BillHustonBlog: Winter Propane Shortage, and need for NY/Seneca Lake Facility caused by TEPPCO reversal and Alberta Tar Sands development

Source:
http://www.slideshare.net/ErikOlbeter/icf-2014-propane-markets-outlook

BREAKING NEWS:
Was the propane shortage this winter engineered to maximize corporate profits?

Short answer: Yes. Partially.

Part of the shortage was caused by natural causes:

abnormally cold winter
abnormally wet corn harvest

However, other parts were caused by industry's zeal to reap profits from the valuable wet-gas regions of the Marcellus and Utica shale (Western PA, Ohio, WV).

Spokesmen for Inergy/Crestwood, and the National Propane Gas Association admit the reason for Seneca Lake Facility, AND the propane shortage this winter was partly engineered to maximize industry profits, and NOT to best serve American consumers. Both are due to Enterprise TEPPCO/ATEX pipeline reversal and Alberta Tar Sands development.

UPDATE: Inside Climate News published on this as well on 3/10/14
http://insideclimatenews.org/news/20140310/us-propane-shortage-provides-lessons-debate-over-oil-and-gas-export

I attended a hearing on the draft NY Energy Plan in Syracuse last week.
Here's one interesting tidbit I picked up.

Here's a short video of Kevin Bernstein, spokesman of Crestwood Midstream (formerly Inergy LLC), the company proposing a massive LPG and NGL storage facility under Seneca Lake in Reading NY, near Watkins Glen:

http://www.youtube.com/watch?v=ImxzMdnkYAU#t=2m11s

Check out 2m:11s to 2m:36s

"New York is at the tail end of the TEPPCO (ATEX) pipeline (operated by Enterprise Products) which delivers propane from major primary storage facilities in Texas. TEPPCO recently reversed part of its line to deliver ethane south to the Gulf Coast from the Marcellus/Utica Shale regions and this has inhibited the pipeline's ability to deliver propane supply into NY.

In recent testimony before the House [Energy and Power Subcommittee], the National Propane Gas Assoc. (spokesman Richard Roldan] stated that the permitting and constructing expanded underground storage in the Finger Lakes area near Reading is essential in meeting NE propane needs." -- Kevin Bernstein, Crestwood Midstream

Here's a video and transcript of of Richard Roldan's testimony:

Hearing page:

http://democrats.energycommerce.house.gov/index.php?q=hearing/hearing-on-benefits-of-and-challenges-to-energy-access-in-the-21st-century-fuel-supply-and-i

PDF of Roldan testimony:

http://democrats.energycommerce.house.gov/sites/default/files/documents/Testimony-Roldan-EP-Energy-Access-Fuel-Supply-and-Infrastructure-2014-3-6.pdf
Excerpt:

``The Appalachian-Texas Pipeline (ATEX) is a new provider of ethane service from the Marcellus region to the Gulf Coast. The pipeline itself is not new, however; rather it is one of two parallel pipelines that run from Mt. Belvieu, Texas to Todhunter, Ohio. What is new is that the ATEX pipeline used to deliver product batches northward as part of the Enterprise TEPPCO system. The decision to reverse this pipeline to take ethane southward reflects the economics associated with taking the huge increases in shale production of natural gas liquids to market. Unfortunately, this reversal has caused all northbound product flowing on the Enterprise TEPPCO pipeline to be squeezed onto the remaining northbound pipeline. The elimination of this northbound capacity, along with the introduction of priority diluent service on the remaining northbound line to assist in the processing of Canadian heavy crude oil [Tar Sands "Oil" => Dilutant for Diluted Bitumen!], has caused congestion and delays for shipments of propane to the Midwest and northeast.``
-- The National Propane Gas Assoc., president/spokesman Richard Roldan

Video of Roldan testimony (19:45-23:40)

http://www.youtube.com/watch?v=CthsQnUKW1k#t=19m45s

(watch the entire video and read the PDFs if you can-- very interesting stuff in here, folks!)

More Reading:

Wells Fargo Securities 11th Annual Pipeline, MLP and Energy Symposium
December 2012. Presentation by MarkWest Energy Partners. Lots of info about Marcellus NGL production and pipelines:

http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MTYzOTM3fENoaWxkSUQ9LTF8VHlwZT0z&t=1

Here is another excellent blog which helps connect the dots:

http://vtdigger.org/2014/03/14/mike-ryan-update-propane-export-situation/

FERC order approving the the TEPPCO/ATEX reversal 5-31-13

http://www.ferc.gov/EventCalendar/Files/20130531173940-IS13-265-000.pdf

Misc maps:

Major NGL pipelines (including propane)
Note, the ATEX is the renamed TEPPCO pipeline
which was reversed to flow south from the Marcellus wet-gas region.

Kinder Morgan Cochin Pipeline Reversal sends valuable NGLs from Wet-Gas regions of the Marcellus (E.OH, WV, SW PA) into Canada, largely for Tar Sands development.