State Governments, Suppliers Convene on Plans to Avoid Future Propane Shortages

State Governments, Suppliers Convene on Plans to Avoid Future Propane Shortages

Midwestern Governors Association hosts working group meeting with state agencies and propane suppliers following 2013 winter shortages

At the Midwestern Governors Association meeting this week in Madison, Wis., policy advisors, state agencies and propane stakeholders gathered to discuss options for preventing future propane supply issues like the shortages farmers faced last winter.

The Propane Supply Chain Working Group meeting addressed broad challenges posed to the propane system and next steps the Midwestern region can take to ease any future propane supply and demand issues.

Last winter, demand for propane reached record highs as a wet fall in 2013 pushed farmers to dry more grain and perpetually cold temperatures had consumers keeping furnaces fueled.

Midwestern Governors Association hosts working group meeting with state agencies and propane suppliers following 2013 winter shortages. (CHS photo)

Adding to troubles was maintenance of the Cochin pipeline, a main propane supply artery from Canada to the Midwest. According to the Energy Information Administration, rail transportation disruptions, both due to weather and other factors, also curtailed deliveries between Mont Belvieu and Conway, two major supply hubs.

Related: Fuel Industry, Lawmakers Want Answers on Propane Issues

The shortages caused concern for farmers, many of whom relied on the fuel to heat barns, and sparked a national conversation as prices began to skyrocket.

Hearing those and many other propane frustrations from last year, Wisconsin Governor Scott Walker, MGA chairman, opted to select propane security and strengthening the propane supply chain as part his 2014 MGA Chair Agenda.

"The propane shortage was felt by residents and businesses all throughout the Midwest this past winter, which is why I selected strengthening our propane supply chain as my MGA Chair's Initiative," he explained.

The meeting also provided an opportunity to discuss future supply line maintenance and lessons learned from the 2013 supply issues.

One of those concerns is the planned reversal of the Cochin pipeline, sending propane supplies into Canada from the U.S., rather than the other way around, as it is currently used.

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But coinciding with the MGA meeting, national cooperative CHS this week said it plans to construct a propane terminal at Hixton, Wis., managed and operated by Federation Cooperative, that will hopefully help offset the supply issues the reversal may bring, says Jeff Polivka, general manager and CEO of Federation Cooperative.

"With the reversal of the Cochin pipeline, our propane supply will be compromised," Polivka said in a statement. "We are excited to work with CHS on this venture to ensure a steady propane supply for our customers."

The project is part of a previously announced $24 million investment to expand propane service in the region because of the reversal.

Related: Cold Weather Strains Midwestern Propane Supplies

Given the severe winter that we experienced, this new CHS propane terminal is a great and welcomed addition to Wisconsin's propane infrastructure," Gov. Walker commented.

Served by the CN railroad, the new terminal is expected to be completed by fall of 2014. It will have 360,000 gallons of storage tanks with the ability to offload six railcars every 4.5 hours and two truck loading bays capable of loading six trucks per hour.

Back at the MGA meeting, Gov. Walker also announced plans to convene a propane supply chain working group comprised of state government agencies and those in the industry to better enhance consumer awareness and industry preparedness of supply issues.

"This meeting served as a great step forward to learn about what worked, how communications can be improved and how states can help the industry with enhancing consumer awareness and industry preparedness," Walker said.

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