Midstream Transportation of Propane
3.17 The two most common means for transporting propane long distances from storage facilities or producers to downstream distributors are pipeline and rail. Transporting long distances via truck is often uneconomic.Footnote 21 .
3.18 Currently, one major pipeline system supplies propane from western Canada to central Canada: the Enbridge System.Footnote 22 The system is primarily used to transport crude oil, but two of its lines also transport refined petroleum products and a propane-plus mixFootnote 23 from Fort Saskatchewan, Alberta to Sarnia, Ontario, where the mix is fractionated into propane, butane and condensate:
•Line 1 has a capacity of 37,600 cubic meters per day (236,500 barrels per day) and runs from Fort Saskatchewan to Superior, Wisconsin. It transports batchesFootnote 24 of natural gas liquids, refined petroleum products, and light synthetic crude oil.
•Line 5 has a capacity of 78,100 cubic metres per day (491,200 barrels per day) and runs from Superior to Sarnia. It transports batches of natural gas liquids, as well as various types of crude oil.
3.19 From 2006 to March 2014, another pipeline system also supplied propane from western Canada to central Canada.Footnote 25 Kinder Morgan’s Cochin pipeline had a 7,950 cubic metres per day (50,000 barrels per day) operating capacity and delivered propane from western Canada primarily to markets in the U.S. Midwest. Cochin also delivered small volumes of propane to Windsor, Ontario and later to Sarnia via the Eastern Delivery System pipeline (see Figure 3.4). The capacity and utilization of the Cochin pipeline was significantly less than that of the Enbridge System and the vast majority of NGL (including propane) supplied to central Canada via pipeline was through the Enbridge System.
3.20 Historically, the Cochin pipeline operated below capacity. Given declining propane production and exports from western Canada, and growing demand for condensate in the oil sands, Kinder Morgan applied to the NEB in 2012 for approval to reverse the section of pipeline west of Kankakee County, Illinois to allow for condensate imports into Alberta. The NEB approved this application in June 2013, with conditions.Footnote 26 The Cochin pipeline stopped receiving propane at the end of March 2014 and Kinder Morgan is undertaking the physical work associated with the reversal.
3.21 The Cochin Reversal Project also required approval in the U.S. It received a presidential permit from the U.S. State Department to proceed with the project in November 2013.Footnote 27
3.22 In order for propane to be moved by rail, rail car filling and unloading infrastructure (commonly called “racks” or “terminals”) is constructed at both the origin and the destination. Facilities located at an originating production plant are generally owned by upstream firms, while facilities at the destination are generally owned by a downstream firm.
3.23 Rail transit of propane can encounter significant disruptions during winter months. Frozen signals can delay progress and cause congestion. Cold weather can also cause train engine issues, and significant snowfalls can cause delays while tracks are cleared. Additionally, it has been reported that one significant rail line experiences air pressure issues when the weather is cold and, as a result, is forced to run shorter trains.Footnote 28 This can result in a shortage of engines, which further reduces the effective capacity of rail.
3.24 During the winter peak home heating season, propane rail transportation may operate at, or near, full capacity. In this situation, if a shipment is not transported on its scheduled day, it can be cancelled if there is no extra capacity on the following day. When this happens, downstream firms may not obtain their contracted or planned supply.
