WASHINGTON, D.C. — U.S. inventories of propane and propylene reached 97.7 million barrels as of September 11, the highest level in the 22 years that EIA has collected weekly propane inventory statistics. In the first six months of 2015, U.S. propane and propylene inventories were 24.3 million barrels higher on average compared to the same period in 2014. In the past year, nearly all of the increase in inventories occurred in the Gulf Coast region.

As production of propane and other hydrocarbon gas liquids (HGL) has grown, the ability to transport, store, and export these commodities has expanded. During the first six months of 2015, production of propane at natural gas plants was 31.3 million barrels, or 172,000 barrels per day (b/d), higher than during the first half of 2014. Exports increased by 33.3 million barrels (182,000 b/d) over the same period.

In the United States, propane is mainly used for space heating and as a feedstock for petrochemical plants, as well as for drying agricultural crops. Relatively small amounts of propane are also used for fueling vehicles. Its heating and agricultural uses make propane consumption highly seasonal and weather dependent, rising in the fall and peaking in the winter.

In addition to heating and agricultural use, propane is used by petrochemical plants to produce ethylene and propylene, key building blocks for the manufacturing of chemicals and plastics. Petrochemical propane consumption has little seasonality but can vary significantly based on plant operations.

Traditionally, propane and propylene stocks increase from the start of April to the end of September, and they are drawn down from October to March, when agricultural and heating demands increase. In 2015, inventories began increasing in mid-February, more than six weeks earlier than the historical average.

With domestic consumption relatively flat, growing propane production at natural gas processing plants contributed to this year's strong inventory build, while also supplying more propane to the global market via exports. Propane is produced at natural gas processing plants or at petroleum refineries.

Expanding shale gas and tight oil development continues to be the main driver of propane production growth, with refinery propane production remaining relatively constant. The natural gas plant share of annual production rose from 62% in 2008 to 76% in 2014.

EIA's September Short-Term Energy Outlook (STEO) expects propane and propylene inventories to begin the October heating season at record levels, reaching a high of 99.1 million barrels at the end of September. STEO anticipates stronger than average inventory draws beginning in the fourth quarter of 2015, as gas plant production slows and exports continue to expand. Natural gas plant production of propane, which reached a monthly high of 1.13 million b/d in April, is forecast to decline slightly in the first quarter of 2016 before rising to 1.19 million b/d by the fourth quarter.

STEO projects that net exports, which reached a monthly high of 518,000 b/d in April, are projected to continue increasing, reaching 702,000 b/d in the fourth quarter of 2016 as export facilities continue to expand and transport costs to export markets decrease with the rising number of tankers and the opening of the widened Panama Canal.

Beginning October 7, EIA will resume its seasonal Heating Oil and Propane Update report of retail and wholesale propane prices. Last year, the data collection was expanded to include propane data for 38 states and heating oil data for 22 states