To avoid critical shortages by the end of February, propane gas shippers have asked FERC for an emergency order to allow, or if necessary direct, Enterprise TE Products Pipeline Co. LLC to temporarily provide priority treatment to propane shipments from Mont Belvieu, TX.

Citing “dangerously low” propane supplies throughout the country, but particularly in the Midwest and Northeast, the National Propane Gas Association (NPGA) Thursday petitioned the Federal Energy Regulatory Commission for an emergency order directing more shipments to the hard-hit regions.

Since it takes two to three weeks for propane to travel from Mont Belvieu to storage facilities in the Midwest and Northeast via Enterprise TE, additional supplies must begin flowing immediately to avoid critical shortages at the end of the month, NPGA said.

While Enterprise TE provides a direct route from Mont Belvieu to propane storage facilities in the Midwest and Northeast, the current state of proration on Enterprise TE is limiting its ability to deliver the fuel where it is needed, the propane shippers said.

Enterprise TE has taken certain steps to facilitate deliveries of propane on its pipeline, but it cannot ensure sufficient supplies will reach these areas under its current proration policy. The propane association and its members said Commission authorization to temporarily prioritize propane shipments would ensure that propane reaches the markets where it is immediately needed.

During a recent earnings conference call with financial analysts, Enterprise Products Partners COO Jim Teague said the company was doing what it could to help out with the propane situation. The Enterprise TE Products Pipeline system can carry supplies from the Gulf Coast to the Northeast, but it also receives supplies from the Marcellus and Utica shales, Teague said.

“Our shippers determine whether they ship propane, butanes or refined products,” he said. “A price response has been needed in order to get them to change their shipping plans, and several of our shippers have chosen to minimize shipments of other products in favor of shipping more propane,” he said.

The propane shippers are asking FERC authority to alter the pipeline’s allocation schedule and immediately give priority in transportation to up to 75,000 b/d through the first week of March, or when the emergency is resolved.

Propane supplies in the Midwest have been at their lowest levels since the U.S. Energy Information Administration (EIA) began keeping data in 1993, the shippers said. The high demand is evidenced by a reversal in the differentials between spot propane prices in Conway, KS, and Mont Belvieu.

“Whereas at this time last year, propane was offered in Conway at a 2.8-cent discount to Mont Belvieu prices, Conway prices recently showed a 96.62-cent premium over Mont Belvieu — the highest premium for Conway propane since at least 2001.”

The current shortage is a result of numerous factors. Most directly, severe winter weather in December and January followed immediately after a strong crop-drying season (see Shale Daily, Jan. 22).

The result is that “multiple terminals in the Midwest and Northeast are out of propane, will be out soon, or will not be able to keep up with demand absent additional propane volumes including Marysville (DCP) in Michigan; Lima Cavern (Husky) and Todhunter (Enterprise) in Ohio; and Bath (Crestwood), Hartford Mills (Enterprise), and Watkins Glen (Enterprise) in New York.”

Despite a special order from the U.S. Transportation Department allowing truckers to work longer hours and drive farther, “the trucking network is already operating well beyond its normal capacity.”

Supplying the affected locations with Mont Belvieu propane via Enterprise TE would relieve pressure on the propane stocks in Conway, KS. Propane at Conway, which is served by Mid-America pipeline, is currently being diverted to the Indiana market.

To accommodate the additional propane transportation, FERC should direct Enterprise TE to temporarily suspend the 81,000 b/d it reserves on a firm basis for contract shippers of diluent with minimum volume commitments. While NPGA said it believes that Enterprise TE’s proration policy provides sufficient authority for the pipeline to take this action unilaterally, it has been hesitant to do so without a Commission order. The propane shippers made clear they did not want to interfere with motor gasoline shipments on the pipeline.

If needed to accommodate the additional shipments of propane, plus other refined petroleum products, the Commission could, as an adjunct to providing priority propane transportation, order Enterprise TE affiliate Enterprise Liquids to put its ATEX line in service to transport propane from the Gulf Coast. The shippers noted that Oneok NGL Pipeline LLC recently took a similar action.

Oneok had filed at FERC to modify its tariff, allowing a flow reversal from south to north on its North Line 5. “By allowing the reversal movement, Oneok is enabling Oneok’s Medford, OK, facilities to increase the volume of propane barrels being shipped into the Conway, KS, market,” the company told the Commission in a letter last week (see Daily GPI, Feb. 3). “The reversal of the direction of flow from south to north increases the available supply of propane from Medford, OK, to Midwest customers.