Weekly Propane Newsletter - Butane

BPN’s
Weekly Propane Newsletter
Volume 44, Number 33
In This Issue
Page 2...
•GPA Responds to EPA
Interim Accident Advisory
•TPERC Offering Incentives
For Autogas Deployments
•MPA Expands Engine Fuel
Incentive Program
Page 3...
•Democrats Call for Higher
Onshore Royalty Rates
•Hiked North American Output
To Reduce OPEC Production
Page 6...
•Marcellus Region Production
Exceeds 15 Bcfd through July
Principal Averages
Mont Belvieu........................... 109.281
Kearney.................................... 112.682
Conway.................................... 109.708
Los Angeles................................ 97.250
Selkirk...................................... 126.200
Apex......................................... 116.644
Hattiesburg.............................. 111.496
All postings reflect rack price only and do not
include other fees, assessments, or taxes.
Weekly Propane Newsletter
John Needham, Editor
Published by
Butane-Propane News, Inc.
338 E. Foothill Blvd.
P.O. Box 660698
Arcadia, CA 91006
Phone 626/357-2168
Fax 626/303-2854
[email protected]
[email protected]
August 18, 2014
Mont Belvieu, Conway Spots Decline
Spot propane at Mont Belvieu and Conway, Kan. lost ground
Thursday, falling 1.5 to 1.625 cents at the Texas trading hub but declining
only fractionally in the Midwest compared to the Monday email Update.
Conway’s premium to Belvieu stretched out to 3 to 3.375 cents from the
2 to 2.5 cents seen early in the week. The late-week losses followed gains
in both markets Monday, when Mont Belvieu spots rallied by 2.25 to 3.5
cents and Conway jumped 2.5 cents from late the previous week. The most
recent losses followed an Energy Information Administration (EIA) inventory report Aug. 13 that showed another significant build in propane stocks
for the week ended Aug. 8. Volumes rose 1.8 MMbbl to bring the nation’s
supplies to 70.3 MMbbl, 8.4 MMbbl, or 13.7%, higher than last year.
But while overall inventories are more robust than last year, EIA
notes that stock levels in the Midwest, although 1.9 MMbbl above last
year, remain below the five-year average, representing a deficit of some 1.6
MMbbl. However, this year’s supply scenario in the Heartland has a positive
side. Higher prices at Conway have spurred inventory builds, and for the
first time in four years Conway prices ahead of the peak demand season
are at a premium to Mont Belvieu. The agency comments that the higher
Conway price creates an incentive for supplies to remain in Midwest rather
than be shipped to the Gulf Coast. Last summer, prices at Conway were
below Mont Belvieu, which encouraged the movement of propane to the
higher-priced Gulf Coast market.
Mont Belvieu non-LST spots mid-morning Thursday stood at
101.50-102.00 cents/gal., down 1.5 cents for buyers and sellers from
Monday. Low and high trades reported as of press time were at 101.50 and
103.00 cents. LST spots, at 101.875-102.00 cents/gal., were off 1.625 cents
for buyers and 1.75 cents for sellers, with deals at 101.75 and 102.75 cents.
The Group 140 (Conway) bid and offer as of mid-morning was at
104.875-105.25 cents/gal., lower by 0.625 cents for buyers and 0.75 cents
for sellers compared to Monday trading. A single deal had been done as of
press time at 105.00 cents.
Edmonton spots gained to stand at 75.50-75.75 cents/gal., up
a half cent for buyers but unchanged for sellers. Sarnia spots, at 106.00107.50 cents/gal., were higher by 0.75 cents for buyers and 1.75 cents for
sellers.
Copying or faxing any part of this material, even for internal use, is expressly forbidden without permission of Butane-Propane News, Inc.
2
GPA Responds to EPA
Interim Accident Advisory
The Gas Processors Association (GPA) has filed
comments with the Environmental Protection Agency
(EPA) in response to an interim advisory stating EPA’s
concern that some natural gas processing plants that store
and process LPG may not be designed in accordance with
applicable industry standards and codes (Docket No. EPA
540-F-14-001, Interim Chemical Accident Prevention). In
January, in response to an executive order, EPA published
an interim chemical accident prevention advisory, “Design
of LPG Installations at Natural Gas Processing Plants.”
In the advisory, EAPA requested comments on the
specific rulemaking, industry standards, and the hazards
they address. GPA appointed a task force with facility
design, safety, and environmental expertise to develop its
response. The association’s comments explained that an
industry standard alone cannot provide the best practice
for every element of design in every situation. Engineers
and designers require the freedom to choose the best specification and/or standard, or the option to develop their
own criteria.
GPA’s comments can be summarized as follows: the most effective way for the federal government
to minimize the risk LPG tank farms and terminals pose
to the public is to sponsor and promote the expansion of
the nation’s NGL pipeline network into new areas under
development, and expedite permitting for new large fractionators and new ethane-consuming chemical facilities
such as ethylene plants. Further, gas processing plants and
tank farms and terminals should be considered different types of facilities. The association adds that, on their
own, gas processing plants do not represent a threat to the
public similar to an ammonium sulfate plant or an LPG
storage terminal, and should not be considered candidates
for expanded regulation. GPA underscored that most of
the industry standards listed in the EPA advisory are not
applicable to the design of gas processing facilities and/or
LPG tank farms and terminals. Finally, both gas processing plants and LPG storage facilities are already heavily
regulated under existing federal regulations.
“It takes a significant amount of time to revise
industry standards, and federal regulation moves even
slower,” said Johnny Dreyer, GPA senior vice president.
“And just because an industry group has published a
standard does not mean it is absolutely correct, or up to
date, or that everyone agrees with the standard. Engineers
need the freedom to exercise their own judgment—to
make their own informed decisions based on the nature
of the facility being designed, the degree of operating risk,
and their own technical expertise. Most industry standards
include language to this effect.”
TPERC Offering Incentives
For Autogas Deployments
The Tennessee Propane Education & Research
Council (TPERC) is administering a new incentive program whereby fleets can access grant funds to help defray
the upfront cost of autogas vehicle deployments. Tennessee-based private business fleets, defined under the program as those operating three or more vehicles, are eligible
to receive $1000 per vehicle that is either bought new with
a factory-direct original equipment manufacturer (OEM)
propane engine or converted to run on propane, either in a
dedicated or bi-fuel configuration.
The propane vehicles must be registered and operated in Tennessee for a period of three years or 100,000
miles, whichever comes first, in order to be eligible for the
incentives. The autogas system in the vehicles, whether
OEM or converted, must be certified by the Environmental Protection Agency and/or the California Air Resources
Board.
The program will continue until July 31, 2015, or
until program funds are exhausted, says TPERC. For additional information, email [email protected] or
call (888) 240-8742.
MPA Expands Engine Fuel
Incentive Program
The Minnesota Propane Association (MPA) has
expanded its engine fuel incentive program to include
more model years and by increasing the amounts awarded.
The program is designed to encourage converting vehicles
to propane, but is open to purchases of new OEM vehicles
as well as aftermarket conversions, including diesel economizer retrofits.
The program is open to Minnesota residents,
companies, fleets, and propane industry members. Vehicles
must be registered in Minnesota. There is a limit of five
incentives per state resident or industry member. Recipients must sign the application’s one-per-incentive request,
and a copy of the conversion invoice or vehicle purchase
3
must accompany the application. All applications will be
processed on a first-come, first-served basis. It is recommended that those planning to submit an application call
the MPA office prior to submitting their paperwork to
ensure funds remain available.
MPA notes that sheriff’s departments, police
departments, taxi companies, bus companies, and van
operators are good markets for conversions, adding that
with today’s prices for propane versus prices for gasoline,
those who convert their vehicles can expect to realize about
40% in fuel savings.
Democrats Call for Higher
Onshore Royalty Rates
Rep. Alan Lowenthal (R-Calif.), a member of
the House Natural Resources Committee, is calling for
immediate action to raise oil and gas rental and royalty
rates on federal lands, rates he asserts remain below other
comparable land owners and which are “shortchanging the
American public while benefiting petroleum companies.”
In a letter to the U.S. Department of the Interior,
cosigned by 42 other House Democrats, Lowenthal urges
Interior to update the “outdated” federal onshore royalty
and rental rates for oil and gas, fees energy companies pay
to extract resources on federal lands. Companies operating
on federal lands currently pay 12.5% of the value of the
oil and gas they produce as a royalty to the Treasury, a rate
the House member notes has not been changed in nearly a
century.
Citing a Government Accountability Office
report, he recommended the Interior Department take
steps to allow the Bureau of Land Management to adjust
its onshore royalty rates to a level closer to the 18.75%
collection on production from some federal offshore leases.
He added that Interior’s own studies have estimated that
updating rates could increase revenue collections by about
$1.25 billion over 10 years. Lowenthal further maintains
that rental rates, which energy companies pay just to
reserve the right to use certain tracts, have not been raised
since the 1980s, and like royalty rates are exceedingly low.
“The current federal royalty rate is not close to
what others charge and needs updating,” said Lowenthal.
“Not only is this less than our western states charge, and
what is charged for offshore oil and gas royalties, but it is
one of the lowest rates of any country in the world. These
lands belong to the public, and this current royalty rate
system is neither fair nor equitable for the American taxpayer. A fair return on public lands is not too much for the
American public to expect.”
Hiked North American Output
To Reduce OPEC Production
Global oil demand in 2014 is forecast to increase
by about 1.2 MMbbld compared to 2013 levels, while
production in non-Organization of the Petroleum Exporting Countries will grow by about 1.6 MMbbld, reducing
the call for OPEC production, according to the research
and consulting firm GlobalData. A GlobalData report
states that a significant increase in non-OPEC production
is forecast to occur, particularly in North America, where
crude oil and condensate production will rise by about 1.3
MMbbld.
“Crude oil production increases are also expected
in South America, the former Soviet Union, and from the
greater use of biofuels,” said Carmine Rositano, GlobalData’s managing analyst covering downstream oil and
gas. “This will more than offset slightly lower production
anticipated in the North Sea and Mexico. The growth in
U.S. oil production of just over 1 MMbbld, combined
with the expansion of Canadian production, will continue
to reduce imports into North America. These could then
flow into Asia, where the rise in oil demand will greatly
exceed the slight increase forecast in local production.”
Venezuelan crudes are now more likely to end
up in Asia than North America, as Asia imported just
under 1 MMbbld of Venezuelan crude oil in 2013. This
has increased tonne-mile demand in the tanker industry
for very large crude carriers, while decreasing the need for
shorter-haul tanker movements into North America, adds
the analyst.
“Crude oil supply patterns and pricing differentials, along with marine freight rates and refining margins,
will continue to be impacted by North America’s higher
forecast production levels, especially if the current ban on
exporting U.S. crude oil remains in place,” said Rositano.
“It will be interesting to see which OPEC member will
reduce its production should Iraq’s output continue to
increase and when Libyan production comes back online.
It also remains to be seen whether Iran’s export level will
increase, should it reach an agreement over the nuclear
issue with the West.”
BPN’s
WEEKLY PROPANE NEWSLETTER COMMENTARY
PROPANE PRICES UPDATE
Most Postings Climb
PRINCIPAL U.S. POSTINGS
Reproduction is prohibited without permission from BPN.
Thursday, August 14, 2014
AePEX Energy
Mont
Belvieu
-
Alliance Energy Svcs
Kearney Conway
Mo.
Kan.
-
Los
Angeles
98.000
Selkirk
N.Y.
-
Apex
N.C.
-
Hattiesburg
-
-
112.060
109.250
-
-
117.000
-
109.000
113.110
109.820
-
126.260
117.040
111.560
Crestwood Services
-
112.760
109.510
-
125.920
116.140
111.000
DCP/GSR
-
-
-
-
125.740
-
-
Enterprise Prod
109.375
112.250
-
97.000
127.250
117.000
112.410
Martin Gas
110.750
-
-
-
-
115.250
111.250
NGL Supply Ltd
-
-
-
-
-
117.250
112.250
NGL Wholesale LLC
-
113.230
110.250
-
125.830
116.830
110.000
Targa
108.000
-
-
98.000
-
-
112.000
Valero
-
-
-
96.000
-
-
-
109.281
112.682
109.708
97.250
126.200
116.644
111.496
CHS/Cenex
AVERAGES
All postings reflect rack price only and do not include other fees, assessments, or taxes.
SPOT PRICES FOR NATURAL GAS LIQUIDS
Propane
101.500
102.000
Normal
Butane
124.750
125.125
Iso
Butane
128.500
129.750
Natural
Gasoline
207.000
208.375
EP-Mix
80%-20%
20.375
21.250
Ethane
22.125
22.375
Mont Belvieu LST
101.875
102.000
117.250
118.500
128.000
130.500
207.000
209.125
-
-
Conway Kan.
104.875
105.250
121.750
123.500
130.000
134.375
201.500
206.500
18.750
20.000
-
Hattiesburg
105.500
107.000
-
-
-
-
-
Hobbs, N.M.
111.125
111.875
-
-
-
-
-
Delivered L.A.
Basin
96.000
98.000
185.000
187.000
210.000
212.000
187.000
190.000
-
-
On The River
-
-
-
206.500
208.000
-
-
Sarnia
106.000
107.500
115.750
116.250
130.750
131.250
-
-
-
Edmonton
75.500
75.750
115.250
116.000
-
-
-
-
Mont Belvieu
*Bakersfield, Calif
*
CANADIAN PRODUCER POSTINGS
Pembina Pipeline: Marysville, 107.500; Sarnia, 106.000;
(In U.S. cents/gal)
All postings reflect rack price only and do not include other fees, assessments, or taxes.
Although two sellers held firm on
the Dixie Pipeline and at Conway, Kan.
Thursday, all other principal postings
gained ground. Prices rose a quarter cent
to as much as 3.5 cents compared to
the Monday email Update. The moves
upward built on increases of 1.75 to 4
cents early in the week. Meanwhile, West
Coast postings also strengthened, with Los
Angeles prices rising 2 to 4 cents over the
week.
Postings on the Dixie at Apex, N.C.
hardened by a half cent to 3.25 cents or
were unchanged, shifting prices to a low of
115.25 cents and a high of 117.25 cents/
gal. At Conway, postings climbed a half
cent to 0.75 cents from Monday or stayed
the same, and prices were from 109.25 to
110.25 cents.
TEPPCO postings at Selkirk, N.Y.
edged higher by a quarter cent to a half
cent, and prices were from 125.74 to
127.25 cents/gal. Mont Belvieu postings,
which ranged from 108.00 to 110.75
cents, added a half cent to 3.5 cents
between the two reporting periods.
Alliance Energy Services, Enterprise
Products, and NGL Supply Wholesale
LLC were all up a half cent at Apex; CHS/
Cenex 1.5 cents; NGL Supply Ltd. 2
cents; and Martin Gas Sales 3.25 cents/gal.
Crestwood Services’ posting did not move.
At Conway, Crestwood Services
gained a half cent, while CHS/Cenex and
NGL Supply Wholesale jumped 0.75
cents/gal. Alliance Energy Services held
firm.
Crestwood Services edged a quarter
cent higher at Selkirk; DCP/GSR an odd
0.37 cents; and CHS/Cenex, Enterprise
Products, and NGL Supply Wholesale 0.5
cents/gal.
At Mont Belvieu, CHS/Cenex’s
posting saw a half-cent increase; Enterprise
Products 1.25 cents; Targa Resources 2
cents; and Martin Gas Sales 3.5 cents/gal.
Copying or faxing any part of this
material, even for internal use,
is expressly forbidden without
permission of Butane-Propane
News, Inc.
BPN’s
PRICES FOR OTHER BASING POINTS
Thursday, August 14, 2014
AePEX Energy: San Joaquin Valley, CA 104.000.
Alliance Energy Svcs: Benson, MN N/A; Hankinson, ND
N/A; Mandan, ND N/A; St. Paul Park, MN N/A; Superior,
WI 114.500; [Dixie] Albany, GA 114.300; Alma, GA 115.050;
Cheraw, SC 115.500; Demopolis, AL 113.000; Lexington, SC
115.000; Milner, GA 114.200; Opelika, AL 113.700; [Kaneb]
Geneva, NE 112.070; Norfolk, NE 113.960; North Platte, NE
113.410; Wolsey, SD 115.050; Yankton, SD 113.380; [KinderMorgan] Clear Lake, IA 115.860; Coralville, IA 115.690; Des
Moines, IA 115.140; Lemont(k), IL 109.500; Morris, IL 108.750;
Plattsmouth, NE 113.030; Rockford, IL 116.990; Tampico, IL
115.960; [MAPCO] Bushton, KS 109.750; Cantril, IA 114.200;
Clay Center, KS 110.670; Dubuque, IA 115.790; Farmington, IL 115.710; Greenwood, NE 111.890; Iowa City(m), IA
115.070; Janesville, WI 116.810; Mankato, MN 114.850;
Moberly, MO 113.280; Ogden, IA 114.070; Pine Bend, MN
115.700; Sanborn, IA 113.780; Whiting, IA 112.860; [TEPPCO]
Coshocton, OH 122.600; Princeton, IN 115.950; Todhunter,
OH 120.600.
CHS/Cenex: Greenbay (Tank Car), WI 118.000; Lebanon,
IN 120.140; Lemont, IL 110.500; Lima, OH 109.750; Rapid
River, MI 120.250; Slaughter, TX 112.500; West Memphis,
AR 119.410; [Dixie] Albany, GA 114.360; Alma, GA 114.990;
Cheraw, SC 115.820; Demopolis, AL 112.810; Lexington, SC
115.280; Milner, GA 114.230; Opelika, AL 113.650; [KinderMorgan] Clear Lake, IA 116.670; Coralville, IA 115.990; Des
Moines, IA 114.640; Morris, IL 109.750; Plattsmouth, NE
113.090; Rockford, IL 117.520; Tampico, IL 116.530; [MAPCO]
Bushton, KS 110.450; Cantril, IA 115.270; Clay Center, KS
111.660; Dubuque, IA 116.950; Farmington, IL 116.800;
Greenwood, NE 113.130; Iowa City(m), IA 116.180; Janesville,
WI 118.410; Lecompton, KS 112.280; Moberly, MO 114.620;
Ogden, IA 115.140; Pine Bend, MN 116.720; Sanborn, IA
114.840; Whiting, IA 113.890; [TEPPCO] Coshocton, OH
123.780; Du Bois, PA 122.610; Greensburg, PA 121.770; Kingsland, AR 116.250; Light, AR 117.550; Oneonta, NY 126.120;
Princeton, IN 118.950; Rixie, AR 117.000; Todhunter, OH
121.840; Watkins Glen, NY 123.080; [Williams] Carthage(w),
MO 117.380.
Crestwood Services: Griffith, IN 112.000; Huntington, IN
114.500; Lemont, IL 109.500; Tuscola, IL 112.500; [Dixie]
Albany, GA 113.450; Alma, GA 114.080; Cheraw, SC 114.910;
Demopolis, AL 111.910; Lexington, SC 114.370; Milner, GA
113.330; Opelika, AL 112.740; [Kaneb] Geneva, NE 113.860;
Norfolk, NE 114.960; North Platte, NE 115.710; Wolsey, SD
116.460; Yankton, SD 115.210; [Kinder-Morgan] Clear Lake,
IA 117.460; Des Moines, IA 116.760; Iowa City(k), IA 117.260;
Morris, IL 108.750; Plattsmouth, NE 114.610; Rockford, IL
118.560; Tampico, IL 117.610; [MAPCO] Bushton, KS 111.010;
Cantril, IA 114.660; Clay Center, KS 111.310; Dubuque, IA
116.510; Farmington, IL 116.260; Greenwood, NE 112.410;
Iowa City(m), IA 115.660; Janesville, WI 117.510; Mankato,
MN 115.260; Moberly, MO 113.860; Ogden, IA 114.510; Pine
Bend, MN 116.260; Sanborn, IA 114.260; Whiting, IA 113.510;
[TEPPCO] Du Bois, PA 122.170; Greensburg, PA 121.220;
Oneonta, NY 124.670; Princeton, IN 119.630; Todhunter, OH
123.630; Watkins Glen, NY 122.370.
DCP/GSR: Greeley, CO 110.000; Gulf Plains, TX 107.500;
Jameson, TX 107.500; La Gloria, TX 108.000; Ozona Gas
Plant, TX 107.500; Sonora, TX 107.500; Spindle, CO 110.000;
Wilcox, TX 108.500; [TEPPCO] Coshocton, OH 128.080; Du
Bois, PA 121.780; Greensburg, PA 121.780; Oneonta, NY
125.040; Todhunter, OH 126.530; Watkins Glen, NY 123.730.
Enable Midstream: Calumet, OK 107.000; Rush Springs, OK
107.000; Wetumka, OK 107.000.
Enterprise Prod: Anacortes, WA 90.000; Armstrong, TX
111.375; Bakersfield, CA 104.000; Harford Mills, NY 125.500;
Hobbs, NM 111.125; Inver Grove Heights, MN 116.500;
Jackson, MN 115.500; Martinez, CA 95.000; Mc Kittrick, CA
104.000; Origin Station, TX 110.125; Shoup, TX 110.375;
Stephens City, VA 115.500; [Dixie] Albany, GA 114.300;
Alma, GA 115.050; Cheraw, SC 115.500; Demopolis, AL
113.000; Lexington, SC 115.000; Milner, GA 114.200; Opelika, AL 113.700; [Kaneb] Geneva, NE 112.250; Norfolk, NE
112.750; North Platte, NE 113.250; Wolsey, SD 114.250;
Yankton, SD 112.750; [Kinder-Morgan] Clear Lake, IA
115.500; Des Moines, IA 113.500; Plattsmouth, NE 111.750;
Rockford, IL 116.000; [MAPCO] Cantril, IA 114.250; Clay
Center, KS 111.000; Dubuque, IA 115.750; Farmington,
IL 115.750; Greenwood, NE 112.000; Iowa City(m), IA
115.000; Janesville, WI 116.750; Mankato, MN 115.000;
Moberly, MO 113.500; Ogden, IA 114.250; Pine Bend,
MN 115.750; Sanborn, IA 115.000; Whiting, IA 113.000;
[TEPPCO] Coshocton, OH 124.300; Du Bois, PA 123.000;
Greensburg, PA 122.200; Oneonta, NY 126.200; Princeton,
IN 119.250; Todhunter, OH 122.700; Watkins Glen, NY
124.000.
Kinder Morgan: Altamont, UT 97.000.
Marathon Ashland Pet.: Catlettsburg, KY 114.000; Woodhaven, MI 114.000.
Markwest: Siloam, KY N/A.
Martin Gas: Arcadia, LA 115.750; Corpus Christi, TX
111.750; East Texas, TX 115.750; [Dixie] Albany, GA
114.150; Alma, GA 114.550; Cheraw, SC 114.950; Demopolis, AL 113.000; Lexington, SC 114.650; Milner, GA 114.000;
Opelika, AL 113.750.
NGL Supply Ltd: [Dixie] Albany, GA 114.750; Alma, GA
115.250; Cheraw, SC 115.750; Demopolis, AL 113.250;
Lexington, SC 115.500; Milner, GA 114.500; Opelika, AL
114.000.
NGL Supply Wholesale LLC: Lebanon, IN 118.640;
[Dixie] Albany, GA 114.150; Alma, GA 114.780; Cheraw,
SC 115.610; Demopolis, AL 112.610; Lexington, SC
115.070; Milner, GA 114.030; Opelika, AL 113.440; [Kaneb]
Geneva, NE 113.290; Norfolk, NE 114.690; North Platte,
NE 115.260; Wolsey, SD 116.380; Yankton, SD 114.650;
[Kinder-Morgan] Clear Lake, IA 117.040; Coralville, IA
115.670; Des Moines, IA 115.030; Lemont(k), IL 119.210;
Morris, IL 117.560; Plattsmouth, NE 113.100; Rockford,
IL 117.750; Tampico, IL 116.820; [MAPCO] Bushton, KS
110.750; Cantril, IA 115.440; Clay Center, KS 111.790;
Dubuque, IA 117.100; Farmington, IL 117.020; Greenwood,
NE 113.050; Iowa City(m), IA 116.360; Janesville, WI
118.660; Lecompton, KS 112.420; Mankato, MN 116.130;
Moberly, MO 114.490; Ogden, IA 115.310; Pine Bend,
MN 117.990; Sanborn, IA 115.010; Whiting, IA 114.060;
[TEPPCO] Coshocton, OH 124.230; Du Bois, PA 121.940;
Greensburg, PA 120.970; Light, AR 117.800; Oneonta, NY
124.570; Princeton, IN 118.180; Todhunter, OH 122.620;
Watkins Glen, NY 122.150.
Phillips 66: Bayway, NJ 120.250; Billings, MT 103.500;
Ferndale, WA 93.000; Ponca City, OK 105.250; Wingate,
NM 105.000; [Cherokee] Mt Vernon, MO 116.750; Wood
River, IL 110.250.
Targa: Ardmore, OK 110.000; Big Spring, TX 108.000;
Calvert City, KY 119.250; Cargray, TX 106.000; Chico, TX
108.000; Columbia, TN 118.500; Cullman, AL 114.500; Elkhorn (Kane), PA 113.750; Elkhorn (Keystone), PA 113.750;
Elkhorn (Roystone), PA 113.750; Gillis, LA 109.000; Greenville, MS 115.500; Lewis Run Plant, PA 113.750; Maysville,
OK 110.000; Mt. Vernon, IN 116.250; San Francisco, CA
93.000; Sparta, NJ 130.760; Tebone, LA 106.000; Tyler, TX
128.000; Warren (United), PA 113.750; Warren-Papco Gas
Plant, PA 113.750; Waskom, TX 108.500; [Dixie] Albany, GA
114.250; Alma, GA 114.750.
Valero: Mc Kee, TX 105.500; Three Rivers, TX 111.000.
All postings reflect rack price only and do not include other fees, assessments, or taxes.
6
Marcellus Region Production
Exceeds 15 Bcfd Through July
Biofuels Power Corp. Plans
Construction of GTL Plant
The agency comments that the rig count in
the region has remained steady at about 100 rigs over
the past 10 months. Given the continued improvement in drilling productivity, which EIA measures as
new-well production per rig, it is expected natural gas
production will continue to grow. With 100 rigs in
operation and with each supporting more than
6 MMcfd in production each month, new Marcellus
region wells coming online in August are expected to
deliver more than 600 MMcfd of additional production, EIA reports.
BFLS will operate the plant for the two-year
demonstration. ThyssenKrupp will provide technical services and contribute an auto-thermal reformer pilot plant,
which will be used to generate synthesis gas feedstock for
the production of synthetic crude. Liberty GTL Inc. will
provide intellectual property and operating know-how
regarding crude oil synthesis, along with relevant catalyst
supply. The Liberty technical team is also credited with
designing the Fischer Tropsch reactor that will convert the
synthetic gas to synthetic crude oil. The GTL pilot plant
will be assembled at the Houston Clean Energy Park, an
industrial estate owned by Biofuels Power Corp.
Natural gas production in the Marcellus
region exceeded 15 Bcfd through July, a record high,
according to the Energy Information Administration’s
(EIA) latest “Drilling Productivity Report.” The Marcellus, mostly located in West Virginia and Pennsylvania, is the largest producing shale gas basin in the
U.S., accounting for nearly 40% of the nation’s shale
gas production. Marcellus production has increased
dramatically over the past four years, notes EIA,
climbing from 2 Bcfd in 2010 to its current level.
Production from new wells is more than
enough to offset the anticipated drop in production
that results from existing well decline rates, increasing the production rate by 247 MMcfd. EIA adds
that hikes in Marcellus production have wide-ranging
effects, including contributing to record natural gas
storage injections. Also, rising production has outpaced growth in the region’s pipeline capacity, which
has resulted in multiple pipeline expansion projects
focused on removing bottlenecks in the region.
As pipeline capacity rises, markets in the
Northeast gain greater access to Marcellus gas, which
can result in stabilized or lower prices. Natural gas
prices in the Northeast, such as at the Dominion
South trading point in southwestern Pennsylvania,
have more frequently been below the Henry Hub
price, in part because of wider access to Marcellus
gas. Production in the Marcellus region has surpassed
winter demand for natural gas in Pennsylvania and
West Virginia several times in past years, and is now
on track to be enough to equal demand in those states
plus New York, New Jersey, Delaware, Maryland, and
Virginia combined, EIA reports.
Biofuels Power Corp. (BFLS; Houston) has signed
an agreement with ThyssenKrupp Industrial Solutions
(Johannesburg, South Africa) and Liberty GTL Inc. to
build a small-scale gas-to-liquids (GTL) demonstration
facility in Houston. The parties have established a nonbinding target date of Dec. 31, 2014 to complete installation and commissioning. The purpose of the GTL pilot
plant is to commercially demonstrate converting stranded
natural gas resources to synthetic crude oil.
The partners note that the abundant supply of
low-cost natural gas produced from unconventional shale
resources enhances the opportunity to convert natural
gas to higher-value liquid fuels. The focus of the pilot
plant will be to optimize design and operability of smallscale GTL facilities capable of converting 5 MMcfd to
10 MMcfd of natural gas into about 500 bbld of synthetic crude oil. Building on previous engineering studies
completed by ThyssenKrupp in 2013, Biofuels Power and
Liberty are in the process of completing engineering on a
500-bbld plant design with the goal of deploying multiple
units in North America.
Biofuels Power comments that GTL projects of
this size may be attractive to companies confronted with
curtailing production or, in extreme cases, ceasing production due to capital cost barriers related to expansion
of natural gas gathering, processing, and transmission
infrastructure. These stranded gas wells would be released
for production if GTL units were available to process
gas immediately after completion of the well. “This GTL
pilot project is an important milestone toward our goal of
installing small-scale GTL plants at stranded well sites,”
said Eric Gadd, Biofuels Power Corp. CCO. “The pilot
7
U.S. Propane Inventories Rise 1.8 MMbbl7/18/14
7/25/14
8/1/14
8/8/14
8/9/13
week
U.S. propane stocks
climbed by another 1.8 MMbbl
the week ended
reach 70.3 5,382
MMbbl, according
East Coast
5,253
5,659Aug. 8 to
5,466
3,180 to
-84
22,923
21,521
the Energy InformationMidwest
Administration (EIA) in its Aug. 21,592
13 “This Week22,439
in Petroleum”
report. As23,433
of that reporting
period, 510
Gulf Coast
36,377
38,718 the Midwest
34,698
1,321
inventories were 8.4 MMbbl,
or 13.7%, higher than a year36,003
ago. Gulf Coast
volumes 37,397
rose by 1.3 MMbbl,
Rockies/West
2,603
2,726
2,694
2,767
2,451
73
by 0.5 MMbbl, and the Rocky Mountain/West Coast region by 0.1 MMbbl. East Coast supplies dipped by 0.1 MMbbl.
U.S. Total
65,451
67,201
68,480
70,300
61,851
1,820
Propylene non-fuel-usePropylene
stocks represented 5.9% of total inventories,
off from
previous week.
4,161
4,1276.1% the
4,194
4,135
3,038
-59
The nation’s propane production for the week stood at 1.499 MMbbld, off nearly 0.1 MMbbld compared to a
week earlier but rising about 0.13 MMbbld from last year. East Coast production was at 0.158 MMbbld, the Midwest
0.289 MMbbld, and the Gulf Coast 0.878 MMbbld. While East Coast production was unchanged for the week, the
Midwest and Gulf Coast both declined, splitting the weekly loss. For the year, the East Coast and Gulf Coast joined to
contribute to the annual gain,
U.S. Inventories, 7/18/14-8/8/14
while the Midwest was down
75,000
slightly.
70,000
65,000
Imports to the nation
were at 0.115 MMbbld, up
just marginally from the prior
week and a year ago. The
East Coast received 0.018
MMbbld and the Midwest
0.084 MMbbld. U.S. propane
demand for the week was at
0.919 MMbbld, down 0.1
MMbbld from the previous
week and 0.24 MMbbld under
last year.
7/18/14
7/25/14
8/1/14
8/8/14
8/9/13
60,000
55,000
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
1995
1996
1997
1998
1999
Average
2000
Midwest
Gulf Coast
23,064
26,053
22,363
19,996
26,394
25,092
30,129
32,805
27,218
25,353
25,834
25,860
20,955
30,587
plant will prove the commercial viability of deploying
small-scale GTL plants in North America. With an abundant natural gas resource base, future gas-to-liquids developments like this could fill a need in the energy industry
for decades to come.”
DOE Conditionally Authorizes
LNG Exports from Oregon Site
The U.S. Department of Energy (DOE) has
conditionally authorized LNG Development Co. LLC
to export domestically produced LNG to countries that
do not have a Free Trade Agreement with the U.S. from
its Warrenton, Ore. terminal. The Oregon LNG application was next in the order of precedence, and review of
the application was initiated before DOE issued a recent
proposed procedural change.
Subject to environmental review and final regulatory approval, the facility is conditionally authorized to
export natural gas at a rate of up to 1.25 Bcfd for a period
49,117
42,359
51,486
62,934
52,571
51,693
51,542
of 20 years. DOE notes it conducted an extensive review
of the LNG export application for the West Coast site.
Among other factors, the agency considered the economic,
energy, security, and environmental impacts, as well as
public comments for and against the application and nearly
200,000 public comments related to associated analysis of
the cumulative impacts of increased LNG exports. DOE
determined that exports from the terminal at the specified
rate were “not inconsistent” with the public interest.
Federal law generally requires approval of natural
gas exports to countries that have a Free Trade Agreement
with the U.S. For countries that do not, the Natural Gas
Act directs DOE to grant export authorization unless it
finds the proposed exports “will not be consistent with
the public interest.” As part of its review of the Warrenton
terminal, DOE took into consideration indications from
the developers that the predominant amount of natural
gas supply for export from the facility would come from
Canada, not the U.S.
8
Mid-Month to Mid-Month: Prices Slide, Then Gain
The period from mid-July to mid-August saw prices begin to slide from late June’s highs. At the nation’s two major
basing and trading hubs, the gradual decline that had begun in early July persisted. During the latest period, Group 140’s
posted average remained slightly below Mont Belvieu’s—conversely, the Group’s spot prices remained higher, about 3 cents
above Texas. Once again, the market was tempered by significant gains for U.S. inventories, summer builds that had stocks
continuing to outpace year-ago totals.
The Mont Belvieu posted average entered the latter half of July at 111 cents/
gal., and coasted downward to end the month at 110.844 cents. Entering August, the
average was down to 108.875 cents, before falling to 106.000 the next week. But this
week the average has edged more than 3 cents higher to 109.281 cents.
The Group 140 posted average followed a similar path, holding just above 110
cents/gal. until the last of July when the price declined 2 cents to 108.550 cents. The
following week saw a 3-cent loss to 105.520 cents, and then a more than a 4-cent jump
to 109.708 cents this week.
The Mont Belvieu spot market held between 102.75 cents and 103.375 cents/
gal. before backing off to 101.125-101.50 at the end of July. The following week, going
into August, saw the market dropping a half-cent to 100.75-101.00, and this week it
has edged fractionally higher to 101.50-102.00 cents/gal.
Spots at Conway also lost ground over the period, dipping from the 105.00
to 106.00-cent range to end July at 104.00-104.75 cents/gal. They lost another cent,
falling to 103.00-103.75 going into August, only to add a little value and climb to
104.875-105.25 cents/gal. this week.
DOE comments that the development of U.S.
natural gas resources is having a transformative impact on
the nation’s energy landscape, helping to improve energy
security, spurring economic development and job creation.
This increase in natural gas production is expected to continue, with the Energy Information Administration forecasting a record production rate of 73.29 Bcfd in 2014.
Topping Off...
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