February 18

Propane’s promise as Maine fuel in jeopardy

Even if this winter’s tight supply is overlooked, industry changes threaten to keep prices high and stall the alternative to heating oil.

By Tux Turkel tturkel@pressherald.com
Staff Writer

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Dead River company employee Dan Printup oversees the transfer of liquid propane from the rail cars to the storage tanks last week.

John Ewing/Staff Photographer

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MOVEMENT OF PROPANE CHANGING

A fast-changing landscape for petroleum markets and product values is altering the movement of propane for domestic use.

In the Midwest, the Cochin pipeline that moved oil from Alberta through six states before entering Ontario also is being repurposed. It will pump a light-grade oil from shale gas deposits back to Alberta, where it will be used to dilute heavy tar-sands oil.

No pipelines bring propane into New England, but operational changes in a corridor running between Texas and New York state are hurting the region. One part of what’s known as the TEPPCO line that formerly carried propane north was reversed in Ohio. It now focuses on moving ethane, a byproduct of shale gas in the Northeast, back to Texas for making plastics.

In an unprecedented action on Feb. 7, the Federal Energy Regulatory Commission ordered TEPPCO’s owner to immediately send propane north again from Texas to the Midwest and Northeast. It’s a temporary, emergency action, made at the urging of the propane association, but it’s expected to help ease the supply shortage.

Much of the nation’s changing pipeline flows support the growing propane export market. The United States exported 20 percent of its propane last year, up from 5 percent in 2008. Statistics gathered by the U.S. Energy Information Administration show the trend. In November, the U.S. shipped out 410,000 barrels a day of propane, a record.

The U.S. gas glut first hit the market for liquefied natural gas, or LNG. Instead of importing LNG into the United States, as was common five years ago, U.S. energy companies are moving to export it.

Propane now is following the lead of liquefied natural gas. Last fall, Phillips 66 announced plans to build a $1 billion export terminal for liquefied petroleum gas products, which include propane and butane.

ADDING EXPORT CAPACITY OPPOSED

There’s one big difference between exporting natural gas and propane. Companies need Department of Energy approval to export LNG, based on long-standing energy security concerns. But except for pipeline projects, which need permission from the Federal Energy Regulatory Commission, propane exports are unregulated. This winter’s shortages and price spikes are raising questions about whether the hands-off policy is a good idea.

“It’s crazy,” said Kim Tucker, a lawyer and environmental activist. “The federal government has exacerbated the problem. We simply shouldn’t have any more export facilities constructed. It’s contrary to our national and regional interests.”

Tucker, who lives on Islesboro, fought last year against the now-abandoned attempt to build a propane storage facility in nearby Searsport, which had the potential to be used for export. Her primary concerns were tank safety and ship traffic. But Tucker also said that allowing unlimited propane exports goes against the promise that using controversial “hydrofracking” technology to extract shale gas would bring energy independence to the Northeast.

“That’s what we were sold,” she said. “The whole fracking process was wrapped in the American flag. And we could be energy-independent, if we don’t export what we produce.”

Tucker is particularly critical of any chance that the Sea-3 marine propane terminal in Newington, N.H., might convert from imports to exports. Along with a marine terminal in Providence, R.I., Sea-3 is the only way to bring propane into New England by ship.

The domestic propane boom killed Sea-3’s import business until this year, and the parent company had been working on an export conversion. Recently, though, plans have shifted to moving propane by railroad to Sea-3’s storage tanks for the domestic market. But there’s opposition to that idea, as well, this time from local residents worried about the safety of large quantities of propane riding through the Seacoast.

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