World Forum Draws 88 Countries, 97 Exhibiting Companies

A sold-out exhibition buoyed the 27th World LP Gas Forum program in Miami Oct. 28-30 with 97 companies filling the exhibit space at the Magic City’s Intercontinental Hotel on Biscayne Bay, along with 535 exhibiting staff. The World LP Gas Association (WLPGA) brought the international event back to the United States for the first time since 2006 when it was presented in Chicago. Under the theme “The Future Starts Now,” the World Forum this year was united with the 29th Asociación Iberoamericana de Gas Licuado de Petróleo (AIGLP) Congress.

World-Forum-for-photos-1About 2000 LPG professionals representing 88 countries attended. The top five nations represented were the U.S. with 661 participants, India with 132, Brazil 77, Japan 73, and Nigeria 52. There were 43 high-level international speakers for the Forum, 10 presenters for the Global Technology Conference, and nine for the Global Autogas Summit.

Kicking off the World Forum, Spanish-American chef and restaurateur José Andrés gave a passionate keynote address about his non-governmental organization (NGO), World Central Kitchen, which is converting school kitchens in Haiti from wood and charcoal to LPG. Noting that high-end chefs like himself spend their careers feeding the privileged few, the successful, newly minted American citizen said he now wanted to focus on feeding the impoverished many. He spoke about how access to clean energy for cooking was improving the health and welfare of students, adding that LPG is the catalyst for that betterment. Andrés and WLPGA president Kimball Chen signed an agreement under which the NGO and the association committed to work together to create good practices guidelines for the conversion of institutional kitchens in schools, hospitals, orphanages, and barracks, among others, from biomass or kerosene to LPG.

Another session was an opening roundtable that addressed the continuing gap between global LPG supply and demand, in addition to the onsite launch of an LPG applications database — — a portal to a global database of LPG applications. Andrew Ford, group public affairs manager for Netherlands-based SHV Energy Group, said creating the website was to support the positioning of LPG as Exceptional Energy, demonstrate its endless uses, stimulate the dissemination of new technology, and build a knowledge base on LPG applications.

Said to be the largest and most complete LPG applications database/website in the industry, it is designed to be the go-to reference for LPG applications and be at the top of Internet searches, while at the same time targeting everyone in the LPG industry, energy professionals, policymakers, and the public. “We need your support to make this website known,” said Ford. “Link it to your websites, promote it with your media and contacts, and give us your feedback to keep enhancing it. Contribute with your resources to its further development. Applications developers and appliance manufacturers, let us know of new products and technology developments.” World-Forum-for-photos-2a
Additional sessions focused on the fundamental changes the worldwide LPG market is experiencing and how understanding those changes is key to survival. Another panel dedicated to examining smart marketing addressed the issue of whether the industry can be shifted to adopt clever advertising, marketing, and communications in order to better communicate LPG’s versatility and benefits.

New to the World Forum was the first Global Women in Propane session (see p. 46) chaired by Nikki Brown, managing director of Cavagna Group UK Ltd. Following the successful launch of the Women in Propane Council in the U.S., the session explored the need to provide role models and create a global network to assist women as they join the LP-gas industry and work toward attaining leadership positions.

Half-day Global Technology Conference (GTC) and Global Autogas Summit sessions were featured. GTC, an annual event organized by WLPGA along with the Forum, provides an opportunity for companies to showcase their latest technological innovations and their impact on the LPG industry. The Autogas Summit, which addresses the transportation fuel sector, focused on fuel metering technology for modern vehicles and fleet management.

The technology paper, “Development of Dual-Fuel Technology: Prins Dieselblend-2.0 System Enabling Heavy-Duty Vehicles Driving on LP Gas,” was the overall winner of the 2014 WLPGA Innovation award. Prins’ CEO Bart van Aerle was praised by James Rockall, association CEO and managing director, for the paper’s outstanding presentation of the technology and the contribution to the global LP-gas market. “Various markets can really benefit from this technology and use LP-gas as a dual-fuel solution in heavy-duty trucks,” he said.

Octavio Perez Salazar, CEO of Mexico’s Asociación Mexicana de Distribuidores de Gas Licuado, led a working luncheon meeting focusing on Mexican energy market reforms. America’s southern neighbor, Latin America’s largest LPG market, has undertaken a sweeping reform process to open its energy sector to foreign participation. While larger issues are still unfolding, Perez underscored that, for LPG, “Now there are no restrictions — buy a company, World-Forum-for-photos-2bjoin a company, start a company,” and that going forward there would be no price caps and market pricing would prevail. He added that 80% of Mexican households use LPG. And while use of natural gas is growing in the North American nation, only 2% of the country’s consumption of that competing fuel is currently consumed in the domestic sector. The remaining 98% is used to fuel electricity generation, leaving a huge untapped market base for expanding LPG use.

Earlier, Rosanety Barrios of Mexico’s Ministry of Energy emphasized that while hydrocarbons contained in the country’s subsoil belong to the nation, under the sweeping reforms free-market access and direct and fair competition among state-owned enterprises and private companies will prevail. She added that the reforms are aimed at strengthening regulatory bodies, instituting transparency and accountability, implementing sustainability and environmental protection, and “maximizing the state’s revenue” in concert with the nation’s long-term development.

Mexico will issue permits for oil refining, natural gas treatment, and oil products imports and exports. Open access to pipeline systems and storage infrastructure is mandated to avoid unfair discrimination, and fees are being set for regulated activities. At the same time, criteria are being developed to qualify certain infrastructure installations as self-use facilities, where indicated. Regulations remain in place for end-use retail activities if effective competitive markets don’t exist. Permits for the sale, transportation, storage, and distribution of hydrocarbons, as well as public retail, are in place, and there is a gradual agenda for liberalization of prices. For the LPG sector, Barrios highlighted that reforms are targeted at reducing losses, increasing quality, replacing the use of firewood and carbon, and modifying the foreign investment law.

“The energetic reform in Mexico opens a wide range of opportunities for investments and represents the road to sustainable development for our country,” she said. “With the opening of the sector, Mexico and other countries could become strategic business partners. The purpose of the reform is to bring about the growth and development of the [energy] industry, which has required the reconfiguration of public politics with the objective of providing investors with competitive conditions, legal assurance, resource availability, and investment opportunities. This way, the benefits will cross borders.”World-Forum-for-photos-3

Panama Canal
José Ramón Arango, senior analyst for the Panama Canal Authority, reported that his nation’s 50-mile wide isthmus, a trade hub since the 1600s, soon will grow from its existing 330 million PC/UMS (Panama Canal/Universal Measurement System) to 600 million PC/UMS when the expanded canal is inaugurated in early 2016. The project doubles the cargo-carrying capacity of ships transiting one of the world’s most important waterways. What this means for LPG is that the industry’s entire, and swelling, fleet of carriers, including VLGCs, will be able to transit. The maximum size of ships in existing locks goes from 4400 TEU (20-foot equivalent) to 14,000 TEU.

In terms of nautical miles and time saved, potential post-panamax LPG trade from the U.S. Gulf to South Korea would realize savings of 5660 nautical miles and 15 days, as opposed to the Cape of Good Hope route. “Expected trends in LPG markets and the impact of the expanded canal include growth in production and lower prices in the east coast U.S. and, in the long term, increased production in the east coast South America,” Arango said. “Continued economic growth on the west coast South America and steady demand growth in the residential and commercial sectors is forecast. Major growth opportunities are seen for east coast South America and east coast U.S. exports to Asian petrochemical industries due to the substitution of naphtha for LPG in the Asian petrochemical industry. And growth in VLGCs will improve the cost position of the east coast U.S. to Asia.”

The Canal Authority official emphasized that the canal is open 24 hours a day, seven days a week, 365 days a year, and strikes are not allowed by law. Predictability is ensured by published tariffs and fixed transit dates. Deepening and widening of the Pacific entrance has been completed, lock design and construction is 77% finished, Gatun Lake and Gaillard Cut dredging is nearing completion, and the Atlantic entrance deepening and widening is complete. Therefore, construction is on track to be wrapped up in late 2015, with the first transits beginning in the first quarter of 2016.World-Forum-for-photos-4

U.S. Exports
Regarding the ability to provide waterborne exports, Michael Sloan, principal at ICF International (Fairfax, Va.), told Forum participants that North American propane production is forecast to nearly double by 2025, with roughly half of that growth coming from the Appalachian Basin. Significant growth is also seen in western Canada and in the Bakken and Eagle Ford plays. ICF also expects modest growth in propane production from refinery operations due to changes in crude slates.

He highlighted that NGL production would continue to be linked to natural gas markets and demand, and that total gas consumption, including exports from the U.S. and Canada, is projected to increase at a rate of 1.8% per year. By 2025, total gas consumption in the U.S. and Canada is projected to reach an average of nearly 105 Bcfd. NGLs continue to be a byproduct of natural gas production, and as demand for natural gas drives their production, it follows that natural gas production drives NGL output. While producers do have a choice of where to drill, all NGL production will remain associated with natural gas. No one drills for NGLs.

“Producers don’t drill for natural gas liquids,” said Sloan. “They drill for natural gas and oil. Without increased LNG exports and an increase in the use of natural gas for electrical generation, there will be a lot less natural gas production in the U.S., and therefore less LPG.”

ICF International is currently projecting relatively flat consumer demand for propane through 2020. Demand in most traditional consumer propane markets is projected to fall, including a continuing decline by residential households heated with propane due to improvements in efficiency. Fueloil conversions in the Northeast U.S. are a bright spot, leading to modest growth, and overall declines for propane use will be somewhat offset by growth in internal combustion engine markets. Petrochemical propane demand, ICF estimates, will rise from the current 350,000 bbld to 475,000 bbld by the 2019/2020 timeframe.

In play are planned export terminals and expansions in the U.S. that will significantly add to current export capacity, Sloan observed. That capacity is likely to better integrate international markets with the North American market, but if all export capacity that is being proposed is actually constructed, the result will be an overbuild, resulting in propane supply falling below market potential.

In the works are 710,000 bbld of LPG export capacity expansion projects, which will come online in 2015 and 2016. Purity propane will also see demand growth from Gulf Coast PDH (propane dehydrogenation) facilities. But increased propane production is not expected to keep up with the growth in export capacity and PDH demand. Therefore, capacity will become available for butane exports, although those potential waterborne exports may be limited by gas carrier availability.

In summary, implications for the LPG price outlook, as seen by ICF International, is that U.S. propane/butane export capacity is likely to exceed available supply in the near term. Exports will balance the market, and prices will be set by international prices. Propane prices will become more volatile, whereby growth in PDH capacity and a decline in propane as a petrochemical cracking feedstock reduces the demand elasticity of the propane market.

At the same time, integration with international markets makes U.S. propane prices more sensitive to weather conditions in Europe—and vise versa. International propane prices are expected to decline relative to world oil prices as U.S. export capacity comes online. Domestic propane prices are likely to increase relative to international prices in the near term as additional export capacity becomes available.

In the longer term, U.S. propane prices are likely to decline relative to crude oil prices. Growth in exports will push down international propane prices relative to crude, and U.S. propane prices will fall relative to international prices as exports increase. “The U.S. has moved from an era when the domestic propane markets had first call and export capacity was absent,” Sloan concluded. “That has now shifted to where American consumers compete with international buyers.”

U.S. West Coast
In furtherance of boosting U.S. LPG export capabilities, Sage Midstream (Houston) vice president John Steen outlined his company’s initiative to develop a world-class West Coast propane and butane terminal at the Port of Longview, Wash. through Sage subsidiary Haven Energy Terminals LLC. Sage, an independent infrastructure developer and operator focused exclusively on NGLs, is constructing a unit train-accessible rail unloading facility, storage tanks, and ship loading area at the port with the ability to load marine vessels with up to an approximate capacity of 550,000 bbl. The terminal will have a capacity of 47,000 bbld.

Steen asserted that the farther away from Mont Belvieu a production area is, the more likely it is to benefit from world LPG arbitrage, and that the U.S. West Coast is most geographically advantaged to access Asian markets—13 waterborne days to that destination versus 25 days from the Gulf Coast. However, there are challenges. It’s difficult to find suitable deep-water dock facilities with mainline rail connectivity. There are no pipelines. Aboveground storage is required, which is more expensive than Gulf Coast cavern storage to build and operate. Since it is difficult to build pipelines, rail must be competitive with pipeline alternatives to other markets. Finally, the regulatory environment in the region is challenging.

Nonetheless, and with all factors weighed, including the lack of market hub liquidity, Sage is pressing ahead to provide a waterborne export outlet for challenged production sources in the Bakken, western Canada, and other production areas, identifying the Port of Longview as an advantaged geographic location to Asia-Pacific markets. Sage sees the shipping advantage to Asia versus alternatives as key.

The Haven Energy facility is aimed at being the first U.S. West Coast LPG export facility capable of fully loading VLGCs and the first to incorporate full-containment storage tanks. Key assets will include an onsite rail terminal capable of handling unit trains, propane refrigerated storage of 550,000 bbl, butane refrigerated storage of 265,000 bbl, an additional 30,000 bbl of storage in day tanks, and a new dock. Sage expects operations to begin in early 2017, and during construction and operation to provide a significant positive economic impact on the Longview area.

“West Coast LPG exports to Asia provide the most advantaged long-term pricing in North America,” Steen maintained. “Mont Belvieu exports must travel via the Panama Canal, and with canal expansion shipping times will be half. From the West Coast, times are halved again. Longview will bring LPG that is currently last in line to Mont Belvieu to the front of the line for export to Asia, providing producers in the Bakken the ability to recover their NGL output rather than flaring it.”
    —John Needham

Litigious, Confusing World of HR Explained

HR-University-for-art-1Need forms? A library of online, customizable business forms—employment application, expense account, and exit interview documents—are featured. Need help preparing an effective employee handbook? Need advice on thorny human resources (HR) questions? How about sexual harassment issues? There’s even a self-assessment available to determine if you’re a good manager. Free answers are an email or phone call away for members of the National Propane Gas Association (NPGA).

Launched in 2002, the HR University affinity program provides members with easy-to-understand solutions to employment issues. Available are human resources forms such as timesheets, employment applications, leave requests, and sexual harassment reports, among others. NPGA notes that the service is valued at $500 a year, but members have admission at no charge with unlimited entry to the HR University Resource Center, accessed in the members section of the NPGA website. There they can get answers to HR questions by emailing a staff expert or by calling the HR hotline. All inquiries are confidential.

Bill Cook of Virginia-based Human Resources Associates, an HR professional with 40 years of experience who has headed the program since its inception, comments that the overwhelming majority of small companies with fewer than 100 employees don’t have their own HR department, but still need to know how to survive a Department of Labor audit. Major issues addressed are common to small businesses across various industries, he adds, including employee termination, exempt versus nonexempt status, drugs, background checks, unemployment insurance, sexual harassment, pay issues, and performance improvement programs. And what all small businesses need to know is when various federal and state regulations begin to kick in as their employee roll grows.

Cook clarifies that HR professionals are not attorneys, and do not defend companies in court, HR-University-for-art-2but do work with attorneys to stymie a lawsuit. Preferred is that, with human resource tools in hand and by strictly following guidelines, companies meet and exceed compliance thresholds. They therefore mitigate the chance of having to defend against a legal action, and ultimately are equipped to prevail if one arises.

Further, a large percentage of Cook’s clients are family-owned businesses in various industries currently struggling through the seemingly ever-shifting rules of the Affordable Care Act and other mandates. “The focus is to promote, protect, and advance businesses,” he says, adding that often employers pay thousands of dollars to settle charges that are unfounded because the risk of losing millions is just too great.

HR University features a monthly “Personnel Notebook” posting showing companies how to create projects such as performance evaluation programs, employee handbooks, position descriptions, and anti-drug programs. “Personnel Notebook” explains in plain, non-legalese language how to understand and comply with federal employment regulations. In addition, the first week of each month an employment column titled “HR On The Job” is posted. The column provides updates and insights in the employment field, including a section listing useful employment statistics. There is also an HR library of forms that may be printed with a company’s name.

A recent “Personnel Notebook” advises managers to “praise in public, criticize in private,” and that the primary goal is not to fire an employee, but to achieve the desired performance. In light of new concepts of fairness that are being litigated between employers and employees, and with perceived unfairness being the trigger for most wrongful termination lawsuits, the column points out there are steps to follow when performance or behavior issues need to be addressed, among them verbal discussion, written warning, and written probation. The three steps are not to be confused with progress toward termination, but rather are critical actions to achieve expected job-related results. The process should never be referred to as a termination process, but should carry the title of a performance improvement process in an employee handbook or other documents, for instance.

Sample employee communications were provided in the column for the verbal warning, written warning, and written probation that companies can use. Ultimately, the article observes, terminating employment means more turnover, recruiting, orientation, training, and downtime—expensive processes loaded with liability. However, regardless of race, gender, age, or handicapped status, no law requires a company to employ someone who cannot do the job.

Cook underscores that, historically, the American workforce developed within the doctrine of “employment at will” (EAW), which essentially says that the worker has the right to cease his or her employment with a company at any time and for any reason chosen. At the same time, the company has the right to cease employment with the worker at any time and for any reason it chooses.

“In the last 30 years, the EAW doctrine has been eroded by new social concerns,” he says. “The first major change was that the company could not use race as a reason to cease employment. Later religion, nationality, gender, age, and handicap were eliminated. More recently, the concept of an employee acting in the public interest, such as whistle blowing or serving on a jury was also eliminated from consideration in terminating employment. Today there is little strength left in the EAW doctrine. It remains as law in only 16 states. A Rand Corp. study found that only five states were still using EAW as basic, unencumbered law. For employers in any other state to depend on the original concepts of EAW would be risky.”

Another “Personnel Notebook” featured a three-part small business survival guide for tough times as it applied to businesses, their employees, and paramount legal issues. Topics covered included the Age Discrimination in Employment Act, the Older Worker’s Benefit Protection Act, the Consolidated Omnibus Budget Recovery Act, the WARN Act, and Equal Employment Opportunity Commission rules governing termination and disparate treatment.

The “HR On The Job” feature recently admonished readers, “You’re Asking the Wrong Questions,” citing examples of poorly posed questions that don’t elicit answers to help solve problems. Among the examples: Who screwed this job up? Why can’t they bring in more customers? The column’s advice: ask what or how—not who, why, or when. Stop the circle of blame by framing the question differently by asking the right question, such as: What can I do to help? How can I better understand the challenges?

The HR University website offers an easily searched “Personnel Notebook” and forms archive. HR management titles include “Changing Face of the Personnel Department,” “Creating the Human Resource Department,” Drugs in the Workplace,” “Emergencies at Work,” and “Employee Surveys.” The latter notes that surveys elevate issues above the gossip and grapevine to a level of information that provides an opportunity for positive change. Three types are outlined. The employee attitude, or human resources, survey usually covers benefits, pay, and company policies. An operation survey deals with improving methods, productivity, efficiency, and profitability. A strategy survey deals with company values, mission, philosophy, marketing, and long range goals. Examples are provided.

Yet other titles are “How to Keep Your Job, Get Along with Your Boss, and Stop Being Miserable at Work”; “Immigration”; “Interviewing Candidates for Employment”; “Keeping Those Personnel Files”; and “Looking for Violence in the Workplace.” That last column observes that over the last 40 years, employers have been advised, even warned, to stay out of their employees’ personal lives. Federal and state legislation has further enforced such rules. Under the Equal Employment Opportunity Commission, the Americans With Disabilities Act, and the Health Insurance Portability and Accountability Act, among other regulations, employers are forbidden to acquire or use information about their employees, or employee candidates, that is not directly related to their ability to perform their jobs. Severe penalties are imposed on companies that peek into the private lives of employees.

However, the article highlights that companies are increasingly being called upon to integrate themselves into the personal and social problems of their employees, vendors, and sometimes even their customers. From acts of intimidation, assaults, and domestic violence for which they may be held liable, companies must be concerned about invasion of privacy, wrongful termination, and defamation claims. Failure to act can be as serious an offense as acting in error. Terminating potentially violent employees may be risky, but keeping them may be deadly.

Citing the example of a female Wal-Mart employee as an example, the column notes that she successfully sued her employer after she was shot and seriously wounded by her husband while she was at work. Her claim that Wal-Mart knew of previous physical abuse and a court order against her husband, yet took no special precautions and had no policy or procedure in place to protect employees from spousal abuse at work, was upheld. With the average jury award of $3 million and an average out-of-court settlement of $500,000, it pays to head off violence in the workplace, notes the column, and it lists several questions companies must ask regarding whether their policies are adequate.

Other, less dire, topics in the archives cover performance evaluations, sick leave versus time off, light duty and return to work, social networking, telecommuting, and workforce planning, in addition to a long list of management primers such as improving productivity, interviewing, people dynamics, principles for managing, skills for top managers, and tips for supervisors.

Regulatory compliance is laid out under fair pay rules, the Family and Medical Leave Act, hazard communication standards, health care reform, and veterans on the jobs, among numerous others, and there is a business section that features articles on ethics and benchmarking.

The long list of HR and related forms stretches from the Family and Medical Leave Act to the Uniformed Services Employment and Reemployment Rights Act. Policy statement, performance appraisal, employee application, pre-employment reference check, time sheet, vacation request, and confidentiality agreement forms are provided, among numerous others, including a Department of Transportation-compliant employment application and general employment forms.

NPGA’s HR University is asking member companies if they would find valuable a free source of immediate support with easy-to-understand guidelines for employment problems. If that’s a yes, association members have access to expert advice, just like they had their own HR department. Also, HR University is welcoming propane companies to today’s litigious and confusing world of human resources.      —John Needham

2015 NFPA 54: Top 3 Areas Of Concern for Marketers

NFPA-54coverRight on schedule, the 2015 edition of the National Fire Protection Association’s (NFPA) National Fuel Gas Code, NFPA 54, is ready for dealers to study and make sure they are in compliance with the updated codes. The new edition incorporates several substantive changes that impact new installations.

Overpressure Protection

The first major revision applies to the overpressure protection requirements, which have been completely rewritten to focus on systems that are truly within the scope of the code — mostly residential and commercial low-pressure fuel gas piping systems, said Denise Beach, senior engineer for NFPA.

As the propane industry moves more toward 2-psi piping systems, propane appliances are still being designed for a water column of 14 inches or less. Overpressure protection is intended to safeguard those appliances that would malfunction if 2-psi gas reaches the appliance shut-off or burners. In the event of a total failure of the regulator, the required overpressure protection limits the downstream pressure to something that the appliance can handle.

The new requirements, section 5.9, focus on systems in which gas is delivered at a pressure greater than 2 psi, and in which the appliances downstream of the regulator must operate at less than 2 psi. NFPA provides different options on how to accomplish that overpressure protection, on where it must be installed, and on the limit of the downstream pressure. Some appliances, but not all, have built-in safety features that will enable them to operate safely at 2 psi. The NFPA 54 committee is looking to ensure that if the line pressure regulator responsible for stepping down 2 psi to the appliance pressure fails, the downstream pressure will not result in a hazard at the appliance.

“The new requirements provide several compliance options, including a pressure-relief device, two regulators in a series, or a monitoring regulator,” Beach noted.

Corrosion Protection

The section on corrosion protection of piping, which the committee also completely rewrote, is a second substantive revision that will have a direct impact on propane marketers. These requirements will be more familiar to propane marketers because they mirror requirements in the 2014 edition of NFPA 58, the Liquefied Petroleum Gas Code. But the new requirement, 7.1.3, states that if steel piping is buried, the piping must be protected by either a factory-applied coating or a cathodic protection system. Those cathodic protection system requirements are basically the same as existing requirements in NFPA 58.

Beach noted that section is a new paragraph stating that galvanizing (zinc coating) is not adequate corrosion protection for underground piping. The problem is that zinc is a sacrificial alloy, she explained, and will corrode before the steel will corrode.

“However, we don’t require any periodic inspections of underground piping, so you have no way of knowing when the zinc has corroded and the steel is starting to corrode,” she said. “You can still use galvanized steel piping, but you would still have to protect it by some other means, either a factory installed coating or cathodic protection system. So that could make a difference to some marketers.” To clear up a point of confusion that she sees among some in the propane industry, she emphasized that the outlet of the final-stage pressure regulator is the point of delivery for NFPA 54. If an integral two-stage regulator is installed at the tank, all of that outdoor piping is under the scope of NFPA 54.


Another segment that the committee completely rewrote and that Beach focused on are the requirements for bonding and grounding of corrugated stainless steel tubing (CSST). The new text states that the bonding jumper — which she explained is a wire connected to a bonding clamp that connects the piping system to the house grounding panel and transmits any errant electrical current directly to the ground — cannot exceed 75 feet in length. But it can be connected anywhere along the piping system. The new bonding and grounding requirements are the direct result of an industry-sponsored research project, documented on the NFPA 54 website,

Bunsen Burners

In other news related to the latest version of NFPA 54, the committee added a specific requirement for Bunsen burners used in laboratories and educational facilities. Section 9.6.3 permits Bunsen burners to be connected to the gas system by an unlisted hose.

Beach explained the long process involved for new NFPA codes to be adopted. For NFPA 54, the committee meets twice, including a first draft meeting to address public input or proposals made against the document. The first draft meeting for the 2015 edition of NFPA 54 took place in 2012. After completion of the first draft, the public had another opportunity to make comments on the committee’s changes, and that second draft meeting for the 2015 version of NFPA 54 took place in June 2013. The NFPA standards council issued the document in August 2014. She noted that the first draft meeting for the 2017 edition of NFPA 58, the Liquefied Petroleum Gas Code, took place this past October.

The 2015 edition of NFPA 54, released in August, is available for sale by contacting NFPA or through its website at         —Daryl Lubinsky

Bobtail Tank Head Shortage Improves, But Other Issues Surface

Tank-Head-Shortage-photos-1A shortage of propane bobtail tank heads is an element of last winter’s supply and infrastructure problems that drew less attention than other factors such as the late crop drying season and record cold temperatures. Earhart Propane (Trumansburg, N.Y.) is one company that felt the effects of a propane bobtail tank head shortage that began in 2013. Earhart was unable to get tanks for two trucks in the needed timeframe and had to use older, smaller tanks.

“I was told that the supply of tanks is about 50% of the demand and still six months out,” said Earhart co-owner Tom Overbaugh.

The company is experiencing these issues as the result of a tank head shortage that began last year, and Milt Swenson, division manager at Arrow Tank & Engineering (Cambridge, Minn.), sees that as the first part of the “perfect storm” that caused last winter’s propane supply and infrastructure problems. The tank head shortage began in early summer of 2013, and then a heavy crop-drying season followed before last winter’s record cold temperatures. In the summer of 2013, Trinity Heads (Navasota, Texas), which is the primary propane bobtail tank head manufacturer in the United States, experienced mechanical problems with the press that forms the heads. The machine was down or producing at reduced capacity for several months last year, which affected the operations of truck builders and their propane marketer customers.

Swenson noted that Trinity’s head press also shut down during parts of last December and January, only to start back up later in January. Shipping began again soon after that. But the issue caused a backlog at Arrow, and Swenson stated that his company is still working to catch up.Tank-Head-Shortage-photos-2

Arrow is currently quoting new tanks for delivery in the second quarter of next year, or about a five- to six-month lead time. And that’s for tanks only, not for a complete bobtail.

“Back in the good old days, if you ordered a tank only it was six to eight weeks,” Swenson said. “So you see how severe the backlog is right now.”

Asked for an update on the tank head situation, Trinity vice president of public affairs Jack Todd stated, “It is Trinity policy to not discuss specific operations or capacities; however, it should be noted that our Trinity Heads facility is currently operating at planned capacity.”

The tank head shortage has also brought attention to other issues causing delays in bobtail deliveries to the end-user propane marketers. A severe shortage of qualified labor to build the tanks is a main issue. Swenson doesn’t know the cause, but he thinks an improving economy in North Dakota might be a factor as well-qualified labor candidates might be leaving Minnesota for better-paying jobs in North Dakota.

Strong demand for tanks is another factor, and he believes that might be a residual effect of the perfect storm of a late crop drying season and cold winter, which meant marketers ran their bobtails harder last winter, causing them to wear out faster.

Yet another factor Swenson mentioned, at least in his area of the country, is that demand for more storage tanks is up because marketers want to build more storage to be better prepared for winter. The reversal of the Cochin pipeline accelerated marketers’ quest for additional storage.

Tank-Head-Shortage-photos-3And production of the Freightliner S2G propane-fueled bobtail is another issue highlighting the importance of the tank head shortage. Scott Swensen of Lin’s Propane Trucks (Dighton, Mass.) said he ordered S2G trucks in January 2013, but as has been widely reported, the release of the truck saw various delays, and the vehicle did not go into full production until several months ago. Combine that with heavy demand for other trucks as marketers gear up for winter, and you have a truck-building industry bursting at the seams.

“We’re booked through this fall, and now we’re getting 15 trucks in that we couldn’t reserve slots for because we didn’t know when they were going to come,” Swensen stated, referring to the S2G. “We’ve received 15 trucks; that’s a month’s worth of unexpected work landing on our door in the busiest building months of the year. Customers expect them to be built, but no one could really plan for it because no one knew exactly when they were coming.”

According to Swensen, Lin’s is doing fairly well with its truck-building schedule because the company planned ahead. Tanks that Lin’s orders from Trinity in October should be delivered around April, which is a lot longer than it used to take, but that doesn’t have as much of an effect on the truck-building company if it plans well.

Swensen believes extremely high demand for trucks and new tanks, not the number of tank heads produced, is the main problem. Instead of replacing trucks in their fleet and reusing tanks, many companies are adding to their fleet with new tanks. “Our new tank orders with Trinity are up 300% over last calendar year while our overall truck production is up 36%. That correlates to a huge increase in new tanks.

“We’ve never seen demand like this, ever,” he said. “It’s been a year where you really have to do a lot more planning. That was the case last year, this year, and it’s going to be the same next year as well, which is a departure from previous years,” he noted. “In previous years you could call in September and get a truck for October. It’s just not like that anymore. You need to plan ahead for your equipment. Right now we’re encouraging our customers to be planning for next year.”

Tank builder Westmor Industries (Morris, Minn.) experienced order delays at the height of the tank head shortage last year, but Mike Hennen, general manager for Westmor’s truck and trailer division, said his company has been getting a fairly steady supply of heads from Trinity since then. Some order delays took place over the summer, but his company stayed fairly well supplied with heads. Sharing heads occasionally with his competitor Arrow Tank helped ease the pain.

“It’s nice having a working relationship where we can share a little bit if we need to,” Hennen stated. “At the end of the day we’re just trying to take care of customers.”

Several marketers told BPN the tank head issue did not affect their operations. “We do more changeovers to new chassis as we have modern equipment,” said Joe Cordill of Cordill Propane (Winnsboro, La). “[We] may purchase [a] complete new bobtail every three to five years and could always delay a season if necessary.”

Although he noted the tank head shortage “is and continues to be real,” it has not affected Superior Plus Energy Services much, said Bruce Ruppert, director of business development for the Rochester, N.Y.-based company. “We have been fortunate enough to be able to almost exclusively re-use the barrels from old trucks for the new trucks we are building,” he explained.

Como Oil (Duluth, Minn.) was initially affected early in 2014 by lack of tank heads, but Jim Olson, the company’s vice president, safety, assets, said Como’s suppliers of residential and bobtail tanks seemed to recover, and for the most part met the company’s demands for new tank and bobtail purchases.

But Olson believes the tank head issue impacted an already-stressed market of used bobtails and bulk plant-size tanks. “Attempts to find used was a trying exercise in our Midwest regions,” he noted. “The rush to put in storage in the Midwest due to the infrastructure loss of the Cochin as well as the head issue were challenging to sourcing new, let alone used, vessels.”

The shortage affected marketers like Overbaugh of Earhart Propane, who had to use older, smaller tanks on two of its trucks. He explained that one of those trucks had a 3499-gal. container that had burned to a total loss.

“This was not a scheduled replacement,” he said. “Because of the shortage and our need to replace it before winter, we had to use a 2500-gallon barrel that came off a truck we had previously taken off the road. It was fortunate we kept it.” The other bobtail was a scheduled replacement with a 3000-gal. barrel.

The issue also had an effect on Reliable Propane (Clarence Center, N.Y.). The company on its most recent bulk truck replacement transferred the tank to the new chassis, said Reliable owner Ken Albrecht. “Each spring we project our truck purchases for the coming year, but we now have to plan two years in advance because of the scarcity of tank heads,” he noted.

That’s a good idea, says Swensen of Lin’s, who advises propane marketers to “plan, plan, plan.”

How should they do that? “They really should be starting to plan right now for trucks they’re expecting to use not in winter ’14-15, but ’15-16,” he stated.

And Swenson of Arrow Tank thinks marketers may have to do that for various reasons.

“If we have a heavy crop drying season this fall, which we may, and if we have a cold winter again, this whole thing could drag out to 2016 before we get caught up,” he noted.     —Daryl Lubinsky

MFA Oil Shows Its Commitment to Propane

MFA-Oil-for-photos-2When it was revealed in 2011 that CHS (Inver Grove Heights, Minn.) intended to purchase 100% ownership of an 85,000-bbld gasoline and diesel refinery in McPherson, Kan., it did not appear that propane had any role. The current minority partners involved with the sale are MFA Oil (Columbia, Mo.) and Growmark (Bloomington, Ill.), both farmer-owned co-ops. Funds that MFA Oil received from the transaction went toward expanding its propane business through the purchase of several propane companies.

MFA Oil is a farmer-owned co-op, which means the more than 40,000 farmers who buy the company’s products to fuel their farm operations are MFA Oil owners. Missouri farmers organized MFA Oil in 1929 because they wanted a reliable supply of petroleum products at a fair price. In addition to propane, the co-op sells gasoline, diesel, oils and lubricants, and biomass renewable energy. Its sales of propane are geared primarily toward residential customers, but poultry barn heating is also a prominent part of the business.

“Refineries are worth a lot of money these days, and with CHS buying us out, we’ve had a lot of capital come into the company,” said Mark Fenner, president and CEO of MFA Oil. “So we’re essentially parlaying the money that we’re getting back from that refinery into buying businesses that support our key initiatives, and that’s bulk fuel and propane — especially propane.”

MFA Oil, which also operates Break Time convenience stores in Missouri and Arkansas, Jiffy Lube locations in Missouri, and Big O Tires locations in Missouri and Arkansas, has been stepping up its involvement in propane in recent years. Of its 16 acquisitions since 2012, 11 were propane companies. If you ask Fenner why his company is focusing more on propane as of late, he will tell you simply that investing in propane companies is a good financial move right now. “There tends to be a better return on investment and stronger margins in the propane business than in bulk fuel for various reasons, and we feel like we’re pretty good at it.” MFA Oil plans to continue pursuing other propane operations. Fenner believes that family-owned propane companies see MFA Oil’s co-op background as a positive attribute that enhances its reputation for customer care.

“They see us and our culture as being pretty customer-intimate,” stated Fenner, who took over as president and CEO in September after the retirement of Jerry Taylor. Since joining MFA Oil two years ago, Fenner has served as COO, with the plan that he would then take over as president and CEO upon Taylor’s retirement.

As part of Fenner’s duties, he worked to ensure customer tanks were full during last winter’s supply and infrastructure problems. He noted that while various propane companies failed to honor some customer contracts when prices hit around $5/gal. in some locations, MFA Oil met all of its contractual obligations, even as it was forced to transport about 50 loads of propane from Mont Belvieu to Missouri, incurring major freight charges. But he noted that MFA Oil did a good job of filling customer tanks or getting contracts done ahead of the heating season. Although the company raised prices on its floating-price customers, it kept them below $4/gal.

Fenner feels good about MFA Oil’s recent propane company acquisitions. With the purchase of Home Service Co. in Poplar Bluff, Mo., announced in September, MFA Oil adds new customers in southeast Missouri and northeast Arkansas. Home Services’ propane division offers bulk deliveries and 100-lb and forklift cylinders. The business also sells appliances including water heaters and gas logs.

“We got both propane and refined fuels in that purchase,” he noted. “It fits very well because it’s essentially right there in geography where we have a presence. So that’s been a very smooth transition so far.” MFA Oil on the same day announced its purchase of All Propane (Murfreesboro, Tenn.), its first propane operation in Tennessee.

In October, the co-op announced an additional acquisition, New Hampton Implement and Propane (New Hampton, Mo.). The company covers propane customers in northwest Missouri, and MFA Oil will service those new accounts from its existing company locations in Albany, Stanberry, and Bethany.

“That was a smaller family-owned operation, close to another one of our plants,” Fenner noted. “We’ve known that company for some time, and they called us and got a deal done.”

The company’s 11 district managers have improved the process of acquiring companies. When one company purchases another, the buyer inherits the attained company’s employees and customer base in addition to hard assets. MFA Oil works to make sure its recently gained customers are happy with their new propane company. “We’re not here to treat them poorly or like a one-and-done type deal,” Fenner stated. “We’re in it for the long haul.” A lot of the [propane companies] we’ve been buying, they know how well we take care of customers because many of them had been right next to our plants that we run. Not all of them but some of them have. So they kind of seek us out.”

In a propane company purchase, the acquiring company usually must convert the attained company’s point of sale system to its existing system. MFA Oil has developed a process to help with those and many other aspects of the procurement process.

A group of MFA Oil employees have taken on additional duties as “training agents,” who help employees from the acquired company transition to MFA Oil’s culture and systems. That culture includes a focus on safety, and company policy requires service employees to shut down any customer system they deem unsafe.

“We don’t want to have issues out there where we compromise anything or anyone, and it just goes along with our safety mantra, making sure people are safe. Employees know that even if you have to lose a customer over some safety issue, that’s better than having an incident. But we don’t tend to lose customers. They understand that we have their best interests at heart and are trying to keep them safe as well.” —Daryl Lubinsky