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Propane is not produced for its own sake, but as a byproduct of two other processes: natural gas processing and petroleum refining.
The processing of natural gas involves removal of butane, propane, and large amounts of ethane from the raw gas, to prevent condensation of these volatiles in natural gas pipelines. Additionally, oil refineries produce some propane as a by-product of production of cracking petroleum into gasoline or heating oil.
The supply of propane cannot be easily adjusted to account for increased demand because of the by-product nature of propane production. About 85% of U.S. propane is domestically produced.
The United States imports about 10-15% of the propane consumed each year. Propane is imported into the United States via pipeline and rail from Canada, and by tankers from Algeria, Saudi Arabia, Venezuela, Norway and the United Kingdom.
After it is produced, North American propane is stored in huge salt caverns located in Fort Saskatchewan, Alberta, Canada, Mont Belvieu, Texas, and Conway, Kansas. These salt caverns were hollowed out in the 1940s and can store up to 80 million barrels of propane, if not more. When the propane is needed, most of it is shipped by pipelines to other areas of the Midwest, the North, and the South, for use by customers. Propane is also shipped by barge and rail car to selected U.S. areas.
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