Propane Supply Dynamics - Ever Changing
Less than five years ago, roughly 285 million gallons moved annually through the two refrigerated marine terminals in Newington, NH, and Providence, RI. That represents nearly 40 percent of total New England propane demand.
By contrast, only 3 percent of our regional supply is likely to come from a marine terminal this year. This is an indication of how much our Northeast propane supply dynamics have changed. It’s a little disconcerting because during periods of strong demand there is no way to bring large quantities of propane into our region other than by ship.
And just a few years ago, most of the propane that was loaded into trucks at the Selkirk, NY, pipeline terminal originated from Mt. Belvieu, TX, about 30 miles east of Houston. The underground salt caverns have the largest storage capacity for propane in the world.
Now most of the supply for the New York pipeline terminals comes from injection points in southwestern Ohio. This cuts transit time in half and has greatly improved the ratios, performance, and reliability of the Teppco pipeline. Nonetheless, pipeline supply today only accounts for about one-half of what it once supplied our region. This is another indication of change. It’s also a little troubling because no terminal in New York or New England, other than Sea-3, can load more transports per day than the Selkirk, NY terminal (about 175).
These developments are primarily the result of a surging increase in domestic NGL production from the Marcellus and Utica shale regions, as well as an increase in Canadian railcar imports. North America has the lowest propane prices in the world, and this inexpensive propane is finding its way into our region by way of the Teppco pipeline and also, predominately, by railcar.
In the past 10 years we’ve seen new rail facilities spring up in NY, CT, MA, VT, NH, RI, and ME. They now account for roughly 70 percent of our Northeast propane supply. This is the biggest change to the Northeast supply picture in 40 years. It’s very exciting, but it also warrants caution, since a disproportionate percentage of our region’s supply is dependent upon one form of transportation. With higher levels of traffic, some delays are inevitable. At the CSX South Albany, NY rail yard, for example, (one of the gateways to New England) the facility can process approximately 1,400 class cars/day and they often have over 5,000 cars on site.
With these ever-changing supply dynamics, nothing is more important than having Ray Energy as your midstream propane supplier. We understand the importance of supply source diversification, or an “all of the above” approach to supply management.
To assure you of a reliable supply of propane we have prepared a comprehensive, diversified asset portfolio that includes the following:
- Pipeline Supply:
We are shippers on the Teppco pipeline, with supply available at Watkins Glen, Oneonta and Selkirk, NY. - Rail Supply:
We have rail supply at terminals in NY, VT, RI and ME. We buy and schedule all of our own rail supply. Our asset-based supply portfolio is continually expanding across the Northeast and now includes a strategic rail facility wiith substantial proprietary supply in Albany, NY. - Refinery Supply:
We have access to supply from the major refineries in NJ and PA. - Marine Supply:
We have supply at Sea-3 in Newington, NH. - Trucks:
We have a fleet of company-owned transport delivery trucks and also partner with the most respected common carriers in the industry.
A large part of our ability to assure you a reliable supply of propane is that we have a fleet of company-owned transport delivery trucks. So we’ll go wherever necessary to get you the supply you need, when you need it. Some folks have said that they are the best looking trucks in our industry! We think we also have some of the best drivers. In addition, we maintain a great working relationship with the major common carriers in the Northeast and they are a valuable resource for us.
Strategic supply. Exceptional customer service.
None of this would matter though … without you as our customer. Please be assured that we never take your trust in us lightly and we’ll always take great care of your propane requirements.
NOTE: The views and opinions expressed herein are solely those of the author, unless attributed to a third-party source, and do not necessarily reflect the views of Ray Energy Corp, its affiliates, or its employees. The information set forth herein has been obtained or derived from sources believed by the author to be reliable. However, the author does not make any representation or warranty, express or implied, as to the information’s accuracy or completeness, nor does the author recommend that the attached information serve as the basis of any buying decision and it has been provided to you solely for informational purposes.
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