The final month of 2012 saw ethane gain some steam at both the Mont Belvieu, Texas, and Conway, Kansas, hubs, though prices and margins were still depressed from their levels in the prior year.

Mont Belvieu ethane margins improved nearly 200% from the start of the month as the gas liquid closed the year in a positive state after starting the month with negative margins. However, the margin was only positive in a theoretical sense as it was 3¢ per gallon, which is actually negative once you factor in transportation costs.

Conway margins remained negative, but improved 43% to negative 2¢ per gallon. This improvement in margin is the result of sustained rejection in the region combined with transportation capacity out of the Midcontinent to both Mont Belvieu and Sarnia, Ontario, in the past six months that has helped to rebalance the market.

The same cannot be said of Mont Belvieu, which has been driven to near parity with Conway prices for the first time in more than three years as ethane rejection has begun to take hold at the hub. It is expected that this will be the case, at least off and on, for the next five months.

While a warm winter began 2012, a cold winter finally arrived as the year ended. Propane experienced a sizable increase in price due to heating demand caused by colder-than-normal weather in much of the Northeast.

Conway propane margins improved 14% as prices finished the month at 82¢ per gallon, which is 7¢ per gallon less than the margin was last December when the price was $1.15 per gallon. Mont Belvieu increased 11% as the price rose to 88¢ per gallon, 24¢ per gallon less than last December’s margin of $1.12 per gallon when the price was $1.39 per gallon.

There was a short squeeze on butane in the Midcontinent as December came to a close, which caused the average price for the month at Conway to increase above the hub’s isobutane price. The Conway butane margin improved 27% to $1.71 per gallon compared to isobutane, which saw an 8% increase to $1.49 per gallon Mont Belvieu butane rose 5% to $1.42 per gallon while isobutane margins were largely flat at $1.49 per gallon

Pentane-plus prices traded at a very close level between the two hubs the final two weeks of 2012 as crude oil prices gained strength. Although natural gas liquid (NGL) prices have been diverging from crude prices, pentaneplus continues to have a closer relationship with crude. This caused the Mont Belvieu margin to increase 3% to $1.86 per gallon and the Conway margin to increase 7% to $1.84 per gallon.

These prices combined to increase the theoretical NGL barrel by 11% at Conway to $43.88 per barrel (bbl.) with a 14% improvement in margin to $31.56 per bbl. The Mont Belvieu barrel price rose 3% to $43.54 per bbl. with a 6% gain in margin to $41.31 per bbl.

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