Doha, Minneapolis and Key West add perspective to issues

March 1, 2012 By    

This approach may sound a bit like what I did on my summer vacation. However, since 2012 is shaping up to be one for the record books in so many ways, I thought the added perspective from my industry travels might be of interest.

Doha, Qatar
Last fall I attended the 25th World LP Gas Forum along with a few other hardy U.S. participants.

A 16-hour direct flight from Houston into a hot and mostly humid environment makes one wonder if a better spot could have been selected. However, this tiny emirate country, friendly to the United States, is soon to be one of the world’s largest producers of natural gas and natural gas liquids (NGLs). These volumes will be destined for the thirsty markets of China, Japan and Indonesia, among other Asian destinations.

A second revelation for me was the extent of the Asian growth for NGLs. In just one example, a speaker summarized the Indonesian government’s successful 10-year plan of converting from primarily a kerosene consumer to a natural gas liquids consumer for its 250 million people. This is yet another example of the rapid double-digit growth that drives world propane prices.

While attending the winter convention of the Minnesota Propane Gas Association in January, I was reminded of the hardiness of people in this region.

These descendants of Sweden, Norway and other Scandinavian and Baltic nations continue to have pride in their cold weather, in being outdoors in the cold weather and in having their largest convention in the cold weather. It was lively and well attended.

I learned that natural gas is attempting to encroach on the propane markets in a number of ways. For example, delivered liquefied natural gas (LNG) is making efforts to access the largest corn-dryer demands. It is an economic-driven effort that points out the remarkable Btu value distinction between propane and natural gas. Further, we are hearing of local natural gas distribution companies expanding to smaller villages that are primarily propane-fueled.

Despite these types of industry challenges, Minnesotans continue to be one of the most positive groups that I have encountered in my travels.

Key West, Fla.
Given the tough sledding our industry faces, the NPGA winter board meeting at the end of January was remarkably well attended, with strong representation across the retail propane industry.

One propane industry veteran from Wasilla, Alaska, was noted for having traveled the farthest and for experiencing the greatest temperature change (from a high of minus-18 degrees in Wasilla to 76 degrees in Key West – a variance of 94 degrees).

Most attending were looking for facts and insight, and I don’t believe they went home unsatisfied. Co-sponsored by PERC, the International Committee of NPGA conducted strong supply, demand and transportation seminars. Measured by attendance, quality of speakers and information provided, the event was highly successful. A robust question-and-answer session – if not cut off – might still be in session.

The speakers remarked that the current dynamics of the energy world are changing so fast that forecasting deep into the future is very challenging. This seminar is available in its entirety on the NPGA website ( and well worth the time to review.

In closing, I pass along an insight into an ongoing industry question that continues to perplex: Just why are propane prices so high? A good clue comes from a recent industry report that quoted global delivered values of propane as: Rotterdam $944, Mediterranean $934 and South China $1,002. All are reported in U.S. dollars and metric tons. This equates to a price of $1.81, $1.79 and $1.92, respectively, per U.S. gallon. From a global perspective, Mt. Belvieu propane looks quite cheap.

For those who care to know the simple conversion math, divide the dollar per ton by a factor of 521 to equate to the value of propane per gallon in U.S. dollars.

About the Author:

Comments are currently closed.