US Gulf Coast propane stocks have grown 3.61 million barrels in the first three weeks of June, roughly four times the amount that was added to storage in the comparable period of 2012, Energy Information Administration data showed Wednesday.
Gulf Coast propane stocks ended the first three weeks of June at 31.47 million barrels.
The rise in stocks comes as Gulf Coast export capacity has failed to keep pace with the growth in available export volumes, which have increased over the past month as propane cracking has dropped amid growing production.
Propane production in the Gulf Coast has averaged 578,000 b/d in 2013, 80,000 b/d above 2012, according to Platts unit Bentek Energy. At the same time, propane export capacity has increased by 105,000 b/d to 336,000 b/d with the expansion of the Enterprise export terminal on the Houston Ship Channel. But lower levels of propane cracking in petrochemical facilities has placed marginal propane barrels on a market that is unable to absorb them, according to market sources and analysts.
Peter Fasullo, an analyst for En*Vantage Inc. estimates that propane cracking fell by 44,000 b/d in May because of petrochemical plant outages.
In addition, PetroLogistics needed to shut its propane dehydrogenation unit on from June 8 to June 18 for maintenance. The unit consumes roughly 25,000 b/d of propane.
Fasullo said that some bullish factors are on the horizon in the medium time-frame that should help draw down stocks.
"Targa is expanding its propane export facility in the third quarter and you also have the crop drying season which peaks around October. The crop drying season can result in a six- to eight-week spike in propane demand which equates to as much as 200,000 b/d."
The Targa terminal expansion will allow the company to load an additional 20,000 b/d of international spec propane.
