Never Again: Times Have Changed; Business Planning Begins Now

Propane Days participants this year had many thoughts to share about last winter’s snarled transportation and supply scenario. Presented for their consideration was a white paper with suggestions for marketers on supply planning. Marketers were encouraged to evaluate its recommendations as a resource when preparing for the upcoming winter heating season. The paper was approved by the National Propane Gas Association (NPGA) board of directors in early June.

The propane industry is advancing “no-repeat” strategies for marketers — backed by consumer education — to avoid doubling down on last winter’s multi-prong logistics, supply, and price-spike nightmare. While recognizing that a replay of the unique alignment of events that caused the unprecedented heating season woes is unlikely, NPGA has published recommendations from the Industry/Marketer Education Working Group-NPGA Supply and Infrastructure Task Force. The suggested guidance targets future actions to avert a rerun. The report may be downloaded at

At the same time, at press time the Propane Education & Research Council (PERC) was seeking funding for a multimillion-dollar consumer safety preparedness campaign. The initiative is designed to keep residential propane customers safe by encouraging them to speak with their propane providers to prepare a plan for winter. Winter 2013-2014 revealed a need for more careful planning for cold weather by many residential propane customers, notes PERC. The council adds that will-call consumers were especially vulnerable to supply and price pressures, making planning before cold weather arrives paramount.

The initiatives are being launched before a backdrop of momentous shifts in the U.S. energy landscape, industry leaders comment, changes that see the nation transitioning from an era of declining domestic resource development and production to a promise of returned abundance — thanks to the shale-gas and tight-oil revolution. As a result, ramped-up hydrocarbon production, and the accompanying jump in NGL volumes, means those liquids, primarily propane, are finding international markets via exports. The unfolding supply-sided market provides both opportunities and challenges for U.S. marketers, observes NPGA.  

Regarding the NPGA recommendations, the Industry/Marketer Education Working Group emphasizes there are no “one size fits all” solutions to last winter’s problems. Further, all propane supply planning “must be customized to each marketer’s region, sources of supply, and customer base, in addition to numerous other factors.” Nonetheless, the working group has organized marketer recommendations into subject areas: demand forecasting, supply contracting, transportation and logistics, primary storage, marketer plant storage, customer storage, capital funding/cash flow management, and shale gas issues.

Generally, NPGA defines demand forecasting as projecting requirements for the coming year by considering past gallon sales and reviewing future weather predictions. Supply contracting requirements include evaluating the strength and reliability of the mid-stream supplier — pipelines, rail terminals, storage facilities, and gas plants. Transportation and logistics involves the ability to successfully access, and transport, previously procured product.

Primary storage, the report adds, applies to leasing or subleasing storage in underground salt domes or caverns, which serve as the main repositories for propane in the U.S. Marketer plant storage regards having adequate peak-season needs owned or controlled by individual companies. Inadequate propane stockpiles, on the part of a few, the study states, are associated with the business practices of a few, and are a cause of problems throughout the supply chain. “(Supply) problems caused to all are associated with the business practices of a few,” reports the Industry/Marketer Education Working Group.

As mentioned, customer storage was addressed. Known as tertiary storage, it is a far-reaching part of the nation’s supply equation. The sheer volume, at an industry estimate of 111 MMbbl, or about 4.7 Bgal., in the field in 2011, nearly equaled the amount of primary storage capacity in the U.S. The study concluded that the average tank size for domestic customers was 400 gal. Furthermore, making the assumption that the average domestic propane tank in the U.S. is 250 gal., retailers responding to a PERC survey reported 88 MMgal. of plant storage, but nearly 800 MMgal. of customer storage. This means that tertiary storage is nearly nine times greater than reported marketer plant storage.Image3

“This sheer volume of customer storage in the field underscores the importance of filling customer storage prior to peak-season demand,” the report highlights. “The Working Group urges all marketers to implement programs aimed at ensuring customers are full prior to peak season. Areas of focus should include: eliminating will call accounts; creating budget, pre-pay, or metered programs to eliminate credit concerns; offering promotional pre-season fill rates; and including customers on scheduled delivery routes.”

Therefore, “customer storage is a critical link in the overall supply process. All marketers are urged to evaluate customer accounts to ensure that they are appropriately sized, and to implement policies that encourage route filling and off-season filling,” the NPGA task force says. Underscored is that, “while there are challenges to modifying established practices and consumer behavior, one great benefit of succeeding with these changes is that they have the effect of increasing supply capacity with no additional capital investment on the part of the marketer or the industry as a whole.”Image4

In addition, the NPGA marketer recommendations acknowledge that capital funding/cash-flow management tests the limits of many marketers every year. “With emergency supply costing up to $3 to $5 per gallon, a marketer could be faced with $30,000 to $50,000 for each transport load,” notes the association. “A mere 10 loads could result in an immediate payable of $500,000, with retail customers typically taking 30 to 60 days to pay after receiving each delivery. This cash flow imbalance meant small marketers may have been faced with over one million dollars of negative cash flow in a peak season, if they sold just several hundred thousand gallons.”

The recommendation: communicate often and share corporate financial information with capital providers; use information provided by NPGA, and other groups, to explain seasonal supply situations and how it has affected business; demonstrate that the business is creating, or has created, a supply plan that ensures the negative consequences of any future supply shortages can be reduced; explore increasing credit limits based on demonstrated needs and capabilities; and seek secondary sources of capital, such as other banking relationships, that can be called upon, as needed.

Image5Finally, shale gas issues: NPGA says this, “shale-gas hydraulic fracturing production is transforming the United States from a net importer of propane to the world’s largest propane producer and, thus, a net exporter.” Succinctly, more propane is being produced in the U.S. than can be consumed here at home. “The shale revolution creates both opportunities and challenges for the propane marketer in regard to supply planning,” the association advises. “First, especially for those marketers located in proximity to shale production, shale gas creates an opportunity to purchase propane in the regional market, often at attractive prices.”

However, the problem for marketers is two-fold: “First, shale production is taking over assets: transports, railcars, and pipelines traditionally used by the retail propane industry to move product during supply shortages. Therefore, as an industry we have lost flexibility to move propane to areas of need quickly. Second, shale production, primarily because it is attractively priced versus traditional supply, can lure the marketer away from engaging in, and then performing on, traditional supply contracts.” This can have a negative impact on building winter allocation levels.Image6

NPGA cautions that when considering purchasing propane produced from shale gas, marketers need to be aware that shale production is “steady-state,” in other words, it doesn’t ramp up or down based on seasonal demand. “In fact,” asserts NPGA, “cold weather often reduces the ability for shale gas plants to make propane due to production constraints. Shale production can also be unreliable, and generally has little, or no, storage attached to it. When the plant is running, there is propane. When the plant shuts down, there is none. When purchasing propane associated with shale gas, marketers need to ask themselves the following: What are the economic benefits of purchasing local production? Can a portion of these savings be used to procure secondary/emergency supply? How am I affecting my traditional supply contracts by replacing volume with sale production? What will I do if the local production goes offline, especially during peak periods? Shale gas is here to stay. Marketers should embrace the opportunities, but be mindful of seasonal pitfalls, and the larger strategic issues, posed by it,” maintains NPGA.

Senate Looks to Keep Propane Affordable, Accessible, Clean, Diverse, and Secure Next Winter

The propane supply and infrastructure problems of the past winter caused a loss of production efficiency for Minnesota turkey growers and concerns over potential animal welfare issues, a turkey grower told members of the U.S. Senate Committee on Energy and Natural Resources during a May 1 hearing in Washington, D.C.

John Zimmerman, a turkey farmer and immediate past president of the Minnesota Turkey Growers Association (MTGA), spoke at the hearing titled, “Short on Gas: A Look Into the Propane Shortages This Winter.” Propane marketers, U.S. senators, and representatives of the U.S. Department of Energy, the Federal Energy Regulatory Commission (FERC), and Association of Oil Pipelines (AOPL) were among the speakers. Several speakers noted the causes of the problems, including the late crop drying season, extreme cold weather, and the Cochin Pipeline reversal.

But Zimmerman’s comments brought the message to senators of how the issues affected end users of propane. He told the panel and hearing attendees that the turkey industry in Minnesota saw a $25-million increase in heating-related costs over the previous year.

To prevent those problems from occurring again, MTGA has formed a propane task force so members can secure as much propane in storage before cold weather hits this coming fall. But Zimmerman noted that because of the loss of product from the Cochin Pipeline, turkey growers cannot easily make up the loss of 80 MMbbl that the pipeline previously provided.

He asked the senators to direct FERC or other government agencies to establish an advanced notification system for end users when inventory drops below certain levels.

Senators Discuss Importance of Adequate Propane Supply

Propane is best known in Louisiana for barbecues and football tailgate parties, but thousands of Louisiana residents also rely on propane for other uses, and millions of Americans rely on it to heat their homes and prepare meals, Sen. Mary Landrieu (D-La.) said in her opening statement at the hearing.

She told stories of hardships that Midwest families suffered because of the propane shortage. The average family in the Midwest had to pay an extra $120 for heating this year, and families in the Northeast had to pay an extra $206. Restaurants across the Midwest were forced to either cook meals by microwave or close their doors; some church services were canceled because the churches simply could not keep the heat on.

“With an abundant supply of petroleum we have here in the United States and North America, we should not let this happen again,” Landrieu emphasized. “That’s what this hearing is about. I look forward to how plentiful energy resources that we have can avoid leaving Americans in the cold. Extreme weather and long winter demonstrate how [a] weak and disjointed inadequate energy infrastructure can have real harmful consequences for millions of American families and our economy.”

According to Landrieu, last winter’s propane shortages served as a reminder that significant investments in infrastructure are necessary to harness the full potential of this energy revolution. Better-coordinated planning between the private sector and states is important as well.

Sen. Al Franken (D-Minn.) also discussed hardships of residents in his state, mentioning a woman who went to bed in several layers of clothing and wrapped in an electric blanket.

“When she awoke, everything in her house, including her olive oil, was frozen,” Franken said. “Her propane tank was empty…and thank goodness for the Salvation Army.” That organization partially filled the woman’s propane tank and filled many tanks across the state.

Sen. Lisa Murkowski (R-Alaska) said at the hearing that energy must be affordable, accessible, clean, diverse, and secure.

“And I think that the propane issues we saw this past winter in the Midwest in my judgment is a reminder to us that things can get pretty dire when energy is not abundant, not affordable, and when we just don’t have those diverse supplies.”

The increase in supply due to shale highlights the nation’s need for more infrastructure, she added, and that infrastructure must be more closely adapted to today’s new resource picture.

“Simply put, infrastructure is just not keeping pace with production. And yet we have to add another layer of analysis on top of that, because in some cases we’ve got a situation where we have plenty of pipeline and plenty of storage capacity, but it’s underutilized for certain reasons.”

Landrieu added: “Today’s hearings will examine what caused the shortage, what can be done to ensure it’s not happening again, and that this product that is so needed can be delivered safely and efficiently transported to consumers.”

Marketers Address Committee on Storage, Exports

Propane industry representatives who spoke at the hearing also made requests of senators. Former National Propane Gas Association (NPGA) chair Joe Cordill mentioned three requests that are also on the request list of propane industry members attending Propane Days in Washington, D.C. this month: Increase transparency of the pipeline infrastructure, eliminate the U.S. Department of Commerce restriction on the Propane Education & Research Council (PERC), and support U.S. Energy Information Administration (EIA) collection and publication of better data. But Cordill, owner of Cordill Propane Service (Winnsboro, La.), also asked senators to encourage additional primary storage, such as the Finger Lakes facility in New York.

He told the committee he is fortunate to be situated close to some of the largest propane supply in the world. But many marketers are not as fortunate.

“For them, storage is important, both at large primary storage facilities and at their own locations,” Cordill explained. Increasing storage at Finger Lakes is one of the best options for the propane industry to increase storage close to where high demand exists.

“Private investment is ready to go, and millions of dollars of equipment are awaiting [New York] Gov. [Andrew] Cuomo’s decision to approve the expansion,” he noted. “This would put over 88 million gallons of propane in the heart of a high winter demand area. It would allow Americans to efficiently utilize American propane, rather than paying a premium for imported propane.”

NPGA appreciates various individuals and organizations that contributed to resolving, and are still working to resolve, the issues posed by the past heating season, said Gary France, current NPGA chair. Hours-of-service waivers that various states granted were a big help, allowing truck drivers to obtain propane from far-away locations, he told the committee. On a federal level, the U.S. Department of Transportation granted four “unprecedented” regional hours-of-service waivers. France recognized the state of Texas for its efforts in getting propane supplies out of the state to the rest of the country. He noted that U.S. Secretary of Energy Ernest Moniz was active in asking pipeline companies to prioritize shipments of propane on their systems.

France suggested that pre-approval of residents receiving Low Income Home Energy Assistance Program (LIHEAP) funds would allow marketers to fill those tanks earlier. He said that he was personally willing to wait on the arrival of the funds as long as he was assured that they would eventually be forthcoming.

NPGA has launched an effort to determine what actions government might take to avoid a future recurrence of last winter’s problems. Reviewing export policies is one, France told the panel. Many consumers and members of the propane industry questioned whether the growing exports of propane caused the supply constraints. NPGA will request that EIA conduct a study of propane supply, demand, and exports similar to the study it conducted regarding liquefied natural gas exports.

EIA Response: Administration Deeply Engaged

The Obama Administration was deeply engaged in responding to the propane supply crisis this past winter and took its responsibilities seriously, said Melanie Kenderdine, director of the office of energy policy and systems analysis for the U.S. Department of Energy (DOE). She noted, however, that DOE’s authority to deal with this type of crisis is limited. The most relevant statutory authority is the Defense Production Act, which grants the president the authority to prioritize contracts deemed “necessary or appropriate to promote the national defense” as well as the authority to prioritize contracts necessary to maximize domestic energy supplies.

The small and fragmented nature of propane markets and the limited availability of “granular information” limited situational awareness and might have hindered potential emergency responses to this past winter’s propane supply problems. To address these challenges, EIA will offer funding support for states to participate in DOE’s annual State Heating Oil and Propane Program (SHOPP). Kenderdine noted that offices collaborating with EIA to conduct the survey use the aggregated data to monitor the heating fuel markets in their states and develop and maintain programs that provide financial assistance for heating costs to low-income residents. At least eight additional states have expressed interest in participating this coming winter, she added.

Pipelines Responded to Requests for Help

The importance of pipelines and other midstream transportation infrastructure was seen during this past winter’s propane supply problems.

“Pipeline operators were asked to help, and they responded,” said Andrew Black, president and CEO of the Association of Oil Pipe Lines. He noted the responses of pipeline companies including TEPPCO, ONEOK, and Kinder Morgan, and stated as an example that TEPPCO asked shippers of certain refined products on its pipeline system to voluntarily defer shipments so that propane shippers could ship propane from Mont Belvieu, Texas, and those shippers generally cooperated in light of the unusual circumstances.

Last winter’s propane shortages were not the result of inadequate pipeline infrastructure or inadequate propane supplies. Adequate propane capacity is available to transport propane supplies to where they are needed if the owners and shippers of the propane adequately plan for their winter demand, Black noted.

Adequate pipeline capacity is an essential element to ensure continued sufficient supply of energy liquids, and that includes building new pipelines. Government policies play a huge role in assuring availability of needed pipeline capacity, Black added. FERC needs to continue to honor long-term transportation agreements between pipeline operators and shippers to ensure that needed new infrastructure can be built.

Contacted by BPN after the hearing, Cordill commented that Black’s remarks that adequate pipeline infrastructure exists to move all the propane needed was based on a year-round shipping schedule rather than the seasonal demand for propane. “His remarks were countered by using his own capacity charts, which showed that the pipelines were at full capacity during the heating season,” Cordill said. “This capacity included the Cochin, which will not be available next season.” Cordill mentioned additional losses of storage at Todhunter, Ohio, and the loss of connection to large volumes of propane stored in Saskatchewan.

Fixing the propane supply problems will take a team effort, Landrieu stated at the beginning of the hearing, and the Senate committee will play an important role.
     —Daryl Lubinsky

Making Good Time

By 2009, Susan Roush-McClenaghan had already been working her way up the ladder as a driver in two professional auto racing series: the National Mustang Racing Association (NMRA) and the National Muscle Car Racing Association (NMCA). But the year before that, she decided to get creative.

“I thought, racing is a wonderful place to showcase innovation, particularly drag racing,” said Roush-McClenaghan. She and her team began converting her teammate Donnie Bowles’ 2005 Mustang race car to propane and testing it in the fall of 2009.

The team has seen success with propane engines since then. Bowles’ car got the team’s first win for its propane program in 2010. The group finished building Roush-McClenaghan’s car, a 2010 Mustang, in February 2010. The car ran its first race as a complete race car using propane in March 2010. It has never run on any gasoline-based fuel. Bowles captured the first win with the propane car that same year, and Roush-McClenaghan also took a win with her propane-fueled car that year.

 Since then she has continued the tradition started by her father, Jack Roush, who is founder of NASCAR team Roush Fenway Racing and Roush Performance, a manufacturer of high-performance parts for Ford Mustangs. The company founded the propane fuel system company Roush CleanTech (Livonia, Mich.) in 2009.

Roush-McClenaghan grew up around drag racing and was actively involved in other motorsports early on. Most people think of Jack Roush’s motorsports career as revolving around stock car racing and will often ask her what it was like growing up in that atmosphere. But she tells them she was grown and out of the house before he started his own NASCAR team in 1988.

“When I was a teenager, dad would let me drive many of the hot rods that came and went through his shop.” Now, her 9-year old daughter, Josie, is starting in the Junior Dragster series at Norwalk Raceway.

Roush-McClenaghan navigated a two-person team for a cross country vintage car rally known as the Great Race from 1998 through 2007. But she did not get behind the wheel until she completed her first drag racing session around 2005, and she made her competition debut at NMRA in 2006.

She went on to finish consistently in the top tier, and she developed an interest in alternative fuels that continued to increase after her family business started Roush CleanTech.

More racing successes came after her team converted Bowles’ vehicle and her vehicle to propane.

Bowles’ 2005 Mustang first competed in the NMRA series in 2005. Conversion to propane and testing began in the fall of 2009. The development engine in his car was tested on C14 (114-octane race fuel) and then propane. The build of the 2010 Mustang began in the summer of 2009 and was completed by February of 2010. The 2010 Mustang was originally built to compete in NHRA Super Stock (a spec fuel class). “Once we decided to run on propane, we had to find a class that would allow a range of fuels,” she said. “The NMRA and NMCA both had classes we were familiar with and that permitted us to use propane.”

The development engine was a new build based on the Ford 5.4-L 4-valve GT supercar engine. It is naturally aspirated and produces 750 hp using two bi-phase injectors per port to support the fuel volume demand.

Roush-McClenaghan won her first race in the fall of that year and then her teammate Bowles won the NMCA championship in the Open Comp class. In 2011, Roush-McClenaghan won the championship in that same class. In 2012, Bowles won the championship in the NMRA Modular Muscle class, and in 2013, after switching her vehicle from the 5.4L propane engine to a Ford Coyote propane engine, Roush-McClenaghan again followed with a championship in that same class. That makes four championships in four years for the pair. AmeriGas (Valley Forge, Pa.) has been a Roush racing team sponsor since 2011.

At the beginning of 2013, the team dedicated all of its 5.4-L equipment to Bowles’ car and modified an intake manifold and adapted a fuel system for a Ford Coyote 5.0-L engine on Roush-McClenaghan’s car. That system runs around 880 hp. Bowles now runs a quarter mile in the high 9 seconds, and Roush-McClenaghan runs in the mid- to low 9s. Her fastest pass was at 154 mph.

She noted that auto racing was a natural extension of her day job as curator for the Roush Museum, which she has managed since 1988. The 50,000-sq-ft museum serves to preserve the company’s history and her father’s legacy in motor sports. She emphasized that her company is involved in non-automotive industries as well, such as “dampeners” that reduce vibration and noise. The company has developed dampeners for products such as golf clubs and Louisville Slugger aluminum baseball bats.

But propane will continue to be a big part of the company and its racing program.

“We’ll continue to race with propane, this year and next year for sure and possibly beyond. Honestly, I don’t see any reason to move away from that at this time. It’s been very successful.”    —Daryl Lubinsky

Attendees Seek Answers on 6 ‘C’s of Supply Situation

Attendees packed the propane supply sessions at the National Propane Gas Association’s (NPGA) Southeastern Convention in April. During the general session on the event’s final day, NPGA chairman Gary France focused additional attention on the product availability topic, as he noted that NPGA will work hard to make sure the industry doesn’t see a repeat of last winter’s supply and infrastructure problems.

France, owner of France Propane Service (Schofield, Wis.), told the audience that like all the propane marketers in the room, the supply problems that the industry experienced were a personal issue for him. He bought the assets of his family propane business in December 1989 during a winter with similar extreme weather and supply constraints. France’s son, Patrick, who began working full-time with the company this year, experienced the same issues his father experienced in 1989 and saw first-hand how a heating season can quickly turn sour for the propane industry. A heavy, late grain drying season moved into a record cold winter, while exports drained domestic propane supply. That caused a spike in propane prices, upsetting customers and drawing less-than-positive media attention to the propane industry.

“I don’t know if you want to call it passion for this industry or a father’s love for his son, but I never want to see this happen again,” France said.

Working toward that goal, NPGA has commissioned a task force of industry members to conduct a post-winter analysis that will identify causes of the problems and make recommendations to ensure the industry is better prepared next time around.

France introduced Mike Sloan, principal for ICF International (Fairfax, Va.), saying that the purpose of this year’s general session was not to dwell on the past, but to review what happened this past winter and determine how to ensure the problems don’t occur again.

Sloan first explained the numbers behind what caused the problems of last winter. The industry was short on supply, he noted, because of the six “C”s: crop drying, cold weather, cargo exports, capacity outages and constraints, Canadian demand and inventory, and the Cochin Pipeline outage.

Propane production in the U.S. increased by 1.4 Bgal. last year, so why was supply short? The combination of the six “C”s occurring at once was hopefully a once-in-a-lifetime confluence of several different issues.

ICF estimates that grain drying consumed 300 to 350 MMgal. of propane last year. That’s not at historic levels, although it is higher than in the past three or four years. The recent peak in grain drying demand was caused by a delay in the harvest because of cooler-than-normal weather throughout the summer and then above-average rainfall in October. The grain drying also started late and finished late, right before the start of the heating season. Sloan displayed a chart showing the date of corn crop maturity was about three weeks later than a year prior. In the Midwest corn-growing regions, October was significantly wetter than average, and in some areas historically wetter than average.
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atlanta img-3Then came the cold. This year was about 7.5% colder across the country than the 30-year normal weather averages. Sloan noted this winter was more than 10% colder than 2012-2013 and almost 30% colder than the previous year. The Midwest saw historic low temperatures.

“So the region of the country that just finished up one of the highest grain drying years in the last five to 10 years immediately jumped into the coldest weather it had seen perhaps ever,” Sloan explained.

That led to a significant jump in propane demand. The 2013/2014 winter consumption was 670 MMgal. higher than it would have been with the winter weather of 2012-2013. From October to March, frigid weather added about 410 MMgal. relative to the previous winter, and grain drying added about 260 MMgal.

Could the problems of this past winter happen again? In 2014 ICF expects propane production to increase by a bit more than in 2013. Sloan predicted a 20% to 25% chance that the crop drying situation would be the same next year.

“It’s unlikely, but we know it’s going to happen again,” he said. “We just don’t know if it’s this year, next year, or the year after.”

Cargo exports will increase, and new export facilities will substantially increase export capacity. The industry will not likely see the same degree of capacity outages and constraints that took place this winter. Sloan hopes the facilities and companies that experienced those outages and that have the capability of scheduling them in the future will not do so during November and December, and hopefully the number of unintended outages will decrease as well.

In the area of Canadian demand and inventory, “Cochin is gone,” Sloan stated. “They’ve stopped putting propane in the pipeline already.” All of the propane was scheduled to be removed from the system by the first week of May, so the pipeline that brought 323 MMgal. of propane into the Midwest last year will no longer be available. The supply is still in Canada, but it will be harder to get it to where U.S. propane marketers need it.

Sloan provided an outlook for the future, noting that propane supply will continue to grow aggressively. ICF forecasts total North American production of propane from gas processing plants will grow from 13.8 Bgal in 2013 to 22.8 Bgal in 2020.

However, several planned export terminals, including a Targa Resources terminal in Galena Park, Texas, scheduled to start up in the third quarter of this year, will significantly add to current export capacity, and export capacity is expected to grow faster than propane production in 2014 and again in 2015.

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As a result, Sloan contends that exports could limit summer inventory builds, and reduce propane availability for domestic markets next winter unless marketers and their suppliers commit to holding propane in storage this summer. If marketers don’t know where their winter supply is coming from, it probably won’t be there when they need it.

Marketers should also consider new storage capacity and develop multiple sources of supply, especially if they rely on rail. Building summer load is even more important than in the past in order to build winter supply allocation and to reduce seasonal swings in propane demand.

His presentation posed the question of how consumers will react to propane’s problems last winter. Competitors are reminding their customers about it, and Sloan emphasized that propane marketers should be proactive.

Even though the industry should look to the future to prevent a repeat of last winter’s supply problems, France complimented the propane industry’s work in coming together to get through the tough times. U.S. Energy Secretary Ernest Moniz requested a meeting earlier this year with France to discuss the issues. “I couldn’t help but think, how would this ever have happened without our national trade association?” France asked. Because of efforts of NPGA staff, DOE implemented an emergency order for the Federal Energy Regulatory Commission to put an additional 500,000 bbl of propane in the pipelines. That eased the problems almost immediately, he noted.

“We had a staff in Washington, D.C. that knew what was going on. They were part of our family and knew exactly what to do and they did it, and I thank them very much.”    —Daryl Lubinsky

Task Force Works on Game Plan for Future Winters
The National Propane Gas Association (NPGA) executive committee in January launched a supply and infrastructure task force to conduct a post-winter analysis to identify causes and contributing factors of this past winter’s supply and infrastructure issues and make recommendations for future strategies. The task force consists of industry experts from all regions of the country, including representatives from NPGA’s supplier section, supply and logistics committee, and pipeline advocacy task force. Also included were representatives from the Propane Education & Research Council and state propane gas association executives.
Tom Van Buren, chair of the supplier section and the pipeline advocacy task force, told attendees of the NPGA Southeastern Conference in April that the task force plans to release a report prior to the Propane Days event in June. But he noted that the task force is working on three strategic areas: education and best practices; policy recommendations and business efforts working with NPGA’s industry partners; and developing a game plan for future winters by working with state and federal agencies and NPGA’s supply and logistics partners. Working groups within the task force are in the areas of public relations/communications, consumer education, marketer education, Cochin reversal analysis; infrastructure and distribution; and exports and national inventory.
“We’re in a whole new world of changes that will continue to evolve, but we also have opportunity,” Van Buren explained. “At this point we have to consider what we are each going to do individually, but also collectively together to adapt and overcome.”