Propane inventories are “plentiful” this year as we approach the winter season, in contrast to the usual tight propane supply the U.S. has experienced for the past few years, said Ron Gist, senior principal at Purvin & Gertz Inc.

Gist presented an outlook on propane supply and demand for the National Association of State Energy Officials’ conference on winter fuels Oct. 6.

Propane should be easy to come by this winter partly because gas processing did not suffer as many issues as a result of hurricanes. Last year, hurricanes Ike and Gustav impacted processing, and, in 2005, Hurricane Katrina disrupted operations.

Gist said processing bounced back quickly after hurricanes Ike and Gustav.

“We had a quick recovery and continued to produce a considerable amount of propane,” he said.

Propane is also profitable for refiners right now, earning margins of 50cts to 70cts.

“They’re certainly squeezing every drop of propane they can from natural gas,” Gist said.

Another factor behind the inventory rise is due to the economic downturn’s affect on the petrochemical industry. About 400,000 bpd of propane is used as feedstock to produce ethylene. But, “the demand for petrochemicals came to a screeching halt, and so did production of ethylene from propane,” Gist said. Once that happened, petrochemical plants began consuming only 175,000 bpd of propane on average, he added.

On the demand side, Gist said he doesn’t expect ethylene plants to increase consumption any time soon, but propane will see a boost in consumption from crop drying later this year.

The corn crop was planted later than usual and looks like it will be a fairly large crop, he said.

Export demand for U.S. propane has increased, particularly from Latin America, due to lower prices for U.S. commodities. The U.S. exported somewhere between 6 million and 8 million bbl of propane last year, but so far this year the U.S. has already exported 18 million bbl, Gist said.

Meanwhile, imports of propane have sunk due to the nation’s already-high inventories. For a few months in 2009 we received no imported propane at all, which Gist said is atypical.

“In all the years of following propane, I can never remember any time that we didn’t get at least some propane from overseas,” he said.

Residential demand for propane this winter will depend partly on the balance of disposable income and the price of propane, but will mostly depend on the weather, Gist said.

If the East Coast has a “quick blast” of cold weather, local supply could become tight due to distribution issues, he said, but overall supply should remain abundant.

“Even in the case of a colder-than-usual winter, inventories will still remain near the top of the typical range,” he said.