Natural Gas Vs Propane

US Propane — Fourth-Quarter 2010, First-Quarter 2011: Anomalies characterize ...

After years of predictable seasonal variations in key elements of the supply-demand balance, the winter 2010-11 was another study in divergence from the norm.

First, some yield accountants continued to misreport the composition of merchant sales of propylene and propane and distorted the reported volume of purity propane from Gulf Coast refineries. Second, instead of declining to accommodate the seasonal increase in retail propane demand, feedstock demand remained steady at summer volumes throughout the winter.

Finally, Gulf Coast propane exports were higher during the winter than during the spring and summer. These and other issues are the primary focus of this article.

Despite persistent efforts on the part of industry committees to work with the US Energy Information Administration (EIA) to resolve reporting errors in refinery merchant sales of propane, these errors persisted throughout 2010 and into first-quarter 2011. We estimate EIA statistics understated refinery propane sales by 37,000 b/d in fourth-quarter 2010 and 20,000-30,000 b/d for first-quarter 2011.

Until the past 2 years, feedstock demand for propane was an important and predictable balancing element for the overall propane supply-demand balance in North America. When colder weather pushed sales and consumption in the retail markets steadily higher, ethylene producers in the Gulf Coast reduced their consumption and effectively offset some or all of the impact of a colder-than-normal winter and kept the market in balance. Historically, the seasonal decline in ethylene feedstock demand occurred during fourth quarter. Frequently, feedstock demand for propane rebounded during first quarter.

Feedstock demand

During fourth-quarter 2010, feedstock demand for propane declined by 12,500 b/d (4.1%) vs. demand in third-quarter 2010 and averaged 294,000 b/d. For the second consecutive winter, the decline in demand in fourth quarter was well below the typical seasonal decline of 50,000-70,000 b/d (12-15%). Propane’s share of fresh feed averaged 19.1% during fourth-quarter 2010 vs. 19.0% during third-quarter 2010.

Typically, as demand in retail markets begins to decline in February and March, feedstock demand rebounds during the first quarter from its seasonal low of the fourth quarter. With a limited decline in demand during fourth-quarter 2010, we would also expect a limited seasonal rebound in demand.

Propane vs. Natural Gas

When it comes to gas grills, there are two primary varieties that must be taken into consideration: propane gas grills and natural gas grills. Each variety has its own set of benefits, so choosing among these two styles of grills will depend upon your individual needs and how you plan to use it. Before making a final decision, it is vital to consider the benefits each provides, as buying a gas grill can be a challenging decision. The price of natural gas grills and propane gas grills are virtually the same, and some models even come with options for either fuel source. As a result, price is not typically of primary concern when comparing these grills. Additionally, natural gas grills and propane grills are primarily available in the same sizes, removing another important factor from the equation. The primary differences between natural gas grills and propane gas grills lie in the features available and in the inherent differences presented with the two differing fuel sources. Natural gas is generally far less expensive than propane for equivalent heat produced. In fact, some estimates claim that natural gas grills can provide the same BTU cooking power as propane grills for as little as one third of the fuel cost, making natural gas relatively economical in comparison. Not only is natural gas generally less expensive than propane, but it also burns much more cleanly, making natural gas grills more appealing to the environmentally conscious consumer. Because natural gas is provided with a constant supply from household natural gas piping, natural gas grills are not hampered by tank levels, reducing the need to check for sufficient fuel levels prior to outdoor cooking events. This makes natural gas grills very convenient for backyard barbecuing. When it comes to gas grills, there are two primary varieties that must be taken into consideration: propane gas grills and natural gas grills. Each variety has its own set of benefits, so choosing among these two styles of grills will depend upon your individual needs and how you plan to use it. Before making a final decision, it is vital to consider the benefits each provides, as buying a gas grill can be a challenging decision. The price of natural gas grills and propane gas grills are virtually the same, and some models even come with options for either fuel source. As a result, price is not typically of primary concern when comparing these grills.

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