US pipeline shutdown piles on propane price pressure

HOUSTON (ICIS)–The shutdown of a natural gas liquids (NGL) pipeline in the northeastern US is adding downward pressure in the US propane market, market sources said on Thursday.

Propane prices at the Mont Belvieu, Texas hub were trading around 74.50 cents/gal on Thursday morning, down 5 cents from the ICIS assessment of 79.50-80.00 cents/gal on Friday 30 March.

Pipeline operator Energy Transfer Partners said its Mariner East 1 natural gas liquids (NGL) pipeline will be shut for at least 4-6 weeks due to additional inspections on the line. The pipeline was shut for what was to be just a two-week period in early March when sinkholes occurred in the area where a second pipeline was under construction.

Mariner East 1 transports 70,000 bbl/day of ethane and propane from gas fields in western Pennsylvania to the Marcus Hook marine terminal in Philadelphia.

The shutdown backs up propane supply in the region, which is emerging from winter, and with no supply coming in from the Mariner East line to load vessels from Marcus Hook, the northeastern US is effectively isolated from the global market, market observers said.

“The long-term effect with this pipeline down shall add to overall stockpiles of propane,” said a natural gas and propane broker.

According to the US Energy Information Administration (EIA), domestic stockpiles of propane grew 600,000 bbl during the week ending 30 March.

Despite a late blast of winter weather hitting the region, retailers and distributors have all but halted their purchasing patterns, the broker said.

“The market has likely concluded drawdowns with winter ending so we’re entering injection season.”

Limited outlets for propane shipments on the US Gulf Coast (USG) also adds to downward pressure, the broker added.