Energized / Energisé - Winter / Hiver 2017 - 18

FEATURE | ARTICLE DE FOND

Winter May Bring Propane
Supply Challenges
BY AMY STRAHAN, ARGUS MEDIA

PROPANE SUPPLIES IN Canada may be tighter this winter, with
North American exports overseas picking up and potentially raising
prices here in Canada. Whether eastern Canada sees surging price
spikes like 2014 largely depends on rail logistics, but the North
American market generally will have less supply to draw upon.
Canadian inventories stand near
record highs, up 4.6 per cent from a
year ago. But that buildup is heaviest in
western Canada, and Eastern supplies
are actually down more than 15 per cent
from September a year ago.
Propane inventories in Canada now
stand near record highs at 11 million barrels, the National Energy Board (NEB)
says. Western Canadian inventories
stand above the five-year average at
7 million barrels, while eastern Canada
holds 4 million barrels of propane.
While nationwide wholesale inventories
overall are higher, most of these barrels
are already sold ahead of the winter.
In eastern Canada, with roughly
4 million barrels wholesale storage,
supplies are very tight heading into
the heating season, considering that
last year propane inventories in eastern Canada fell by 3.9 million barrels
between the start of October and the
start of April, during an unusually mild
winter. The 4 million barrels currently in

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ENERGIZED | ÉNERGISÉ

storage in eastern Canada would barely
meet that demand.
In January 2014, Sarnia propane
prices spiked to U.S. $4.25/U.S. gallon,
and Edmonton propane hit $4.595/U.S.
gallon after low temperatures and tight
supplies combined to send propane
markets soaring.
Since the spikes seen in 2014, more
investments have been made in rail
infrastructure - particularly in western
Canada - by Canadian National.
"As part of our capital investment program, CN has invested several million
dollars in the Scotford region of Alberta,"
CN told Argus. "These investments were
targeted at facilitating the transport of
petrochemicals and other petroleum
products, including LPG, from Alberta."
Western Canadian propane will
find its way to meet eastern Canadian
demand, supplementing any storage
during the winter. There is more money
made from transporting propane east
than moving it south at the moment:

the west/east arbitrage appears more
favorable than exporting propane south
from Edmonton to Conway, Kansas, in
the U.S.
These moves are not free - transportation costs are variable and significant.
But for now, the cost of railing propane
from Edmonton to Sarnia is 20¢/U.S.
gallon, compared with 17¢/U.S. gallon
from Edmonton to Conway, a major
export destination for Canadian propane into the U.S.. But Sarnia propane
prices are more than this 3¢/U.S. gallon
difference, making it advantageous to
sell in Ontario.
Supply across the continent remains
a concern as record propane exports
out of the U.S. this year left U.S. supplies depleted ahead of heating season. Producers, particularly in western
Canada, continued to increase exports
via U.S. west coast's Ferndale terminal
in Washington and are shipping propane south into the U.S. and Mexico.
Canadian propane exports to the U.S.
from January to July totaled
26.3 million barrels compared with
24 million barrels last year, according to the NEB data. With U.S. and
Mexican demand competing with
domestic consumers, some market
participants say that spot propane
availability would be tight during
a colder-than-typical winter due
to increasing exports and higher
volumes sold under the term contracts this year.
For eastern Canada, relief from
the U.S. is unlikely. New England
propane inventories stood at
492,000 barrels the week ending
15 September, according to the U.S.
Energy Information Administration
(EIA), down 17 per cent from
593,000 barrels a year ago.
"Floating" railcars storing propane



Table of Contents for the Digital Edition of Energized / Energisé - Winter / Hiver 2017

Message from the Vice-Chair | Mot du vice-président du conseil
What can You Make Out of Propane? | Que pouvons-nous faire avec le propane ?
Propane: Bringing Value Back Home to Canadians | Propane : plus de valeur pour les Canadiens
Renewable Propane: A Clean Fuel Made Even Cleaner | Propane renouvelable : un carburant propre qui se fait encore plus propre
Winter May Bring Propane Supply Challenges | L’hiver pourrait avoir certaines incidences sur les réserves de propane
The CPA: Working for You | Nous travaillons pour vous
Auto Propane: A Leading Clean Alternative Fuel for Buses | L’auto-propane, principal carburant de remplacement pour les autobus
Members on the Move | Membres en action
Index to Advertisers | Index des annonceurs
Energized / Energisé - Winter / Hiver 2017 - intro
Energized / Energisé - Winter / Hiver 2017 - ebelly1
Energized / Energisé - Winter / Hiver 2017 - ebelly2
Energized / Energisé - Winter / Hiver 2017 - cover1
Energized / Energisé - Winter / Hiver 2017 - cover2
Energized / Energisé - Winter / Hiver 2017 - 3
Energized / Energisé - Winter / Hiver 2017 - 4
Energized / Energisé - Winter / Hiver 2017 - 5
Energized / Energisé - Winter / Hiver 2017 - Message from the Vice-Chair | Mot du vice-président du conseil
Energized / Energisé - Winter / Hiver 2017 - 7
Energized / Energisé - Winter / Hiver 2017 - 8
Energized / Energisé - Winter / Hiver 2017 - What can You Make Out of Propane? | Que pouvons-nous faire avec le propane ?
Energized / Energisé - Winter / Hiver 2017 - Propane: Bringing Value Back Home to Canadians | Propane : plus de valeur pour les Canadiens
Energized / Energisé - Winter / Hiver 2017 - 11
Energized / Energisé - Winter / Hiver 2017 - 12
Energized / Energisé - Winter / Hiver 2017 - 13
Energized / Energisé - Winter / Hiver 2017 - 14
Energized / Energisé - Winter / Hiver 2017 - 15
Energized / Energisé - Winter / Hiver 2017 - Renewable Propane: A Clean Fuel Made Even Cleaner | Propane renouvelable : un carburant propre qui se fait encore plus propre
Energized / Energisé - Winter / Hiver 2017 - 17
Energized / Energisé - Winter / Hiver 2017 - Winter May Bring Propane Supply Challenges | L’hiver pourrait avoir certaines incidences sur les réserves de propane
Energized / Energisé - Winter / Hiver 2017 - 19
Energized / Energisé - Winter / Hiver 2017 - 20
Energized / Energisé - Winter / Hiver 2017 - 21
Energized / Energisé - Winter / Hiver 2017 - 22
Energized / Energisé - Winter / Hiver 2017 - The CPA: Working for You | Nous travaillons pour vous
Energized / Energisé - Winter / Hiver 2017 - 24
Energized / Energisé - Winter / Hiver 2017 - 25
Energized / Energisé - Winter / Hiver 2017 - 26
Energized / Energisé - Winter / Hiver 2017 - 27
Energized / Energisé - Winter / Hiver 2017 - Auto Propane: A Leading Clean Alternative Fuel for Buses | L’auto-propane, principal carburant de remplacement pour les autobus
Energized / Energisé - Winter / Hiver 2017 - 29
Energized / Energisé - Winter / Hiver 2017 - 30
Energized / Energisé - Winter / Hiver 2017 - Members on the Move | Membres en action
Energized / Energisé - Winter / Hiver 2017 - 32
Energized / Energisé - Winter / Hiver 2017 - 33
Energized / Energisé - Winter / Hiver 2017 - Index to Advertisers | Index des annonceurs
Energized / Energisé - Winter / Hiver 2017 - cover3
Energized / Energisé - Winter / Hiver 2017 - cover4
http://www.nxtbook.com/naylor/FUMT/FUMT0118
http://www.nxtbook.com/naylor/FUMT/FUMT0317
http://www.nxtbook.com/naylor/FUMT/FUMT0217
http://www.nxtbook.com/naylor/FUMT/FUMT0117
http://www.nxtbook.com/naylor/FUMT/FUMT0316
http://www.nxtbook.com/naylor/FUMT/FUMT0216
http://www.nxtbook.com/naylor/FUMT/FUMT0116
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