State Waiver Sought for Texas to Ease Propane Shortage

With another Arctic blast slamming the Midwest and Northeast, millions of Americans who rely on propane to heat their homes are facing an acute shortage of the fuel at a critical time.

But help could be on the way from Texas in the form of an emergency declaration by Gov. Rick Perry’s office that would temporarily ease licensing regulations for commerce in propane and allow out-of-state suppliers to tap the state’s reserve.

“It’s an unusual thing to declare an emergency when we don’t have an emergency. It’s a unique situation. We need to help our states that aren’t as fortunate as us,” said Bill Van Hoy, executive director of the Texas Propane Gas Association, which sent a letter to Perry’s office Friday asking for a temporary waiver to quickly allow additional transport trucks to enter the state.

Van Hoy said he hopes the governor’s office will approve the waiver in the next couple of days. Perry’s office did not respond to questions about the emergency declaration.

The propane shortage affects 24 states, stretching from Oklahoma through the Midwest and up to Maine, Van Hoy said.

About 5 percent of U.S. households heat with propane, primarily in rural areas that are not served by a gas pipeline, according to the U.S. Energy Information Administration.

The waiver of licensing requirements is not safety-related, and Texas consumers would not be affected, Van Hoy said.

The shortage is the result of a “perfect storm,” he said.

“It truly is a number of things that have come together and have got us into a crunch. The polar vortex was a significant part of this problem. Demand has been up,” Van Hoy said.

Also reducing the supply was a record corn harvest in October and November, when large quantities of propane were used to dry out crops, he said.

A sharp increase in propane exports has also led to price spikes. Prices in the Midwest are the highest since at least 1990, according to the Energy Information Administration.

The propane supply has fallen from 34 days on Nov. 29 to 24 days on Jan. 10, according to the administration. The supply stood at 42.1 days a year ago.

“They are having transportation problems with some pipelines shut down. Rail lines are overburdened. We have a lot of rail cars being used for oil and gas plays all over the country,” Van Hoy said.

The nation’s largest propane storage facility is in an enormous salt cavern in Mont Belvieu, about 30 miles east of Houston, Van Hoy said

“There’s also a number of other storage facilities in Texas. It’s a co-product of oil and gas production. We produce the product so we also have storage for it,” he said, noting that the state is among the top five in propane use.

If the emergency declaration is approved, Van Hoy expects to see an influx of out-of-state truckers.

“I’ve talked to people as far away as Maine that are considering it,” he said.

Transportation costs will be higher than by rail, he said, but there is no other option.

“They have to have it,” he said.

Read more here: http://www.star-telegram.com/2014/01/22/5506228/state-waiver-sought-for-texas.html?rh=1#storylink=cpy

Date Posted: 1/24/2014