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www.eia.govU.S. Energy Information Administration Independent Statistics & Analysis
Propane Markets Overview
For2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
ByWarren Wilczewski, Industry EconomistOffice of Petroleum, Natural Gas, and Biofuels Analysis
EIA’s revised monthly data tables for HGL affect all natural gas liquids (alkanes) and refinery olefins (olefins)
2
Natural Gasoline
Ethane
+Ethylene (net refinery
production only)
Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
Liquefied Petroleum Gases
-ethane -ethylene-propane -propylene-n-butane -n-butylene-isobutane -isobutylene
Pentanes Plus
Ethane/Ethylene
Propane
+Propylene
Propane/ Propylene
Normal Butane
+Normal
Butylene
Normal Butane/ Normal Butylene
Isobutane
+Isobutylene
Isobutane/ Isobutylene
Alkanes = Natural Gas Liquids
Olefins = Refinery Olefins
propane n-butaneisobutane
Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
Various days-of supply/disposition measures
Note: *disposition = domestic product supplied + exportsSource: U.S. Energy Information Administration, Weekly Petroleum Status Report, data through June 1, 2018 For more information, please see EIA’s webinar on Propane Market Indicators and Measures of Supply Adequacy
U.S. weekly stocks of propanedays of supply & disposition
3
0
20
40
60
80
100
120
140
Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18
days of supplydays of disposition*days of supply under severe winter conditions
PADD REGIONS
1B2
3
45
1C
1A
0.0
0.2
0.4
0.6
0.8
1.0
Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-185-year range inventory level rolling 5-year Avg
PADD 1A (New England) propane inventories above the 5-year averagePADD1A propane* inventoriesmillion barrels
Source: EIA, Weekly Petroleum Status Report, data through June 1, 2018 *propane/propylene for fuel use only
Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC 4
0
1
2
3
4
5
Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-185-year range inventory level rolling 5-year Avg
PADD 1B (Mid-Atlantic) propane inventories above the 5-year averagePADD1B propane* inventoriesmillion barrels
Source: EIA, Weekly Petroleum Status Report, data through June 1, 2018 *propane/propylene for fuel use only
Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC 5
PADD REGIONS
1B2
3
45
1C
1A
0
5
10
15
20
25
30
Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-185-year range inventory level rolling 5-year Avg
PADD 2 (Midwest) propane inventories within the 5-year rangePADD 2 propane* inventoriesmillion barrels
Source: EIA, Weekly Petroleum Status Report, data through June 1, 2018 *propane/propylene for fuel use only
Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC 6
-10
-8
-6
-4
-2
0
2
4
6
8
10
Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18
inventory level (difference from 5-year average)
PADD 2 (Midwest) propane inventories below 5-year-average levelsPADD 2 propane* inventories, difference from 5-year averagemillion barrels
above5-year average
below5-year average
7Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
Source: EIA, Weekly Petroleum Status Report, data through June 1, 2018 *propane/propylene for fuel use only
0
4,000
8,000
12,000
16,000
20,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Kansas propane stocksthousand bbls
5-year range Year ago inventories 5-year average
0
1,500
3,000
4,500
6,000
7,500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Michigan propane stocksthousand bbls
5-year range Year ago inventories 5-year average
0
500
1,000
1,500
2,000
2,500
3,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Illinois, Indiana, Ohio propane stocksthousand bbls
5-year range Year ago inventories 5-year average
0
200
400
600
800
1,000
1,200
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Iowa, Minnesota, Wisconsin propane stocksthousand bbls
5-year range Year ago inventories 5-year average
Selected state propane* inventories
Source: EIA, Weekly Petroleum Status Report, data through June 1, 2018
8Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
*propane/propylene for fuel use only; inventories include stocks at terminals, gas plants, and refineries only
0
10
20
30
40
50
60
70
Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-185-year range inventory level rolling 5-year Avg
PADD 3 (Gulf Coast) propane inventories within the 5-year rangePADD 3 propane* inventoriesmillion barrels
Source: EIA, Weekly Petroleum Status Report, data through June 1, 2018 *propane/propylene for fuel use only
9Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
-40
-30
-20
-10
0
10
20
30
40
Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18
inventory level (difference from 5-year average)
PADD 3 (Gulf Coast) propane inventories below the 5-year averagePADD 3 propane* inventories, difference from 5-year averagemillion barrels
above5-year average
below5-year average
Source: EIA, Weekly Petroleum Status Report, data through June 1, 2018 *propane/propylene for fuel use only
10Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
0
1
2
3
4
5
6
7
8
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov
5-year range5-year average
2016
20172018
propane inventories in Western Canada propane inventories in Eastern Canada
Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
Propane inventories in Canada coming into the heating season were at record highs. While rail challenges tapered ability to deliver out of W. Canada, E. Canadian inventories dropped to 5-year lows at close of winter
Source: Canada’s National Energy Board, May 16, 2018
11
million barrels
2018
2016
2017
Propane spot prices above same time last year; Conway, KS discount to Mt. Belvieu, TX averaging ~15¢/gal since end of heating seasonPropane spot prices (Conway, KS and Mont Belvieu, TX)dollars per gallon
Source: EIA, Bloomberg, data through May 25, 2018
12Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
0.00
0.20
0.40
0.60
0.80
1.00
1.20
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
Conway
Conway(2017-18)
Mont Belvieu(2016-17)
Mont Belvieu(2017-18)
This Season(2017-18)
Last Season(2016-17)
-15
-10
-5
0
5
10
15
20
25
2010 2012 2014 2016 20180
50
100
150
200
250
2010 2012 2014 2016 2018
U.S. propane and Brent Dated crude oil prices$/MMBtu
propane spot prices$/U.S. gallon
Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
U.S. propane prices return to historical trend relative to crude and international market propane prices
Source: EIA, Bloomberg, data through May 25, 2018
13
Dated Brent crude price
U.S. propane spot price
U.S. propane premium to Brent crude oil
U.S. propane discount to Brent crude oil
Far East (Japan & Singapore)Northwest Europe
Saudi Aramco Contract
U.S. Gulf Coast
-10
0
10
20
30
40
50
60
-20
0
20
40
60
80
100
120
-5
5
15
25
-20
0
20
40
60
80
100
120
Mont Belvieu Propane Spot Prices¢/U.S. gallon
propane spot prices$/U.S. gallon
Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
Not all price spikes are created equal: some are caused by market imbalances rather than product shortages
Source: EIA, Bloomberg, data through May 25, 2018
14
Mt. Belvieu Propane (ETP)
Mt. Belvieu Propane (non-ETP)
ETP vs. non-ETP spread
Mt. Belvieu non-ETP
Conway
North/South spread
U.S. propane exports by destinationthousand b/d
With expanding capacity and volumes, U.S. exports are reaching more distant foreign markets, with bulk of exports now going to E. Asia
Source: U.S. Department of Commerce, EIA
0
200
400
600
800
1,000
1,200
2011 2012 2013 2014 2015 2016 2017 2018
Annualized
Refrigerated Export CapacityNon-Ref Export Capacity other
AfricaMiddle East
East Asia
EuropeSouth AmericaCaribbean & Central America
MexicoCanada
15Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
EIA’s price projection for crude oil suggests a decline through the forecast horizon, affecting petroleum product prices
Source: Short-Term Energy Outlook, May 2018, and CME Group.
16
0
20
40
60
80
100
120
140
Jan 2017 Jul 2017 Jan 2018 Jul 2018 Jan 2019 Jul 2019
Historical spot priceSTEO price forecastNYMEX futures price95% NYMEX futures upper confidence interval95% NYMEX futures lower confidence interval
Note: Confidence interval derived from options market information for the 5 trading days ending May 3, 2018. Intervals not calculated for months with sparse trading in near-the-money options contracts.
West Texas Intermediate (WTI) oil pricedollars per barrel
U.S. propane production, imports, and stock draw U.S. propane consumption, exports, and stock build
Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
Projected production growth drives increased export volumes as well as return to inventory builds
Source: Short-Term Energy Outlook, May 2018.
17
2014 2015 2016 2017 2018 2019
stock draw
imports
refinery production
ngpl production
0.00
0.25
0.50
0.75
1.00
1.25
1.50
1.75
2.00
2.25
2.50
2.75
2014 2015 2016 2017 2018 2019
stock buildexportsdomestic consumption
million barrels
U.S. propane inventoriesmillion barrels
deviation from normal%
Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
After two years of significant draw-downs, EIA projects propane stocks to slightly build and return to 5-year average levels
Source: Short-Term Energy Outlook, May 2018.
18
-120%-100%-80%-60%-40%-20%0%20%40%60%80%100%120%
-120-100
-80-60-40-20
020406080
100120
Jan 2014 Jan 2015 Jan 2016 Jan 2017 Jan 2018 Jan 2019Note: Colored band around storage levels represents the range between the minimum and maximum from Jan. 2013- Dec. 2017.
Corn crop planted% progress, by week
Corn crop emerged% progress, by week
Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
Corn crop nearly all in the ground; emerged progress currently tracking a half-week behind last year
Source: USDA National Agricultural Statistics Service
19
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Apr.Week 2
May.Week 1
May.Week 4
Jun.Week 2
Jul.Week 1
2013
2009
2018
2016
2015
2017
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Mar.Week 4
Apr.Week 3
May.Week 2
May.Week 5
Jun.Week 3
2013
2009
2018
20162015
2017
0
100
200
300
400
500
600
700
800-2.00
-1.50
-1.00
-0.50
0.00
0.50
1.00
1.50
2.002012/13 2013/14 2014/15 2015/16 2016/17 2017/18
El Niño Region 1+2 Sea Surface Temperature (SST)departure from normal (Co)
average heating season propane product supplied1,000 b/d
Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
El Niño – Southern Oscillation (ENSO) conditions in El Niño Region 1+2 are a reliable predictor of propane heating in PADDs 1 and 2
Sources: U.S. Energy Information Administration; National Oceanic and Atmospheric Administration
20
El N
iño
| La
Niñ
a
SST departure from normal ■PADD 2 propane product supplied■PADD 1 propane product supplied
NOAA’s projected temperatures: October – December 2018, and January – March 2019
• Early in the heating season NOAA projects above-normal temperatures all across the country with the exception of the South Atlantic region, where temperatures are expected to be within NOAA’s 30-year normal range
• Further into the heating season, above-average temperatures are expected throughout the west, with equal-chance of above/below normal stretching across much of PADDs 1 and 2, as well as eastern PADD 3
21Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
A = temperatures above normal
N = equal chance thattemperatures are above normal, normal, or below normal
B = temperatures below normal
Source: NOAA, May. 17, 2018
12
3
45
Petroleum Administration for Defense Districts (PADDs)
0
100
200
300
400
500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Midwest (PADD 2) product supplied of propane1,000 b/d
Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
Midwest propane product supplied in the summer, an indicator of summer fill, was lower in 2017 than in past 5 summer fill seasons
Source: U.S. Energy Information Administration, Midwest (PADD 2) Product Supplied of Propane
22
2012-16 range2012-16 average2017
summer fill season
0
400
800
1,200
1,600
0
4,000
8,000
12,000
16,000
2013 2014 2015 2016 2017 2018
PADD 1propane product suppliedthousand barrels/month heating degree days
PADD 2propane product suppliedthousand barrels/month heating degree days
Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
Above-trend January 2018 propane product supplies in PADDs 1 & 2 reflected fast-rising HDDs and low start-of-season inventories
Source: EIA Propane Product Supplied; National Oceanic and Atmospheric Administration, Weighted Heating Degree Days
23
0
400
800
1,200
1,600
0
4,000
8,000
12,000
16,000
2013 2014 2015 2016 2017 2018
12
3
45
propane product suppliedheating degree days
propane product suppliedheating degree days
Generally, tariff on the TEPPCO* pipeline sets the ceiling in the Northeast, unless supplies come from overseas, as was the case this past winter
TEPPCO = Enterprise TE Products Pipeline Company LLCSource: EIA, Bloomberg, data through May 25, 2018; Enterprise Products Partners L.P., Effective Tariffs, FERC No. 54.42.0
propane spot pricesdollars per gallon
24Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
propane price spreaddollars per gallon
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
$0.90
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
$1.80
Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18
Selkirk, NYMont Belvieu, TX
approx. TX-NY TEPPCO tariff (RS)
Mt. Belvieu to Selkirk spread (RS)
With heating season over, Edmonton to Conway spread is back to the cost of rail
Source: EIA, Bloomberg, data through May 25, 2018
propane spot pricesdollars per gallon
25Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
propane price spreaddollars per gallon
-$0.40
-$0.30
-$0.20
-$0.10
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
-$1.00
-$0.75
-$0.50
-$0.25
$0.00
$0.25
$0.50
$0.75
$1.00
$1.25
Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18
Conway, KS
Edmonton, ABEdmonton to Conway spread (RS)
approx. AB-KS rail (RS)
State Heating Oil and Propane Program (SHOPP) updates• SHOPP is a collaborative program between states and EIA that provides weekly
wholesale and retail prices for heating oil and propane at the state level
• EIA has extended SHOPP (beginning October 2014) to include 14 additional states in propane price data collection
• 10 new states were added to the wholesale propane price survey in 2016. This should be taken into consideration when comparing the average prices for last year (2015-2016 season) for the U.S., PADD 1, PADD 1B, PADD 1C, and PADD 2 averages
• EIA is providing more granular inventory data to states on a weekly basis since the 2016/2017 heating season
• New winter fuels page provides easier access to state-level information: www.eia.gov/special/heatingfuels
Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC 26
Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
Maps of states participating in Winter Fuels Survey
27
Source: EIA, Heating Oil and Propane Update
PADD 1dollars per gallon
PADD 2dollars per gallon
Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
Retail propane prices this heating season in PADD 1 and PADD 2 are above prices reported for the same week last year
Source: State Heating Oil and Propane Program, data through March 27, 2018
28
0.00
1.00
2.00
3.00
4.00
Oct Nov Dec Jan Feb Mar
heating oil (2017-18)propane (2016-17)
propane (2017-18)
heating oil (2016-17)
0.00
1.00
2.00
3.00
4.00
Oct Nov Dec Jan Feb Mar
heating oil (2017-18)
propane (2016-17)
propane (2017-18)
heating oil (2016-17)
Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC 29
Conway
Mont Belvieu
Rockies & Bakken production flows to Gulf Coast through
Conway
Increasing rail from Canada
Legend= Market hub= Propane pipeline flow= Y-grade pipeline flow= Y-grade & propane pipeline flow = RailProduction to Mont Belvieu
for fractionation and storage
Increasing focus on moving volumes south
PADD 4PADD 2
PADD 1
PADD 3
Marcus HookExports and storage
at Marcus Hook
Increasing Northeast production seeking storage
UT storage dominates PADD 4
Most infrastructure buildout focused on Gulf Coast
more in-region storage at retail level; more rail-
receipt capacity
AZ storage serves PADD 5
Chesapeakebutane exports and
occasional propane imports
Newington, NHNew England’s sole
remaining import terminal
Source: EIA, public company filings
Propane-oriented infrastructure getting more complex / diversified
Tampa terminal occasionally ships and receives
Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC 30
HGL pipeline Throughput (1,000 b/d) Start
To CanadaMariner West 50 2013 Q4Utopia East 50 2018 Q1To U.S. Gulf CoastATEX 125 2014 Q1ATEX expansion 25 2017 Q4UMTP 430 2019+To overseas export marketsMariner East 70 2015 Q3Mariner East II 275 2018 Q3Mariner East IIx 250 2019 Q2To local marketTeppco 60 2014 Q1Cornerstone 100 2016 Q4Falcon (Shell) 107 ±2020Source: EIA, company filings and public announcements
Projects to ship HGL out precede development of in-region demand
-50
0
50
100
150
200
250
2010 2011 2012 2013 2014 2015 2016 2017 2018
PADD 1 net receipts of propane by modethousand b/d
Warren Wilczewski – 2018 State Heating Oil and Propane Program (SHOPP) WorkshopJune 6, 2018 | Washington, DC
PADD 1, now a major producer, is both a source of supply and a major consumer of propane
Source: EIA, Movements by Tanker and Barge between PAD Districts, Movements of Propane by Rail between PAD Districts, Movements by Pipeline between PAD Districts
31
net receipts by bargenet receipts by rail
net receipts by pipeline
For more informationU.S. Energy Information Administration home page | www.eia.gov
State Energy Portal | www.eia.gov/state
Winter Heating Fuels Site | www.eia.gov/special/heatingfuels/
Movements of Propane by Rail | http://www.eia.gov/dnav/pet/pet_move_railNA_a_EPLLPA_RAIL_mbbl_m.htm
Today in Energy | www.eia.gov/todayinenergy
Short-Term Energy Outlook | www.eia.gov/steo
Energy Explained – Hydrocarbon Gas Liquids | http://www.eia.gov/energyexplained/index.cfm?page=hgls_home
Annual Energy Outlook | www.eia.gov/aeo
International Energy Outlook | www.eia.gov/ieo
Monthly Energy Review | www.eia.gov/mer
U.S. Energy Information Administration 32
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