MANAGING THROUGH THE PROPANE CRUNCH

Dec 17, 2019


There have been a lot of conversations about the fall propane shortage, says Agtegra Energy Vice President Kent Borstad. “But it’s really not so much a shortage, as a logistics issue,” says Borstad.
           
Propane is plentiful in the southern part of the country around Kansas and Texas, and states near the Gulf of Mexico.  The issue, says Borstad, has been unprecedented crop conditions, harvest timing and subsequent pipeline constraints.
           
“We’ve experienced a perfect storm of about every factor possible, that affected our supply capabilities here in the upper Midwest,” explains Borstad. “With all that happened, there just wasn’t enough pipeline and storage.”
           
The energy team began monitoring the situation as early as last spring, with the late-planted crop and a cooler-than-normal growing season. “That set the stage for what we were pretty sure was going to be an immature crop harvest, that was going to take a lot of drying,”  says Borstad. The cooperative immediately began increasing its projection of contracted gallons.
           
A factor that added to this year’s challenge was timing. Usually the corn belt finishes harvest in a staggered time frame, from east to west. But this year, from Indiana to North Dakota, nearly all were combining at the same time, because of widespread growing season challenges. That further pressured supply availability in the upper Midwest.
           
Borstad notes that home heating and animal confinement usage always takes priority over crop dryer gas. Home heating customers were monitored and kept informed, as the situation continued to evolve. On the farming side, dryer contracts were offered early.
           
In a time when some elevators did not have propane, Agtegra was able to keep its contract commitments to customers. “Obviously we wish we could have had enough gallons for everyone that didn’t contract,” says Borstad. “In order for us to have done that, a conservative estimate of another 4 million gallons of propane monthly, would have been needed.”
           
Pipeline capacity in a year like this also could not keep up with demand. There is no single propane pipeline. Pipelines, like the one in Wolsey, SD., share space with gas and diesel, which limits propane amounts that can be pulled.  
           
Agtegra was able to use its energy network, by using 7 suppliers across North Dakota, Montana, Nebraska, Wyoming, Kansas and Missouri. A minimum of 15 semis have been running daily to meet customer needs, bringing back 10,000 gallons a load.
           
And that segues to a quiet success story Borstad says deserves highlighting. “Our people have helped drive and do everything possible to get propane from all these points to our Agtegra customers,” says Borstad. “They’re the reason we’ve been able to meet our contract commitments, keep our customers warm and the dryers going.”
           
Borstad likes to quote his colleague and propane transporter Jerry Brick, of Aberdeen, SD, who has been in the propane business for half a century. “He has never seen anything like what we experienced this year,” says Borstad. “I think we’re all hoping we also never see anything like it again.”
 

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