ONEOK moves to reverse pipeline flow due to propane squeeze

NEW YORK Fri Jan 31, 2014 3:46pm EST

NEW YORK Jan 31 (Reuters) - U.S. energy company ONEOK Partners LP moved on Friday to reverse the flow of a propane pipeline to help supplies reach a Kansas storage hub and ease a shortage of the heating fuel suffered by millions in the Midwest and Northeast.

In a filing to the Federal Energy Regulatory Commission, which oversees all U.S. interstate pipelines, ONEOK adjusted a tariff notice for a Kansas-Oklahoma propane pipeline to notify shippers that the pipeline can be reversed.

The filing, a necessary regulatory step, will become effective Feb. 6. But ONEOK did not say when exactly, or even whether, it would actually reverse the line. Company representatives were not immediately available to comment.

"Due to unprecedented propane market conditions (this notice) is being filed to add language ... which states that when operating circumstances permit, the carrier may reverse the direction of flow from South to North," ONEOK said in a document to the FERC.

"By allowing the reversal movement, ONEOK is enabling ONEOK's Medford, Oklahoma, facilities to increase the volume of propane barrels being shipped into the Conway, Kansas, market."

Conway has the second-largest propane storage hub in the country, from which Midwestern and Northeastern states can source their supply. Propane prices there spiked last week to historic highs close to $5 a gallon as demand soared due to a record-breaking freeze.

Prices have since halved to around $2.50 but remain far above the $1.75 traded earlier in the month before the freezing weather settled in. Prices at Mont Belvieu, Texas, the largest storage hub, have risen by only a few cents.

States have enacted a variety of measures to help consumers of the heating fuel, such as waiving trucking restrictions and tapping into state funds to help customers meet their bills.