains Braziel. But since most inventories in the Gulf Coast support fractionation operations and exports, “we really don’t expect a problem unless something crazy happens to the weather,” he says.

PADDs 4, 5 (Rocky Mountains and West Coast)

Propane supplies in the Rockies are in good shape, forecasted near or above the five-year average this year and early next, says Braziel. In California and the Pacific Northwest, refinery runs are a constant concern. Refinery utilization has been around 85 percent, he says, but if refiners have problems this winter, it’s a long way on the supply chain with rail cars to get replacement barrels to the region. “We’re going to be watching that very carefully,” he adds.

NPGA will host a webinar Sept. 7 focused on the industry’s preparation for peak demand.