Northeast Propane Update

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While consumers across the Nation are experiencing higher petroleum product prices due in part to rising crude oil prices, propane consumers in the Northeast have seen regional supply issues add to overall price pressures. Residential propane in New England has risen to $3.28 per gallon, while Central Atlantic prices, at $3.37 per gallon, are the highest in the Northeast. Prices in the region have risen over 45 cents per gallon since the start of this heating season, compared with a 29-cent increase in Midwest prices (where the residential propane heating market is much larger). Prices in New York State, where the supply disruption is centered, have grown by 56 cents over the heating season.

As reported in the November 10 edition of This Week In Petroleum, propane supply into New York State and the Central Atlantic and New England regions was disrupted earlier in the season due to an outage on the Enterprise TE Products Pipeline (TEPPCO) that brings propane into the Northeast through New York State. The pipeline failure occurred downstream of the Watkins Glen, NY terminal, which was able to remain operational, but pipeline flows to the Harford Mills, Oneonta, and Selkirk, NY terminals were curtailed. Rail and truck shipments from outside the region, as well as waterborne imports into Providence, RI and Newington, NH, have thus far sustained propane stocks in the Northeast while portions of the pipeline remain out of service. In fact, propane stocks in New England fell to just 39,000 barrels in mid-October, prompting companies to utilize truck and rail shipments from outside the region much earlier than typical to rebuild supply. The ongoing supply chain issues warrant monitoring, as there is potential for supply difficulties as we move deeper into the winter.

Cold weather in the Northeast during December translated into 5 consecutive stock draws in the Central Atlantic, while New England stocks fluctuated during the month. New England propane inventories were 0.7 million barrels on December 31, 72 percent above the 5-year average, while Central Atlantic inventories, at 1.6 million barrels, were 20 percent below the 5-year average (Figure 1). Central Atlantic stocks are almost 34 percent higher than levels seen two years ago when inventories in that region stood at historically low levels.



Currently, product transportation issues in the region are more pressing than relative stock levels. Enterprise has successfully completed hydrostatic testing of the portion of the pipeline between Watkins Glen, NY and Marathon, NY and received regulatory approval to resume operation from the Pipeline and Hazardous Materials Safety Administration (PHMSA). Enterprise expects that pipeline flow of propane to the Harford Mills, NY terminal should resume on January 5. While loadings at this terminal had already resumed after Enterprise trucked product in from other areas, Harford Mills has capacity to load only 2-3 trucks per hour, leading to long wait times for truck drivers. Since Federal and State regulations limit the number of hours drivers may be on duty, including time spent in loading terminal queues, propane dealers in some States have sought driver hours-of-service waivers to help ease distribution.

Enterprise is continuing its hydrostatic testing of the pipeline east of Marathon. The company currently estimates, pending regulatory approval, that pipeline service to the Oneonta, NY terminal will recommence during the week of January 3, while service to the Selkirk, NY terminal may resume the week of January 10. However, these dates may change if further delays occur.

Source: U.S. Energy Information Administration



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