US industry group asks FERC to order more propane in cold spell

by Reuters
Friday, 7 February 2014 13:00 GMT

NEW YORK, Feb 6 (Reuters) - The National Propane Gas Association asked the federal energy regulator on Thursday to order more supplies of the heating fuel, via a Enterprise Product Partners pipeline, due to shortages in the freezing Northeast and Midwest.

In a notice, the Federal Energy Regulatory Commission said the association had asked it to use its emergency powers to order Enterprise to suspend an 81,000 barrel per day (bpd) supply of diluent and instead supply 75,000 bpd of propane along its TE Products pipeline running from the Gulf Coast to the Northeast.

It asked for the service to start immediately until the end of the first week of March, according to the filing.

"NPGA submits that due to unique weather and other circumstances beyond the control of shippers, propane supplies throughout the country, particularly the Midwest and Northeast, have reached dangerously low levels," the FERC notice said.

Millions in the upper Midwestern states such as Wisconsin and Michigan suffered from the shortage as brutally cold weather gripped the region in the last two weeks of January. Supplies were rationed and prices jumped to record highs.

The price of propane at the Conway, Kansas, storage hub heading north rose to $5 a gallon from a pre-shortage level of about $1.75. But these prices have returned to below $2 in recent days, suggesting supply is more readily available.

Enterprise did not immediately respond to calls and emails for comment. It said previously, however, that batches of propane along the TE Products line had been prioritized, allowing them to get to the Northeast sooner.

The NPGA also wanted Enterprise, one of the biggest shippers of propane in the country, to reverse the flow of its ATEX pipeline, "if necessary", to supplement supplies.

Enterprise had only last year began services on this system, carrying ethane from the Marcellus and Utica shale formations in the Northeast, south to the U.S. Gulf Coast petrochemical market.

Part of the ATEX project included reversing a twin TE Products pipeline that had been disputed by distillates suppliers in court and which, according to propane suppliers, had also carried the heating fuel, from south to north.

The NPGA represents some 3,200 propane industry companies including suppliers and marketeers of the fuel.

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