February 11, 2014 / 10:31 PM / 4 years ago

UPDATE 1-U.S. regulator extends order on more propane supplies to Northeast

(Adds pipeline allocation, propane prices, background)

NEW YORK, Feb 11 (Reuters) - The U.S. Federal Energy Regulatory Commission extended an order to Enterprise Product Partners to prioritize shipments of propane along its pipeline running to the Northeast and parts of Midwest after weeks of freezing weather caused shortages.

Enterprise had previously said it was willing to agree to such an extension for its TE Products pipeline after FERC used emergency powers for the first time in issuing the original order last week.

The National Propane Gas Association and some suppliers first asked FERC to take action after high demand during a colder than expected winter and low inventories led to rationing and price spikes in the Midwest and the Northeast.

Enterprise said last week the prioritization of propane along the line would lead to the late arrival of other products such as gasoline and diluent by 36-48 hours.

On Tuesday, it told shippers that the pipeline would be on allocation for some of its shipment cycles in March, which means the pipeline has been oversubscribed by users and volumes will be rationed between them.

Propane prices at the Conway, Kansas, storage hub shot up last month as markets reacted to the shortage and reached record highs of around $5 a gallon. They traded at around $1.75 in the days before the crisis began in early January.

On Tuesday, spot propane for February delivery at Conway, traded at $1.58 a gallon, after earlier in the day trading as high as $1.70. February barrels were traded late on Monday at $1.85 a gallon, but had traded as high as $1.90.

At the key Gulf Coast hub at Mont Belvieu, Texas, spot propane traded on Tuesday in a range from $1.52 to $1.67 a gallon, after trading late on Tuesday as high as $1.69. (Reporting by Sabina Zawadzki; additional reporting by Robert Gibbons; Editing by David Gregorio)

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