Propane Supply Chain Archives

CHS Launches Propane Rail-Ship Terminal in Yuma

CHS has recently inaugurated a state-of-the-art propane rail-ship terminal in Yuma, Colorado, offering a significant boost to propane marketers in the region. Strategically located, the facility is set to benefit businesses across eastern Colorado, western Nebraska, and western Kansas, providing a much-needed alternative to the distant Conway propane hub in Kansas. Scott Pearson, Vice President… Continue reading CHS Launches Propane Rail-Ship Terminal in Yuma

Scott Pearson, Vice President of CHS Propane, emphasized the initiative’s role in addressing regional supply challenges. Previously, propane suppliers in the area faced lengthy journeys of up to ten hours to secure propane loads. The new terminal is a testament to CHS’s commitment to ensuring a stable, accessible supply in the region.
Recent disruptions in the supply chain, coupled with gas plant shutdowns and a refinery’s shift to renewable diesel production, have strained propane availability in these areas. Additionally, the industry has grappled with driver shortages, further complicating delivery logistics.

Local businesses have welcomed the new facility with open arms. David Dodson, Vice President of Energy at Ag Valley Co-op in Edison, Nebraska, expressed optimism that the terminal would bolster propane availability, especially during peak heating seasons. Similarly, Jess Wimmer, Petroleum Division Manager at WESTCO in Alliance, Nebraska, highlighted the terminal’s potential to alleviate supply chain bottlenecks and reduce wait times at critical junctures.

CHS, a leading propane wholesaler in the U.S., operates an extensive network with access to over 150 terminals across 40 states and five Canadian provinces. The Yuma facility, equipped with two loading stations and 24-hour access, can accommodate 12 railcars, ensuring efficient and quicker loading processes.

Pearson concluded by reiterating CHS’s dedication to being a reliable propane supplier. The Yuma terminal is set to streamline the propane acquisition process, enhancing convenience and efficiency for customers in the heartland of America.

Managing Propane Supply Chain Challenges

The propane industry has seen its resilience tested amidst supply chain disruptions. These interruptions, caused by factors ranging from geopolitical issues to natural disasters, pose a significant challenge. Here, we explore strategies propane businesses can implement to manage and adapt to these disruptions, ensuring reliability in service and maintaining customer trust. Understanding the Vulnerabilities The… Continue reading Managing Propane Supply Chain Challenges

Understanding the Vulnerabilities

The first step in proactive management is recognizing the weak links. The propane supply chain spans production, storage, transportation, and delivery. Disruptions can occur at any stage and stem from:

1. Production Shortfalls: Unexpected shutdowns of refineries or manufacturing plants can lead to supply shortfalls.
2. Transportation Hiccups: Dependence on pipeline networks, trucks, and railways means that transportation issues, whether due to logistical errors, strikes, or shortages in commercial drivers, can cause significant delays.
3. Storage Constraints: Inadequate storage capacity during peak usage times can strain the supply, unable to buffer the gap during sudden demand spikes.
4. Regulatory Impediments: Changes in energy policies or environmental regulations can impact supply chain efficiency and costs.
5. Natural Disasters: Hurricanes, floods, tornadoes, or extreme winter weather can severely disrupt production and delivery.

Strategies for Proactive Management and Adaptation

To fortify against these potential disruptions, propane companies need a combination of strategic planning measures, investment in infrastructure, and agile response mechanisms. A business focused on those areas will be sure to implement the following strategies:

1. Diversification of Suppliers: Relying on a single source for propane is a risk. Engaging multiple suppliers, possibly from different geographical areas, can mitigate the effect of regional disruptions.
2. Investment in Infrastructure: Enhancing storage facilities can provide a larger buffer during supply disruptions. Similarly, investing in a diverse set of transportation modes – like a company-owned fleet of trucks – reduces dependency on third-party services.
3. Advanced Demand Forecasting: Utilizing advanced analytics to forecast demand more accurately can help companies prepare better for market fluctuations. This preparation involves adjusting procurement, storage, and distribution plans accordingly.
4. Flexible Contracting: Building flexibility into contracts with suppliers can ensure more reliability in times of crisis. These contracts can include agreements on supply priority during shortages or alternative supply arrangements.
5. Technology Integration: Implementing technology like IoT for real-time tracking of shipments and inventory levels can provide early warnings of potential disruptions, allowing for timely countermeasures.
6. Regulatory Preparedness: Keeping abreast of regulatory changes and actively engaging in industry and governmental dialogues ensures that companies are not caught off guard by new rules. It also allows them to influence policy decisions constructively.
7. Customer Communication Protocols: Establishing transparent communication with customers during disruption helps businesses manage expectations and maintain trust. Proactive outreach with real-time updates about how the company operates reflects a customer-centric approach.
8. Business Continuity Planning: A detailed business continuity plan (BCP) that addresses various supply chain disruption scenarios prepares companies to act swiftly and efficiently. Regularly updated BCPs, informed by recent incidents and near-misses, keep the strategies relevant.

Long-Term Benefits

Tackling supply chain disruptions in the propane industry requires a multifaceted risk management strategy, operational flexibility, and constant communication. By investing in robust infrastructure, technology, and strategic planning, companies can mitigate the impacts of unforeseen events. Proactive and adaptive management safeguards business operations and reinforces customer confidence in the company’s reliability, ultimately contributing to a more substantial brand reputation

The Era of Renewable Propane: A Clean Energy Revolution

Renewable propane, a relatively recent addition to the energy landscape, has quickly become a reality in the United States. In just three short years since the first significant amounts were sold to end-users in 2019, renewable propane has found its way into the market, making its presence felt in different states across the country. This… Continue reading The Era of Renewable Propane: A Clean Energy Revolution

Renewable propane, a relatively recent addition to the energy landscape, has quickly become a reality in the United States. In just three short years since the first significant amounts were sold to end-users in 2019, renewable propane has found its way into the market, making its presence felt in different states across the country. This remarkable progress signifies a significant step forward for a renewable energy product that was virtually nonexistent not long ago.

One of the most striking aspects of this journey is the surging demand for renewable propane, particularly in the autogas sector. Yet, its influence is not confined to just one segment; awareness and demand for renewable propane are steadily expanding across various market domains.

The next frontiers for renewable propane are the residential, commercial, and agriculture markets. With the right industry focus and support, these markets are poised to grow at a rate similar to that of autogas. Renewable propane now stands proudly alongside other sustainable liquid fuels, including renewable diesel, biodiesel, Bioheat, and sustainable aviation fuel, sometimes referred to as alternative jet fuel.

While demand has been robust, the supply chain for renewable propane has faced challenges in keeping up. However, this is gradually changing. Producers of other liquid fuel renewables, such as biodiesel, ethanol, and dimethyl ether (DME), are recognizing the potential of diversifying their production to include renewable propane. Notably, DME blended with conventional propane presents an exciting supply source, capable of achieving net-zero carbon emissions when blended correctly.

At present, the price of renewable propane may seem relatively high. Yet, it’s essential to bear in mind that increased availability typically leads to reduced costs. As the production and adoption of renewable propane continues to grow, we can anticipate more competitive pricing in the future.

Recognizing the transformative potential of renewable propane, U.S. propane industry organizations are shifting their perspective. They no longer view renewable propane as a competitor but as a complement and extension of the conventional propane market. This shift is driven by a growing appetite among propane marketers for insights on sourcing, marketing, and selling renewable propane alongside conventional propane and other energy products they offer.

Leading the charge in research and development, the Propane Education & Research Council (PERC) and the World LPG Association are exploring the use of DME combined with conventional propane blends and their impact on various equipment components. PERC is also ramping up its focus on renewable propane within its broader strategy to advance the propane market.

Notably, conventional propane already boasts a cleaner profile compared to most grid-sourced electricity today. With the advent of renewable propane, it appears increasingly unlikely that grid-sourced electricity will ever catch up in terms of environmental cleanliness. Propane is clean now, and it’s on a trajectory to become even cleaner.

Renewable propane is not just a concept; it’s a reality. Its swift rise in prominence, surging demand, and potential to revolutionize various sectors underscore its significance in the clean energy transition. As renewable propane continues to make strides, it promises a greener and more sustainable future for energy consumption in the United States.

Exploring the Journey of Propane: Origins and Supply Chain Dynamics

Recent changes in the market have highlighted the complex dynamics of propane production and its widespread impact. An important event took place on August 4 involving the U.S. Energy Information Administration (EIA) gathering data for its Weekly Petroleum Status Report. This information was made public on August 7, revealing a pivotal moment in the propane… Continue reading Exploring the Journey of Propane: Origins and Supply Chain Dynamics

The focal point? Propane production. The week ending August 4 witnessed a record-breaking surge in U.S. propane production, reaching a remarkable 2.687 million barrels per day (bpd). This substantial increase of 187,000 bpd from the prior week has caught the industry’s attention, offering the potential for significant shifts in propane dynamics.

The surge in production is believed to be linked to expanded fractionation capacity around Mont Belvieu, a crucial hub. The propane journey begins with hydrocarbon wells, often nestled in remote locations. These wells yield an array of hydrocarbons, categorized as crude or natural gas depending on their composition. Near the wells, separators come into play, segregating water, heavy hydrocarbons, and lighter hydrocarbons. Each stream continues its journey along the supply chain.

The journey of propane continues as heavier hydrocarbon wells are processed, resulting in propane as a byproduct. Near-demand refineries commonly sell their propane in local markets, although supply sources have dwindled due to centralization. On the other hand, light hydrocarbons journey through processing plants that separate methane, used for natural gas distribution.

However, the bulk of propane supply emerges from major hubs, like Mont Belvieu. Here, natural gas liquids are fractionated and stored. Recent capacity expansions led to a surge in propane production, reflecting the dynamic interplay between production levels, fractionation capacity, and overall hydrocarbon output.

This surge in supply introduces new variables, including propane dehydrogenation plants converting propane into propylene for petrochemical use. As the market navigates these changes, it’s important to watch how demand responds. With supply surges often preceding shifts in demand, the market anticipates potential above-average inventory builds until winter demand gains traction.

The propane journey is a complex symphony, orchestrated by hydrocarbon wells, refining processes, fractionation capacities, and evolving demand dynamics. As the industry adapts to newfound capacity and demands, the ebb and flow of propane’s journey continue to shape market outcomes.

Empowering Growth Through Technology: Elevating Safety in the Propane Industry

Empowering Growth Through Technology – In the dynamic landscape of technological advancements, industries face a dual prospect of challenges and opportunities to amplify their operations. Propane companies, pivotal in providing energy to millions, stand on the threshold of transformation. The integration of technology not only streamlines processes and enhances efficiency but also emerges as a… Continue reading Empowering Growth Through Technology: Elevating Safety in the Propane Industry

Empowering Growth Through Technology – In the dynamic landscape of technological advancements, industries face a dual prospect of challenges and opportunities to amplify their operations. Propane companies, pivotal in providing energy to millions, stand on the threshold of transformation. The integration of technology not only streamlines processes and enhances efficiency but also emerges as a powerful force in ensuring safety across the entirety of the propane supply chain.

The Significance of Safety

Propane, hailed as a versatile and environmentally-friendly fuel, occupies a key position in residential, commercial, and industrial energy consumption. However, its combustible nature dictates a heightened need for safety at every stage of its journey. While adhering to traditional safety protocols, the propane industry now has an opportunity to transcend its own standards. Embracing cutting-edge technology revolutionizes safety measures and curbs risks, nurturing an unwavering safety culture within propane enterprises.

Harnessing Technological Leaps for Safer Horizons

Technology presents a myriad of tools that propane companies can wield to fortify their commitment to safety. Here are some key domains where technology stands as a transformative influence:

1. Remote Surveillance: Infusing propane storage facilities and distribution hubs with advanced sensors and monitoring systems ushers in real-time assessment of temperature, pressure, and gas levels. Immediate alerts in case of irregularities empower operators to initiate swift responses, thwarting potential hazards in their infancy.

2. Insights through Analytics: By harnessing the potency of data, propane enterprises can deploy predictive analytics to foresee equipment malfunctions or breaches in safety. Scrutinizing historical patterns allows the identification of latent risks, facilitating preemptive measures to avoid accidents.

3. IoT Enrichment: The Internet of Things (IoT) ushers in a realm of intelligent devices that engage in seamless communication. Within the sphere of propane safety, IoT-enabled devices create a network of interlinked sensors, valves, and alarms. These entities independently address emerging safety concerns, abating human error.

4. Immersive Training and Simulations: Technology also transforms training approaches for professionals in propane-related domains. Virtual reality simulations offer hands-on experiences in controlled settings, empowering individuals to rehearse emergency responses without jeopardy.

5. Drone-Powered Inspections: Drones with specialized cameras and sensors perform routine propane facilities, pipelines, and storage tank evaluations. This diminishes the necessity for manual inspections, which can be both time-intensive and hazardous.

The importance of technology-driven safety protocols is unparalleled for propane companies. By embracing these innovations, these enterprises can nurture an all-encompassing safety framework that envelops every facet of their operations. What elements should that safety framework include?

1. Fortifying Reputation: Safety constitutes the bedrock of customer reliance. When propane companies espouse cutting-edge technology to ensure safety, they effectively convey to their patrons that their well-being is paramount. This consolidates customer allegiance and beckons potential clients who prioritize safety in their energy preferences.

2. Harmonizing with Regulations: Stringent safety regulations govern the propane industry. Adopting technology-guided safety mechanisms ensures compliance and transcends the threshold of regulatory requisites, showcasing an unwavering commitment to surpassing minimal safety benchmarks.

3. Operational Synergy: Integrating technology for safety not only averts accidents but also optimizes operations. Propane companies can navigate operations more seamlessly and resourcefully by curtailing downtimes caused by equipment failures or mishaps.

4. Risk Abatement: Financial, legal, and reputational hazards resulting from safety oversights can bear substantial consequences. Incorporating technology to mitigate these risks is a proactive endeavor, safeguarding the long-term viability of propane enterprises.

Shifting Dynamics in Propane Tank Infrastructure and the Evolving Needs of the Fruit Tree Industry

Washington State stands as the leading producer of apples, pears, and cherries in the United States. The fruit tree orchards spanning over 265,000 acres rely on propane-powered wind machines to safeguard the crops from frost damage. A single wind machine, coupled with a 500-gallon propane tank, is typically employed to protect a 10-acre block of… Continue reading Shifting Dynamics in Propane Tank Infrastructure and the Evolving Needs of the Fruit Tree Industry

Washington State stands as the leading producer of apples, pears, and cherries in the United States. The fruit tree orchards spanning over 265,000 acres rely on propane-powered wind machines to safeguard the crops from frost damage. A single wind machine, coupled with a 500-gallon propane tank, is typically employed to protect a 10-acre block of trees. These wind machines circulate air and slightly raise the temperature, mitigating the risk of bud damage and ensuring optimal fruit yield.

Challenges and Seasonal Demands

The demand for propane in the fruit tree industry can be highly unpredictable, as it is contingent on weather conditions during the frost season. Warmer years may witness unused propane reserves, while colder years can lead to a surge in demand, creating the need for additional propane supplies. In April 2022, an unprecedented cold snap devastated fruit crops, resulting in up to a 70% loss in the hardest-hit regions. The sudden surge in demand during this exceptional event highlighted the challenges faced by suppliers to meet the urgent propane needs of orchardists.

Implications of the Cold Snap

The extensive cold damage experienced in 2022 marked a rare occurrence not seen in nearly four decades. The fruit industry, which has deep roots in the Yakima Valley, faced significant difficulties. The demand for propane skyrocketed, with approximately 10 million gallons delivered in central Washington during the frost season, four times the usual volume. The unexpected surge in demand strained the propane supply chain, resulting in logistical challenges and depleted inventory across the Pacific Northwest.

Challenges in Meeting Demand

Meeting the unprecedented demand for propane during the cold snap presented significant obstacles. A shortage of drivers and trucks hindered the timely delivery of propane to refill depleted tank inventories. The limited resources and time constraints posed immense challenges for suppliers in ensuring a continuous supply of propane to orchardists. However, prepared suppliers who possessed robust infrastructure and established supplier relationships were better equipped to manage the crisis.

The Shift towards Tank Ownership

The exceptional nature of the 2022 frost season has prompted some orchardists to reconsider their reliance on leased propane tanks. In line with a trend observed in the Midwest, many fruit farmers are now exploring the option of purchasing their own tanks to gain greater control over their propane supply. This shift empowers orchardists to choose their propane supplier, providing a sense of security during times of high demand or price fluctuations. However, tank ownership entails significant capital investment, maintenance responsibilities, and the need to manage supply logistics traditionally handled by experienced suppliers.

Balancing Considerations: Tank Ownership vs. Leasing

The decision between tank ownership and leasing involves a careful evaluation of the advantages and disadvantages associated with each option. While tank ownership provides greater control and flexibility, it necessitates a substantial upfront investment and ongoing maintenance. Leasing, on the other hand, offers convenience and access to expertise, but may limit the ability to select preferred suppliers. Orchards must weigh these factors and consider the impact on the supply chain while ensuring a reliable and secure propane supply for their operations.

Building Resilience in the Supply Chain

Regardless of whether orchardists choose tank ownership or leasing, it is crucial for both customers and suppliers to proactively address challenges and build resilience in the propane supply chain. Sustaining strong relationships, diversifying sources of supply, and investing in infrastructure are key strategies to ensure a reliable and secure propane supply in the future. Collaborative efforts between industry stakeholders will be essential to meet the evolving demands of the fruit tree industry and ensure the successful journey of fruit tree crops to market.