Propane industry looks back at 2013-14 winter

The headlines proclaiming “propane shortage” flash on the screen.

An NPGA panel discusses the winter of 2013-14. From left are Steve Kossuth of World Fuel Services, DD Alexander of Global Gas, Tom Van Buren of Meritum Energy Holdings and Daniel Dixon of EDP. (Photo: LP Gas staff)

We’re in a hotel ballroom in downtown Louisville, Kentucky. A host of propane marketers look on and listen. Those who lived it, who worked through it, certainly must recall that time 10 years ago – the infamous winter of 2013-14.

A National Propane Gas Association (NPGA) panel discussion at these fall meetings ignited memories for many – of an industry pushed to the brink of its daily delivery processes, of the dynamic leadership it showed to persevere through a traumatic time and the lessons learned that still hold true today.

Rehashing winters is nothing new for an industry that bases much of its business performance – and therefore its reputation – on cold temperatures. The colder the better because it means that propane is flowing, propane marketers are delivering, and customers are warm and happy in their homes.

Caught by surprise

The winter heating season of 2013-14 started even before the official winter began. The industry burned through 300 million gallons of propane for crop drying purposes during the fall harvest – 235 million more than the previous year, according to NPGA.

And then it got cold – really cold – for much of the winter. The 2013-14 winter popularized the term “polar vortex,” a low-pressure system of cold air near the North Pole, which that year moved south into North America. Some of the coldest temperatures in nearly 20 years affected the eastern two-thirds of the U.S., according to the National Oceanic and Atmospheric Administration. Parts of the Midwest and Great Lakes region saw some of the coldest temperatures on record.

“The weather at that time continued and continued,” says Tom Van Buren of Meritum Energy Holdings.

Supply point outages, pipeline infrastructure changes and rail car service interruptions were among the factors stretching the propane distribution system and leading to regional shortages and price spikes. The public outcry was fierce against some companies.

“The domino effect absolutely applied here,” says Steve Kossuth of World Fuel Services, who at that time worked in supply and logistics for AmeriGas.

“A demand challenge became a supply challenge, which then became a transportation challenge,” he adds.

The industry’s response: All hands on deck.

Van Buren describes propane industry member actions in the months that followed – from those working in the offices to those in the field – as “incredibly impressive.” Meanwhile, propane industry leaders worked collaboratively with one another and with other associations, agencies and elected officials to expedite the movement of propane to the areas that needed it most.

“It’s a reason a lot of us love this industry,” says DD Alexander of Global Gas. “When things get tough, we all work together.”

Lessons learned

The winter led to a series of actions and changes for the propane industry and NPGA. Companies ramped up their own propane storage capabilities, modified their supply and transportation purchasing strategies and added other supply-related tools and technologies, such as tank monitors.

NPGA formed a supply and infrastructure task force and created helpful resources, including a white paper on propane supply planning and another document – a comprehensive checklist – called the “ABCs of supply preparation.” In addition, the association now provides a weekly propane supply update, courtesy of RBN Energy; shares a crop drying trends report, in collaboration with the Propane Education & Research Council (PERC); and conducts webinars in the summer to educate members on supply-related topics and underscore the importance of winter preparation. It also has an app (PLAN) that tracks wait times at supply points.

Despite the lessons learned and improvements of the past 10 years, the industry must guard against complacency, Alexander says, as it awaits another true test.

“The lesson for all of us is: Have a plan, a backup plan and a backup to that plan,” PERC President and CEO Tucker Perkins adds during the discussion. “The winter of 2013-14 is coming again; we just don’t know when.”