Events of last winter lead to industry recommendations on supply

Propane marketers gathered at industry meetings in February to discuss the ongoing challenges that were preventing our product from moving to needed destinations.

Marketers were relatively calm during those National Propane Gas Association (NPGA) meetings in Florida as they presented and dissected the issues at hand. Some comments were based in frustration, like, “I can’t go anywhere without someone asking me about the propane shortage,” Jerry Brick of North Star Energy in South Dakota, now treasurer of NPGA, said at the time. “Some of these comments cut deep to me.”

At that particular meeting, NPGA leaders mulled over outcomes they could impact directly and decisions that would make a difference in the near term.

“We need a plan in place so we are not in this situation next year,” said David Lugar, vice president of supply and logistics at AmeriGas and now the newly elected chairman of NPGA.

Part of that plan was the establishment of a supply and infrastructure task force to address the challenges last winter posed and to make recommendations for future action on the part of industry and government.

The task force was set up to explore six key areas: PR communications, industry/marketer education, consumer education, infrastructure and distribution, exports and national inventory analysis, and the Cochin Pipeline reversal’s impact.

The fruits of that labor are now showing, as the task force’s working group on industry/marketer education released recommendations on propane supply planning.

The 16-page document is broken into two parts – recommendations for propane marketers and those to NPGA and state associations. A variety of subject areas are covered, including demand forecasting, supply contracting, transportation and logistics, storage and shale gas issues.

The document is currently available in the members-only section of NPGA’s website, but the association said it will promote the report to the entire industry through a variety of channels. In addition, NPGA said it would create a hard-copy workbook based on the document and make it available to all industry members.

“We know just putting the recommendations out there is not enough,” said Mollie O’Dell, director of communications for NPGA, in an email. “We are using every avenue possible and every resource we have to help propane marketers and customers avoid another winter like the last one.”

O’Dell said the recommendations of the additional working groups will be presented at the NPGA Executive Committee’s meeting in August.

The task force’s working group on exports and national inventory has launched a request for proposal on an inventory forecast analysis, O’Dell said. Industry leaders say last winter revealed a lack of knowledge about propane inventory levels and what can happen when inventories are not located in high-demand areas.

This working group is calling for the development of a monthly report that estimates inventory levels and improves on the Energy Information Administration’s backward-looking data reports. A forward-looking approach would not only help the propane industry but could also be used to forewarn elected officials and federal and state agencies that supportive action is needed, according to a formal recommendation of the working group.

The overall efforts of NPGA’s supply and infrastructure task force and its accompanying working groups comprise just one piece of the propane supply puzzle, as the industry looks to bounce back from last winter and keep customers in propane.

“We’ve got to take care of ourselves, invest in our own assets, storage, transportation,” said Dean Haldeman of Blue Flame Inc. in West Virginia during the winter meetings. “There’s not a blanket answer, but if you don’t look at who you are and where you’re located and adjust your game plan to capitalize on your strengths, you are whistling Dixie.”

Check out the latest installment in our propane supply series.