LP Gas, April 2014

WINTER OF 2013 14 THE CHALLENGES THE SOLUTIONS those two things we took up all of the extra production and then we had a high demand winter and crop drying season Marty Lerum a principal at Propane Resources cites a litany of converging concerns that caused the problems This included a scarcity of available transports and railcars record busting thermometer readings and other climatological calamities coupled with an invigorated domestic well drilling industry that has diverted critical resources The distribution system is in a period of transition and the distribution system broke down you had the Titanic hitting the iceberg Lerum says People were running out of propane because there were not enough trucks They were designed to run 50 miles and we were asking them to run 400 miles Regulatory relief The propane industrys strong association affiliations at the national and state levels are receiving accolades for their work in easing some of the trials and tribulations that marketers faced throughout the heating season Debra Grooms of the Iowa Propane Gas Association made four visits to the statehouse in Des Moines to meet with officials at the executive and legislative branches We were up front Grooms says They wanted to know why there was a shortage and why the prices were so high and we gave them updates on what was going on In Oklahoma there were fears about supplies being threatened and people running out of propane says Richard Hess the executive director of the Oklahoma Propane Gas Association Critical aid from Gov Mary Fallin and other regulatory officials in the form of hours of service HOS relief and other emergency waivers brought a welcome respite as stocks became tighter and tighter Wholesale Propane Prices U S avg 2013 14 Oct Nov Dec Jan Feb Mar Apr U S Energy Information Administration dollars per gallon 410 360 310 260 210 160 110 Everyone has acted responsibly we have a good relationship with the governor and she trusts what we tell her Hess says Industry outreach and the resulting cooperative stance from government officials in Charleston W Va and other nearby state capitals created a smoother route for transports traveling long distances In addition to state HOS waivers the Federal Motor Carrier Safety Administration granted unprecedented regional exemptions for the East Midwest South and West covering as many as 35 states this winter With this repeated snow and icing the regional HOS waiver was so helpful says Tom Osina executive director of the West Virginia Propane Gas Association WVPGA They were all able to abide by the same waiver without having to take into account different rules for each state Osina like other state association leaders was also busy working the phones to keep reporters abreast of the unfolding situations in the industry There were concerns about price he says and by talking to those media outlets we were able to get out the HOW DID WE GET HERE Timeline of notable events impacting propane supplies pricing and distribution Oct 23 2013 A late 2013 corn harvest along with cold wet weather results in strong demand for propane at distribution terminals in the Upper Midwest Minnesota and South Dakota are the first states to issue hours of service waivers for commercial truck drivers That list will grow substantially as winter approaches Week ending Nov 1 Midwest propane inventories drop more than 2 million barrels the largest single week stock draw in any November since 1993 according to EIA Nov 27 The Cochin Pipeline which delivers propane from Canada to the Upper Midwest goes out of service for three weeks due to maintenance Pipeline owner Kinder Morgan is doing the work part of a reversal project that ultimately will send condensate into Canada beginning in July 2014 and cutting off propane supplies to this region In November U S propane propylene exports continue to soar to record levels reaching 410000 barrels per day EIA data shows Early January 2014 Much of the nation experiences record cold temperatures and wind chills and the term polar vortex becomes popular Import terminals in Newington N H and Providence R I begin to receive propane shipments to help meet high demand Shipments will continue through February supplying the region with 87 million gallons of LPG this winter 18 LPGas April 2014 www LPGasmagazine com