By Sabina Zawadzki
NEW YORK Jan 31 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.
The reversal may be a sign that the propane supply crisis
caused by a record-breaking freeze and low inventories is no
closer to being resolved.
On Thursday six governors asked Texas, home to the largest
store of propane, to extend waivers on trucking restrictions.
Wisconsin and Iowa said on Friday they had
received federal funding to help low-income families with their
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 did not immediately reply to questions.
The reversal would enable Oneok's Medford, Oklahoma,
facility to increase the volume of propane shipped into the
Conway, Kansas, market, the company said.
Conway has the second-largest propane storage hub in the
country, from which Midwestern and Northeastern states can
source their supply.
Propane prices at the Conway Storage hub spiked last week to
historic highs close to $5 a gallon. Prices have since halved
although they remain far above the $1.75 traded earlier in the
month before the freezing weather settled in.
Oneok earlier this week scrapped a fee it charged shippers
if they stored propane on its North System in excess of their
allotted amount, another filing showed, in an indication that a
bottleneck of the product had built up in its system.
The charge was 7.5 cents a barrel a day. The 1,585-mile
(2,551-km) North System running through the Midwest and around
Chicago has a capacity of 134,000 barrels per day (bpd) although
not all of that is propane, according to Oneok's website.
On Friday, Iowa Governor Terry Branstad declared a state of
disaster emergency and energy emergency that would last until
March 2, having already issued two similar proclamations in
December and January.
Some 30 states have made similar declarations which have
tended to help the distribution of propane by lifting limits on
the time truckers are allowed to spend on the road.
Residential propane prices in Iowa more than doubled since
the start of the year to $4.70 a gallon on Jan. 27 from $2,
according to Energy Information Administration statistics. That
is the highest of any Midwest or Northeast state.
On Friday, propane at Conway traded at $2.57 a gallon after
ranging between $2.45 and $3.50 on Thursday. February propane
traded cheaper at $2.05 a barrel, which could indicate traders
see the shortage disappearing soon but that prices could also
rise on Monday when February becomes the front month.
At the Gulf Coast storage hub in Mont Belvieu, Texas,
January propane traded at $1.55 a gallon after a small batch of
5,000 barrels swapped hands at $1.84. That compares with prices
of $1.66 to $1.72 a gallon on Thursday.