Subscriber note: Platts to launch USGC propane cargo assessments

Platts will launch daily assessments reflecting the value of propane cargoes loading at major US Gulf Coast export terminals on an FOB basis with effect from July 1, 2013. The assessments will be published as outright prices, and as a differential to the Platts non-LST Mont Belvieu propane assessment. The assessments will reflect the value of 44,000 mt, Very Large Gas Carriers (VLGCs) loading 15 to 30 days forward from date of publication. Smaller trade sizes in refrigerated propane may be considered in the assessment, normalized for size. The quality basis for this assessment will be "low-e" propane, or propane with an ethane content of 2% maximum. "HD-5," or propane with an ethane content of 5% maximum, may be normalized back to the quality specification basis. The assessments will be published in both US dollars per metric ton, and cents per gallon, to allow for efficient comparison between US pipeline and export markets. Platts proposes to use a conversion factor of 12.405 barrels/mt to convert between US dollars per metric ton and cents per gallon. Significant growth in propane production, a result of liquids-rich gas drilling, has shifted the US from a net importer to a net exporter of propane, and propane exports are expected to increase substantially going forward as rising US supplies will continue to overwhelm demand. In its assessment process, Platts will gather bids, offers, and transactional information for the FOB USGC propane market, and will normalize these inputs to 2:15 pm Houston time. In the absence of spot information, Platts will analyse achievable netback values using forward propane prices in Northwest Europe and Asia, and VLGC freight rates, to establish a basis for assessment. Propane values in Asia and Europe would be normalized for time to a 2:15 Houston timestamp in this analysis. Specifically, Platts will subtract USGC-NWE freight rates from propane on a CIF NWE basis to reach a USGC netback value and compare that value against the same calculation basis USGC-Japan to discover the export value of an FOB Houston propane barrel, according to the international market trends. The higher of the two calculations will become the basis for the Platts FOB USGC propane assessment, if there is a lack of reported spot market activity in the USGC export market itself. The assessment will reflect loadings out of existing USGC export terminals located on the Houston Ship Channel -- Enterprise and Targa. When additional facilities are built outside of the Houston Ship Channel, Platts intends to revise its methodology to accommodate additional export locations in the region. Please send questions and comments to americas_products@platts.com with a cc to pricegroup@platts.com. For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.