Grain Drying Demand, Early Cold, Spawn Propane Supply Challenges

(January 21, 2020) — Heavy rains produced record flooding in the Midwest in early 2019, wreaking havoc in communities and on farms. Sustained precipitation caused marked postponements for crop seeding in the spring, and many acres weren’t planted at all. Fallout from the flooding hit again in the fall and produced severe propane distribution constraints throughout America’s Breadbasket.
Challenges Caused by flooding, late grain drying Sets Up Propane Supply Issues for lpg retailers in winter 2020 reports BPN industry leading source for news since 1939
Farmers who earlier struggled for months with swamped fields, fewer planted acres, and commodity price uncertainty now endured the multiple challenges of a delayed, wet harvest and the early onset of cold temperatures and snowfall. Mother Nature determined that record levels of prompt propane were needed to dry sodden grains at harvest time, and just for good measure swept the Heartland with cold and snow so space heating demand for people and farm animals alike would ramp up concurrently.

“A multitude of factors contributed to the supply challenges in the Midwestern states,” observed John Powell, senior vice president and head of Kansas City-based Crestwood Services’ Marketing, Supply, and Logistics Group. He said these included refinery turnarounds and outages, unexpected and extended colder-than-normal weather, a lack of contingency storage barrels, and strong crop drying demand due to a late planting season. Adding to the harvest woes were the high moisture content of corn coming out of the field, allocation on pipelines, and contingency supply points 50 to 200 miles further away than normal. All these conspired to stretch trucking capacity. And to boot, Canadian National railway workers called a strike and walked off the job, stranding propane railcars along its network.

“The colder-than-normal start to the winter season caused a dramatic increase in demand, both for heating and crop drying, along with several production issues, creating the perfect storm for a short-term supply shortage,” Powell adds. “Generally speaking, the supply constraints are now largely resolved.”

TO THE RESCUE
All that being said, marketer frustration mounted, with significant irritation directed at the wholesale side. Noted by several in Iowa was a reported change in policy by one leading wholesaler. “Some producer/wholesalers are opting out of doing small contracts and spot loads for retail propane marketers,” said Marty Lerum, managing partner at Propane Resources in Mission, Kan. “This puts more risk on the retail propane marketer. While we produce more propane than ever before in the U.S., the propane distribution system is actually less flexible to deliver to the retail propane industry.”

“My phone is ringing a lot less. It was a fairly quiet weekend,” said Deb Grooms, CEO of the Iowa Propane Gas Association, just after Thanksgiving. “No one called to say people or animals are cold, but there remains a lot of corn to dry.” Grooms, who spent most of late October and all of November dealing with retail challenges, made two trips to Washington, D.C., on behalf of Iowa marketers. Although she said she was finally seeing light at the end of the tunnel, for her association membership December still brought with it difficulty in procuring product. There was, however, a sense the perfect storm was steadily coming to an end.

U.S. Department of Agriculture data obtained and distributed by the National Propane Gas Association (NPGA) estimated the U.S. harvest was 86% complete as of Nov. 25. A five-year average for Iowa shows the crop usually at 97% complete by that date. “Iowa bore the brunt of the challenges,” said Jeff Petrash, NPGA vice president and general counsel.

NPGA MEETS WITH FERC
Through numerous discussions with Grooms, Iowa Gov. Kim Reynolds and her staff, and the Iowa congressional delegation, Petrash and NPGA staffers were able to arrange a meeting with the Federal Energy Regulatory Commission (FERC) Nov. 25. FERC is the government agency that regulates the interstate transmission of electricity and movements of fuels. For only the second time in history the agency worked with pipeline operators to expedite propane batch deliveries to Iowa. It acted in a similar manner during the winter 2013-2014 logistical difficulties.

A Nov. 27 memo of talking points for state propane associations prepared by NPGA stated that FERC had initiated an alternative dispute resolution process with pipeline companies on Nov. 19. Shippers and their representatives were therefore able to explore actions to alleviate propane pipeline constraints in the Midwest. Accepted was a proposal from Enterprise Products (Houston), owner and operator of many U.S. pipelines, to provide emergency transportation of propane to the Midwest for a 30-day period.

In addition, a Nov. 25 FERC meeting that involved representatives of Enterprise TE Products Pipeline Co. LLC, ONEOK North System LLC, NPGA, the Iowa Propane Gas Association, the Association of Oil Pipe Lines, and shippers was held to examine possible actions. NPGA thereafter reported that Enterprise would file to extend its emergency propane service. It also reported that ONEOK would file a tariff revision temporarily waiving restrictions on its allocation policy to allow qualified shippers to transfer allocated capacity, thereby facilitating prompter shipments. The FERC discussions were confidential. Further details were not released.

Meanwhile, NPGA reported the Federal Motor Carrier Safety Administration would continue to lift hours of service restrictions for Midwest states, including Illinois, Indiana, Iowa, Kansas, Kentucky, Minnesota, Missouri, Nebraska, North Dakota, South Dakota, and Wisconsin through Jan. 10.

By early December, whether through warmer temperatures, the end of crop drying drawing near, FERC actions, or likely a combination of all, Petrash said he noticed his email inbox was no longer flooded. “Since March of 2019, Sarah Reboli, Lesley Garland, and I had been watching the Midwest crop situation along with PERC’s Michael Newland, who oversees ag issues,” he said. “We have been communicating with FERC, the Midwestern Governors Association, NASEO [National Association of State Energy Officials], our state propane associations, and our membership about concerns throughout the year. We’ve stayed in regular communication with these organizations since the problems in 2014.”

At the same time, NPGA issued talking points directed to consumers, government officials, and media, namely, there is not a propane shortage in the Midwestern United States. There are limits on the safe transportation of propane from supply points, as well as limits on pipeline capacity. The U.S. continues to be a net exporter of propane and there is more than enough to satisfy customer demand. Talking points also observed that some propane marketers had sold up to five times more propane over a month’s time compared to the same time a year earlier. The deliveries were primarily for crop drying and other agricultural heating needs, as well as serving the needs of residential and commercial customers.

NPGA emphasized it is important for consumers to communicate with propane suppliers in advance to ensure they have what is needed, when it is needed, especially if they do not have a contract with a supplier or have not scheduled deliveries. “To understand the demand from corn and grain drying, consider that your typical home that uses propane for space heating, water heating, and cooking might use around four to five gallons every day,” the association explained. “But some of these grain dryers are using nearly 18,000 gallons every day. That volume of gas requires two tractor-trailer loads of gas every day.”

CHALLENGES AND CONCERNS
Jay Christie, energy development specialist at New Century FS (Grinnell, Iowa), is president of the Iowa Propane Gas Association. He said he and the association leadership took seriously the decision to contact Iowa’s governor and the state’s congressional delegation to seek help. “We don’t want to ask for help unless it is really needed, and in this case help was definitely needed.”

He pointed out that northeast Iowa was hit the hardest. One company slammed was Three Rivers FS (Dyersville, Iowa). Dani Ling, energy marketing manager, agreed that it was a tough fall. “We’ve had days where we could have used 25 loads but only got 13 loads,” she said. “We averaged about 13 loads per day in November and had trucks going to Monee and Morris near Chicago; Conway and Hutchinson in Kansas; and Oklahoma and Arizona.” In 2014, Three Rivers FS even trucked in some loads from Texas.

Ling added the company rationed propane in some areas this fall. “There were days we had to shut down some dryers to make sure home heat and hog house customers were taken care of. We sometimes limited drivers to delivering no more than 600 gallons per day, short-filling customers with enough to get by for a short period.” She acknowledged some efficiencies were lost between the cost of extra trips associated with short-filling and spending 20 cents to 50 cents per gallon more for propane to be trucked in from longer distances.

Terry Davis of Country Propane in Milo, Iowa said that he always stresses there is a plentiful supply of clean-burning, easily transported propane. He tells his customers not to read too much into the hype on the news until he communicates a concern to them. “As an industry, we often respond with reliable propane to fuel generators for short-term issues like hurricanes and tornadoes,” he said. “Where natural gas and electricity fail, propane picks up the slack. Crop drying is a similar circumstance where propane can resolve a short-term problem, but it often gets a black eye when transportation can’t keep up.”

Davis said the industry has done a good job of increasing storage at various customer sites. In many cases, 320-gallon tanks have been replaced by 500-gallon containers. In turn, 500-gallon vessels have been replaced by 1000-gallon tanks. However, he expressed concern that, too often, government stands in the way of boosting storage. “In Indianola and Warren County, it is next to impossible to add storage due to zoning conditions,” he said. “Meanwhile, crop drying equipment is faster and more efficient, but that means using up the propane faster and faster.”

And if extended travel is required to obtain more and more propane, the shortage of drivers is another big challenge for the industry. “We’ve got to legalize 18- and 19-year-olds receiving licensing to drive hazardous materials,” Davis said. “By the time they’re 21, the legal age, they are often already settled into another job.”

While Davis lauded the efforts of the Iowa Propane Gas Association, he said he is concerned that propane distribution issues arise about every five years. And each time the propane industry must work with new people in leadership positions at various government agencies. “Getting all the right people educated every time these situations arise takes time, and when propane is not moving fast enough a week can seem like an eternity. I’d like to see some policies and procedures in place where government assistance kicks in more automatically for cutting hours of service requirements and prioritizing propane on the pipeline.” — PAT THORNTON

EPA Seeks Comments on Cleaner Trucks Initiative Proposal

(January 20, 2020) — The U.S. Environmental Protection Agency (EPA) is soliciting pre-proposal comments on a rulemaking effort known as the Cleaner Trucks Initiative (CTI). This Advance Notice of Proposed Rule (ANPR) describes EPA’s plans for a rulemaking that would establish new emission standards for oxides of nitrogen (NOx) for highway heavy-duty engines. It also describes opportunities to streamline and improve certifcation procedures to reduce costs for engine manufacturers. The EPA is seeking input on this effort from the public, including all interested stakeholders.

EPA requests comments on clean air initiatives for near-zero propane autogas vehicles trucksThe purpose of the CTI is to update EPA emissions standards for NOx and potentially other criteria pollutants from highway heavy-duty vehicles and engines. In this ANPR, EPA provides stakeholders with our early thinking on CTI principles and program elements and solicits stakeholder input on preliminary plans for analyses and data to inform the upcoming notice of proposed rulemaking (NPRM).

Streamlining and Modernizing Heavy-Duty Emissions Regulations.
EPA is actively exploring opportunities to streamline our requirements, while ensuring no loss in protection for public health and the environment. For instance, we are working with industry partners to develop a more cost-effcient path for manufacturers to demonstrate the durability of their emission control systems. The ANPR describes several other areas that EPA is evaluating for streamlining and modernization, and requests comment on additional opportunities we could consider.

Improving Real-World Emissions Testing. Today’s in-use testing standards require manufacturers to collect emissions data from heavy-duty vehicles on the road in the real world. Our analysis suggests there may be great potential to improve in-use performance by considering a broader range of engine operation when we evaluate in-use compliance. The ANPR describes our current thinking on potential updates to the in-use testing program and requests comment and data on all aspects of this topic.

Updating Laboratory Test Cycles for Heavy-Duty Vehicles. Based on our early analysis of heavy-duty diesel engine technologies, we expect today’s advanced diesel technologies are capable of substantial emission reductions on current laboratory test cycles. We are considering an additional laboratory-based test cycle that would evaluate an engine’s control of emissions during conditions not emphasized in today’s test cycles, such as low-speed, or low-load operation. The ANPR describes our current thinking and requests comment on this topic.

Providing Additional Assurance of Emissions Controls through Extended Useful Life and Emissions Warranty Provisions. Our current analysis shows that heavy-duty engines operate well beyond EPA’s current defnition of the engine’s regulatory full useful life. EPA’s current emission warranty provisions cover only a small fraction of an engine’s operational life. In order to ensure that emission controls continue to perform over a period more refective of the real-world operational life of heavy-duty engines, we are evaluating longer mileage requirements for regulatory useful life and emissions warranty. The ANPR describes our early thinking on this topic and asks for stakeholder input.

Working Towards a 50-State Approach for Heavy-Duty Vehicles. EPA is closely following the technical work initiated by the California Air Resources Board (CARB) to update their heavy-duty vehicle and engine programs under a Heavy-Duty NOx Omnibus proposal. The ANPR provides an opportunity for comment on the extent to which EPA should adopt provisions similar to those expected in the CARB Omnibus proposal.

Public Participation Opportunities:
The EPA welcomes your input on this Advance Notice. Comments will be accepted for 30 days following publication in the Federal Register. All comments should be identifed by Docket ID No. EPA-HQ-OAR-2019-0055 and submitted at www.regulations.gov. For additional submission methods, please visit www.epa.gov/dockets/commenting-epa-dockets.

For More Information:
You can access the ANPR and related documents on EPA’s Cleaner Trucks Initiative webpage at:
  • www.epa.gov/regulations-emissions-vehicles-and-engines/cleaner-trucks-initiative
You can also contact the National Vehicle and Fuel Emissions Laboratory (NVFEL) Library for document information by email at This email address is being protected from spambots. You need JavaScript enabled to view it. or by phone at 734-214-4311.

In Memoriam: Sam McTier

(January 20, 2020) — The propane industry morns the loss of Samuel E. McTier, 93, an elder statesman of the propane industry and longtime member of the National Propane Gas Association (NPGA). McTier died peacefully on January 11, 2020, in Lake Forest, Illinois, where he was a longtime resident. Born in El Paso, Texas, on June 16, 1926, Sam was a child prodigy, playing the violin and viola at age ten in the El Paso Symphony Orchestra, and graduating from Austin High School in El Paso at 14. He graduated from the University of Colorado in Boulder as a Mechanical Engineer. Sam served both in the Navy in WWII and the Korean War.
 Sam McTier Honored Propane Industry Leader Dies Jan 11 2020 reports BPN industry leading source for news since 1939
In 1946 Sam settled in the Chicago area and began his career in the propane industry with Bastian Blessing. After working as a RegO salesman, Sam eventually founded McTier Supply Company, serving as President and CEO for over 40 years. Upon his retirement, he worked in the industry at Propane Technologies and McTier Consulting. Sam received the Distinguished Service Award from the National Propane Gas Association and the World’s Distinguished Service Award from the World LP Gas Association. In April 2012, Sam was placed in the Inaugural Class of the Hall of Fame by LP-Gas Magazine. He was the only person to receive the Member Emeritus status on the NFPA Technical Committee on LP-Gas. 
 
Sam was a past President of the Bath and Tennis Club of Lake Bluff, IL, where he won their doubles tennis championship and was also nationally ranked in Men’s Senior tennis. He was a finalist for the Poole Cup in golf and a finalist in the singles and doubles squash at the Onwentsia Club, Lake Forest, IL. Sam also served on the Board of the Lake Forest Symphony from 2006-2010. He played the viola in the Lake Forest Symphony and was on the Scholarship Committee of the National Propane Gas Association. 

Sam was preceded in death by his parents, brother Frank McTier and first wife, Ann Heffner McTier. He is survived by his loving wife, Virginia Aldrich McTier, son Brian McTier (Kerry) of Brush Prairie, WA, daughters Dianne McTier Olsen (Clifford) of Lake Bluff, IL, Carolyn McTier Makens (Paul) of Tiburon, CA, grandchildren Annaka Olsen, Christian Olsen, Hanna Olsen Westmoreland (Nikolai), Samuel Olsen, Katherine Gertrude Makens and Kevin Makens. 

The funeral will be held at the Church of The Holy Spirit, 300 E. Westmoreland Road, Lake Forest, IL, at 1:00 PM on Saturday, January 25th. In place of flowers, Memorial Contributions may be made to the Lake Forest Symphony, 400 E. Illinois Road, Lake Forest, IL 60045 or to t he NPGF Samuel E. McTier Memorial Scholarship. Donations in Sam’s name may be made using this form. Donations are tax-deductible.

Non-OPEC Production Grows at Record Speed

(January 16, 2020) — Oil production from non-OPEC countries is expected to grow at record speed in 2020, reports Norway’s Rystad Energy, creating a headache for the Organization of the Petroleum Exporting Countries, which was meeting in Vienna in early December to discuss extending oil production cuts.

OPEC logoRystad Energy predicts that total non-OPEC production, crude oil and condensate, will grow by about 2.26 MMbbld in 2020, creating a challenge for OPEC and Russia as they attempt to balance the global oil market this year. The non-OPEC rise in output will eclipse the 40-year-old record by a wide margin.

“The record-high production growth from non-OPEC tight oil and offshore puts significant pressure on OPEC’s ability to balance the oil market in 2020,” says Espen Erlingsen, head of upstream research at Rystad Energy. “Rystad Energy believes that OPEC will need to extend and deepen production cuts if it has any hope of supporting the oil price in the near-term.”

Looking at the year-over-year change in total non-OPEC oil production from 1960—the year the cartel was founded—toward 2020, production from non-OPEC countries grew the most in 1978, rising 1.96 MMbbld thanks to increases from Russia, the U.S., the United Kingdom, and Mexico.

However, this 40-year-old production growth record may be beaten this year. Tight oil is expected to be a key contributor to the non-OPEC oil output expansion, contributing around 1.35 MMbbld of the 2.26 MMbbld increase, according to Rystad Energy analysts. Offshore will balloon by an impressive 1.25 MMbbld, nearly 900,000 bbld of which will come from deep-water.

“In a unique turn of events, it is the offshore segment that will drive much of 2020’s non-OPEC supply growth,” Erlingsen says. “The record-high production growth this year comes almost exclusively from tight oil and offshore.” The U.S. tops the list of non-OPEC countries that will see the quickest production growth in 2020, driven by tight oil output. Norway and Brazil, the world’s two dominant offshore players, follow close behind.

Norwegian production growth will in large part be driven by the North Sea Johan Sverdrup field, which came online in October, as well as similar projects such as Oda, Valhall West Flank, and Trestakk. “Although a rather mature producer, Norwegian production growth may reach an all-time high this year, boosted by a bevy of young finds,” Erlingsen observes.

The same can be said of Brazil, where record-high production growth is expected this year thanks to the Buzios, Lula, and Lara projects. Rystad Energy forecast recently that Brazil’s state oil company, Petrobras, is set to become the world’s largest oil producer among publicly listed companies by 2030.

Barring additional oil production cuts by OPEC in 2020, Rystad Energy forecasts a substantial build for global crude oil stocks and a corresponding drop in oil prices. A showdown took place in Vienna Dec. 5-6 as OPEC member countries, plus Russia, gathered in the Austrian capital to discuss oil output levels for 2020. “We have a clear message to the OPEC-plus countries: a roll-over of the current production agreement is not enough to preserve a balanced market and ensure a stable oil price environment in 2020,” asserts BjØrnar Tonhaugen, head of oil market research at Rystad Energy. “The outlook will be bleak if OPEC-plus fails to agree on additional cuts.”

According to the energy consultancy’s estimates, the global oil market will be fundamentally oversupplied to the tune of 800,000 bbld in the first half of 2020. Empirical evidence has demonstrated that a 1-MMbbld surplus of oil can be expected to cause an oil price decline of around 5% per month, implying a potential drop of 30% over six months.

“If OPEC and Russia don’t extend and deepen their cuts, we could see Brent Blend dip to the $40s this year for a shorter period,” Tonhaugen says. “In order to ensure a balanced market, our research indicates that OPEC would need to reduce crude production to 28.9 MMbbld—a drop of 800,000 bbld from the levels seen in the fourth quarter of 2019—given our forecast for demand, non-OPEC supply, and the impact of new IMO 2020 regulations on global crude runs.”

New shipping fuel regulations, the so-called IMO 2020 effect, are expected to create more demand for crude oil in the near-term. However, if the actual effect of the International Maritime Organization rules on crude demand turns out to be zero, the call on OPEC—the amount of OPEC oil needed to meet demand—drops by 1.9 MMbbld year on year to 28.3 MMbbld.

“Despite decent cut compliance from the group as a whole, and large involuntary declines in Iran and Venezuela in 2019, OPEC’s current crude production of about 29.7 MMbbld is far above the call for 2020,” Tonhaugen remarks. “Alas, without deeper cuts taking effect in January 2020, large global implied stock builds are in the cards.”

(SOURCE: The Weekly Propane Newsletter, January 13, 2020, available by subscription)

"Gift Of Lights" Event Benefits Local Children, Firefighters

(January 15, 2020) — Three local New Hampshire nonprofits experienced the true spirit of the season this year thanks to the annual "Gift of Lights" holiday event presented each year by Eastern Propane & Oil at the New Hampshire Motor Speedway (NHMS). The event, which was launched in 2011, runs each year from Thanksgiving through January 5th. This year's fundraising efforts benefitted the Speedway Children’s Charities New Hampshire Chapter with $30,000; provided an extra 4,800 meals to the Loudon Food Pantry, and supported the Loudon Firefighters Association with a $4,000 donation.
Eastern Propane hosts annual NH Festival gift of lights fundraiser children firefighters 2019
Gift of Lights visitors received a discount on their admission when they brought at least three non-perishable food items to donate to the Loudon Food Pantry. These donations contributed to a total of 5,858 pounds of food, which will provide 4,882 meals. 

“It’s always great when a community comes together to help those in need,” said Sue Houck, president of the Loudon Food Pantry. “Thanks to the generosity of those that attended the Gift of Lights and those that work at New Hampshire Motor Speedway, there will be fewer families making the choice to eat or heat their homes this winter.”

Since the Gift of Lights first began, food and monetary donations have allowed NHMS to donate more than 98,000 pounds of food to the Loudon Food Pantry, which has provided nearly 93,000 meals to local citizens during the holiday and winter months.

Speedway Children’s Charities New Hampshire Chapter (SCCNH), that raises money for children in need throughout New England, received a portion of each car’s NHMS admission and a part of the registration proceeds went to the “Yule Light Up The Night” Walk/Run hosted by Millennium Running raising a total of $30,218, making this one of the largest SCCNH annual fundraisers. The funds raised will be combined with the proceeds from other SCCNH events throughout 2020 and be distributed through grants to local nonprofits in December. As the official charity of the speedway, Speedway Children’s Charities New Hampshire Chapter has raised $220,476 from Gift of Lights events since 2011, and has distributed more than $1.8 million to support over 808,000 children throughout New England since its inception in 2009.

During the 8-week Gift of Lights event the Loudon Firefighters Association hosted a S’mores Pit each Friday and Saturday night for a monetary donation raising a total of $3,736 for their “Off Road Utility Vehicle Fund, “ which will be used for Off-Road Firefighting and Rescue situations. The Loudon Firefighters Association has hosted the S’mores Pit during the Gift of Lights for three years running, collecting a total of $10,169.

The Gift of Lights event, presented by Eastern Propane and Oil, has seen more than 108,000 cars since it started in 2011, is a 2.5-mile drive-thru light show, which transforms New Hampshire Motor Speedway into a twinkling winter wonderland with 80 different scenes, 520 displays and 2.5 million LED lights.