Propane inventories are at the highest level in 22 years, the Energy Information Administration said Monday, which should be good news for farmers beginning to put bushels into bins.
While many have needs settled for the fall, final propane use remains highly dependent on weather. But inventories are set up to handle a less-than-stellar harvest, tallied at 97.7 million barrels as of Sept. 11. They're expected to reach 99.1 million barrels by the end of the month.
The higher inventories are attributed to higher production, which is driven by expanding shale gas and tight oil development, EIA says. During the first six months of 2015, production of propane at natural gas plants was 31.3 million barrels, or 172,000 barrels per day, higher than during the first half of 2014.
Exports were also on the rise, increasing by 33.3 million barrels over the same period.
The short-term energy outlook projects that net exports, which reached a monthly high of 518,000 b/d in April, are projected to continue increasing, reaching 702,000 b/d in the fourth quarter of 2016 as export facilities continue to expand and transport costs to export markets decrease with the rising number of tankers and the opening of the widened Panama Canal.
The inventory update comes as memories are still fresh of the late 2013 and early 2014 propane shortages, which were largely due to heavy fall use, weather and pipeline and transportation factors.
In November, 2013, EIA reported the largest single-week propane stock draw (2 million barrels) since 1993. By January 2014, EIA expected prices to increase to as much as $4 to $5 per gallon due to the low supplies coming into the Midwest.
Traditionally, propane and propylene stocks increase from the start of April to the end of September, and they are drawn down from October to March, when agricultural and heating demands increase.
This year, inventories began increasing in mid-February, more than six weeks earlier than the historical average.
At the same time, Midwest heating degree days over the 2014-15 winter were 8.5% below the comparable 2013-14 period, cutting demand for heating fuel. Inventories early this year were 6.3 million barrels more than the five-year average and 11.8 million barrels above February 2013, EIA reported.
As supplies have been rebuilt, domestic consumption has remained nearly flat, EIA says. Growing propane production at natural gas processing plants contributed to this year's strong inventory build, while also supplying more propane to the global market via exports.
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