US propane stocks are high, 33% above the 5-year average. Year-to-date propane exports are 1.6 Mb/d, well above the 1.4 Mb/d shipped in 2022. Rising propane production should drive inventory growth and exports, right? No! Propane production is actually down, falling 9% from September 2022 through December, and even with meager growth this year it’s still 3% below September’s peak. So where do the propane inventory and export barrels come from? And what does this mystery reveal about the trajectory of propane production over the next year or two? In today’s RBN blog, we do some research and provide some answers.
This is not the first time propane markets have confused our production models. In the summer of 2020, we were trying to learn how propane production was recovering from the COVID meltdown that spring. As we mentioned in Now you see it, now you don’t, the problem was that the EIA’s weekly production numbers (modeled from propane production from fractionators, plus propane and propylene from refineries) can differ significantly from the same agency’s monthly statistics (based on the forms of EIAs filled out by gas processors and refineries, but published two months past due). It was a big deal at the time, and the inconsistencies between the numbers were driving us crazy, so we developed models that estimate “real” propane production for the most recent two months, and then used that to project the propane production for the rest of the year in our US Propane Monthly Billboard report
In the 2023 propane mystery, weekly and monthly data issues contribute to the confusion, but are not a major factor in the production disparity. They just make it a little more complicated to figure out what the data is telling us.
To make sense of this disparity, we’ll focus on the geographic footprint of NGL production that has by far the greatest impact on propane supply, demand, and exports: the Gulf Coast, or PADD 3 parlance of the EIA. Over the past five years, PADD 3 has been responsible for approximately 75% of the growth in US propane production. You might think that propane production moves in tandem with crude oil and natural gas production, since all three hydrocarbons come out of the same hole in the ground, and you’d be right, most of the time. But sometimes, like in the last few months, there can be a disconnect.
