Ethane prices fell at both hubs this week due to several ethane crackers remaining down because of scheduled maintenance combined with weak propane prices that are putting pressure on ethane to maintain its status as the most preferred ethylene feedstock.

Lower propane prices aren’t giving ethane prices much room to grow at this time. Ethane’s net margin as a feedstock was 49¢ per pound (/lb) compared to 43¢/lb for propane.

This resulted in the Mont Belvieu price dropping 9% to 43¢ per gallon (/gal), its lowest price since the week of Feb. 8, when it was the same. The margin at Mont Belvieu dropped 13% from last week. The Conway price fell 17% to 16¢/gal, which was the hub’s lowest price since it was 15¢/gal, also the week of Feb. 8. The margin was down 40% from the previous week.

The Conway price was also negatively affected by a delay in the start of Kinder Morgan’s Cochin pipeline that will transport approximately 13,000 barrels per day (b/d) of E-P mix from Conway to Nova Chemicals’ petrochemical complex in Sarnia, Canada. This delay is being caused by pending regulatory approvals that are expected to be finalized later this month.

Propane prices continued to decrease at both hubs because of excess storage caused by the mild winter. While it is possible that propane inventories will continue to rise and reach record levels in the second half of the year, thus pushing prices further down, it is more likely that low prices will increase exports before an excessive storage overhang occurs.

The Conway price for propane remained below the $1.00/gal threshold as it tumbled 6% to 93¢/gal. This was its lowest price at the hub since it was 92¢/gal the week of July 14, 2010. The Conway margin dropped 6% from last week. The Mont Belvieu price dipped 3% to $1.19/gal, its lowest price since the week of Feb. 15, when it was $1.18/gal. The Mont Belvieu margin was down 4% from the previous week.

Heavy NGL prices continued to hold firm at both hubs as they continued to keep pace with crude prices, which were up slightly this week. Natural gas prices were down 5% to $1.83 per million Btu (/MMBtu) at Conway while the Mont Belvieu price rose 1% to $1.89/MMBtu. This helped the heavy NGLs maintain their status as the most profitable NGLs to make at both hubs.

Due to its close relationship with crude, C5+ remained the most profitable NGL to make at both hubs with the Conway margin at $2.12/gal and the Mont Belvieu margin at $2.18/gal. This was followed, in order, by isobutane at $1.74/gal at Conway and $1.87/gal at Mont Belvieu; butane at $1.42/gal at Conway and $1.69/gal at Mont Belvieu; propane at 77¢/gal at Conway and $1.02/gal at Mont Belvieu; and ethane at 4¢/gal at Conway and 31¢/gal at Mont Belvieu.

Although the Conway ethane margin is on the cusp of unprofitability, the continued strength of Conway propane margins are ensuring that E-P mix, which is the ethane product traded at the hub, remains profitable.

Natural gas in storage for the week of April 6 increased 8 billion cubic feet (Bcf) to 2.487 trillion cubic feet (Tcf) from 2.479 Tcf, according to the Energy Information Administration’s (EIA) latest data. The EIA noted that this lower than normal injection was a result of the producing region reclassifying 10 Bcf. This was 56% greater than the 1.599 Tcf figure reported last year at the same time and 59% greater than the five-year average of 1.567 Tcf.

The National Weather Service’s forecast for next week includes warmer than normal temperatures in the Southeast and parts of the West Coast and Southwest. Cooler than normal temperatures are expected in portions of the Great Lakes, Mountain and Pacific Northwest regions. 

Contact the author, Frank Nieto, at fnieto@hartenergy.com.