Page 20 - DCP AR2011 Dev

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quality standards for long-haul pipeline transportation. As a result, gathering systems and natural gas processing
plants will typically provide ancillary services prior to processing such as dehydration, treating to remove
impurities and condensate separation. Dehydration removes water from the natural gas stream, which can form
ice when combined with natural gas and cause corrosion when combined with carbon dioxide or hydrogen
sulfide. Natural gas with a carbon dioxide or hydrogen sulfide content higher than permitted by pipeline quality
standards requires treatment with chemicals called amines at a separate treatment plant prior to processing.
Condensate separation involves the removal of liquefied hydrocarbons from the natural gas stream. Once the
condensate has been removed, it may be stabilized for transportation away from the processing plant via truck,
rail or pipeline.
Natural Gas and NGL Transportation and Storage
After gas collected through a gathering system is processed to meet quality standards required for
transportation and NGLs have been extracted from natural gas, the residue natural gas is shipped on long-haul
pipelines or injected into storage facilities. The NGLs are typically transported via NGL pipelines or trucks to a
fractionator for separation of the NGLs into their individual component parts. Natural gas and NGLs may be
held in storage facilities to meet future seasonal and customer demands. Storage facilities can include marine,
pipeline and rail terminals, and underground facilities consisting of salt caverns and aquifers, used for storage
of natural gas and various liquefied petroleum gas products including propane, mixed butane, and normal
butane. Rail, truck and pipeline connections provide varying ways of transporting natural gas and NGLs to and
from storage facilities.
Wholesale Propane Logistics Overview
General
Wholesale propane logistics covers the receipt of propane from processing plants, fractionation facilities
and crude oil refineries, the transportation of that propane by pipeline, rail or ship to terminals and storage
facilities, the storage of propane and the delivery of propane to retail distributors.
Production of Propane
Propane is extracted from the natural gas stream at processing plants, separated from NGLs at
fractionation facilities or separated from crude oil during the refining process. Most of the propane that is
consumed in the United States is produced at processing plants, fractionation facilities and refineries located in
the United States or in foreign locations, particularly Canada, the North Sea, East Africa and the Middle East.
There are limited processing plants, fractionation facilities and propane production in the northeastern United
States.
Propane Demand
Propane demand is typically highest in suburban and rural areas where natural gas is not readily available,
such as the northeastern United States. Propane is supplied by wholesalers to retailers to be sold to residential
and commercial consumers primarily for heating and industrial applications. Propane demand is typically
highest in the winter heating season months of October through April.
Transportation and Storage
Due to the region’s limited propane production and relatively high demand, the mid-Atlantic and
northeastern United States are importers of propane. These areas rely almost exclusively on pipeline, marine
and rail sources for incoming supplies from both domestic and foreign locations. Independent terminal
operators and wholesale distributors, own, lease or have access to propane storage facilities that receive
supplies via pipeline, rail or ship. Generally, inventories in the propane storage facilities increase during the
spring and summer months for delivery to customers during the fall and winter heating season when demand is
typically at its peak.
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