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DIGITAL EDITION
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THIS WEEK'S TOPIC:
CANADIAN PROPANE EXPORTS
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Destinations evolve due to values, infrastructure |
The focus of last week’s Trader’s Corner was Canadian propane inventory, which is setting five-year lows for this time of year. As we pointed out, a big reason is increased exports by Canadian producers.
The latest Canadian export data is available through May. It shows that Canada exported about 2.3 million barrels more propane to the United States during the first five months of 2019 than it did during the same period last year.
Click to enlarge. Image: Cost Management Solutions
Prior to March 2017, that would have been the end of the story because all Canadian propane exports were destined for the U.S. But, weak values in the U.S. had Canadian producers looking for other markets, which they found in Mexico.
Click to enlarge. Image: Cost Management Solutions
The chart above shows the evolution of those exports over the last three years. In 2017, non-U.S. destined exports tallied 1.9 million barrels. That amount more than doubled in 2018 to 4.4 million. Exports have been 3.5 million through May of this year, putting them 1.8 million barrels higher than through the same five months last year.
Combined U.S. and non-U.S. propane exports from Canada have been more than 4 million barrels higher through May of this year than they were a year ago.
There was a question coming into this year if Canadian producers would continue to be aggressive in moving barrels into the U.S. with a new waterborne export facility coming available. That question has been answered in the affirmative.
The Ridley Island Propane Export Terminal (RIPET) is located in Prince Rupert, British Columbia. The facility is operated and 70 percent owned by AltaGas. AltaGas entered a multi-year deal with Astomos Energy Corp., a Japanese company, to purchase at least 50 percent of the propane shipped from RIPET annually.
The facility started taking propane in mid-April and its first shipment departed on May 23. It is expected that nearly 15 million barrels of propane will be shipped from RIPET to Asian customers each year. Those exports should start showing up in the next data released by Canada’s National Energy Board (NEB).
Fifteen million barrels of exports represents about 27 percent of last year’s 55.8 million-barrel total. So now the question becomes will the new export facility simply open the door for more propane production in Canada such that the exports to the U.S. and Mexico will be unchanged or will the new waterborne exports take barrels from either Mexico, the U.S. or both?
It will take a few months of data from the NEB to start answering that question. What is certain is that the flexibility will be good for Canadian producers and potentially increase their netback if increased production does not offset all of the new capacity. That would mean values in the U.S. Midwest could have to improve to compete for Canadian supply in the future.
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WHAT IS COST MANAGEMENT SOLUTIONS?
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The Propane Price Insider is an email service that provides:
- Three daily price Flash Wires
- Periodic option quotes
- Wednesday inventory data updates around 11 a.m. ET
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Evening report with executive summary, weather maps and complete review of energy prices that are based on propane's Btu equivalent
For a free 10-day trial subscription by email, sign up online here or call 888-441-3338.
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Cost Management Solutions LLC (CMS) is a firm dedicated to the analysis of the energy markets for the propane marketplace. Since we are not a supplier of propane, you can be assured our focus is to provide an unbiased analysis.
Contact us today to see if you can benefit from having the Energy Price Watchdog working for you.
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Many retailers simply don't have time to analyze the large amounts of data to make an informed purchasing decision.
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