Page 10 - FPGA SeptOct2020 final
P. 10
developing in some areas, often and distribution issues that we’re having to adjust to
due to short-term logistical could be aggravated by the accommodate that,” she adds.
issues. COVID-19 situation. “As a result, it’s going to be
“There is certainly an The pandemic’s impact tighter.”
expectation of reduced and lower crude prices, plus a Anderson advises retailers
imports via rail from Canada decline in oil and gas production to be wary about reducing
as producers there increase “are reducing propane their contracted gallons due
exports to other markets, supplies from all major basins, to a large commercial account
namely Mexico and Asia,” says resulting in what may end up undergoing a coronavirus-
Rachal. being a squeeze across the induced shutdown or other
The potential for reduced rail propane industry for supply anxiety-producing disruptions
availability is a real concern for and demand,” according to that could turn out to be
this winter, he continues. Anderson. temporary or offset by different
“That is especially true with “Now that we have export demand sources.
a lot of crude and associated terminals hooked up to some of “We found last winter you
natural gas production shouldn’t decrease your
shut in the Bakken that The pandemic may cause gallons based on an
would normally provide account not coming back
more Midwest supply. extra logistical challenges online,” she recounts,
Also, the supply from this winter. “because we’re seeing an
Marcellus and Utica increase on the residential
shale plays that used to side.”
remain in the Midwest is now the pipelines and the demand
moving east to Marcus Hook for exports is increasing out of Uptick in gallons
for export or movement into the British Columbia and Marcus D.D. Alexander, president
Northeast,” Rachal says. Hook, the rail that we’ve been of Global Gas who serves
“We are confident there getting as a result of how it was on the National Propane
will be a lot more supply than moving to these markets in the Gas Association’s Executive
demand overall,” he explains. past is not going to be there this Committee along with its
“So, we are not particularly year,” she elaborates. Propane Supply and Logistics
concerned about huge price “We should not count on rail Committee, noticed an uptick in
spikes at Mont Belvieu this moving across the U.S.; now it gallons this spring with so many
winter. There would be more will be piped directly to these people staying home.
concern about a spike in prices facilities or go west to Ridley “If COVID-19 lingers into this
at Conway during the peak Island instead of coming across fall and winter, I believe we will
domestic demand period.” to the east,” she says. “It’s a big see the uptick in gallons again
Rachal notes that “we are concern for us” as vigorous from people being home more,”
also concerned about local exports could put a crimp on she says.
market tightness due to the domestic surplus supply. The overall summer build
inattention to infrastructure “Couple that with regional was proceeding at a strong
needed for meeting domestic production being down and level, according to Alexander.
demand in the winter. That is no more regional volumes being “However, please don’t let that
longer an industry focal point, exported,” says Anderson, fool you,” she says, forecasting
and propane retailers are being and “we could have our local that the biggest issues for this
saddled with the burden of markets facing disruption if winter will be increased exports
there’s a cold-weather event
maximizing assets and supply this year. If that happens, barrels on the West Coast and Mid-
control to successfully navigate will be moving further distances Atlantic region.
peak demand periods.” to meet demand,” thus leading Surplus propane has been
Leslie Anderson, president to higher costs. coming down into the U.S. and
and CEO of the Propane Gas “Some of the big Canadian Mexico from western Canada,
Association of New England, suppliers from past years have and “now with the exports out
observes that she too is pulled out and are not supplying of western Canada, the gas that
harboring concerns over supply to our region anymore, and has been in ample supply will no
10 Propane Magazine September/October 2020
