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Continued: Propane industry scrambles to replace supply from major pipeline

  • Article by: DAVID SHAFFER , Star Tribune
  • Last update: December 7, 2013 - 5:14 PM

One concern is that propane prices could rise when rail and trucking increases the cost.

Propane industry leaders aren’t blaming Kinder Morgan. As Canadian propane exports have dropped, the pipeline has operated at 22 percent of annual capacity, according to RBN Energy, a Houston research firm. The United States, once a propane importer, is now self-sufficient in the fuel, and exports are rising.

“From a free-enterprise point of view, I can’t really argue with them,” CHS’ Combs said of Kinder Morgan’s decision.

Reversing the flow

Kinder Morgan, which received a presidential permit for the Cochin reversal on Nov. 19, already has done significant work on the project. The reversal requires modifications to valves and pumps on 1,525 miles of the line, and the building of a new storage terminal in Illinois.

Propane shippers are now getting a preview of life after the Cochin pipeline. Kinder Morgan on Nov. 27 temporarily stopped shipments for maintenance. It will resume propane delivery in mid-December, and cease permanently after March.

In July, the line will begin carrying light condensate, also known as diluent, to Canada. It is used to dilute thick oil, or bitumen, extracted from Canadian oil sands. Otherwise, the oil couldn’t flow through crude oil pipelines like the proposed 1,179-mile Keystone XL from Alberta to Nebraska.

Cochin will be the second pipeline across Minnesota to carry diluent. The other, owned by Enbridge Energy, was completed in 2010, and like Cochin, cuts diagonally across the state.

Canada has projected a shortage of light condensate next year. Thanks to the U.S. oil and gas boom, light condensate supplies outstrip domestic demand. When Kinder Morgan sought Canadian customers for the reversed line, shippers quickly signed up, taking all available capacity.

“There was a strong market demand for this project,” said Karen Kabin, a Kinder Morgan vice president.

 

David Shaffer • 612-673-7090 Twitter: @ShafferStrib

 

  • related content

  • Propane terminals like this one in Inver Grove Heights will help fill the gap after the Cochin pipeline from Canada stops delivering propane in 2014, cutting off 40 percent of the state’s supply. This terminal gets its supply from a different pipeline.

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