Propane industry faces record demand

Propane is needed for crop drying in unprecedented quantities by farmers across the Midwest, causing a supply challenge for propane suppliers.

As of Nov. 5, 2019, 52% of corn harvest was complete, according to a USDA report. That progress was 23% behind the five-year average. Harvest is proceeding at a slow, but constant, pace, providing consistent demand for propane used in crop drying.

“The propane industry is in the middle of three key issues,” says Adam DeLawyer, vice president, CHS Propane. “A wet spring delayed harvest, causing a demand for dryer gas across a large geography where normally there is a more gradual harvest from south to north. Add to that a wet crop that needs more propane to dry. And a much colder-than-normal fall means our owners and customers need home heat for homes and livestock facilities earlier than usual.” 

The high demand for propane is being felt by Midwest farmers, whose propane is primarily sourced from Kansas, Texas and western Canada and transported by pipeline, rail or truck. The issue is not a propane shortage, according to the National Propane Gas Association (NPGA). Instead, the challenge is getting propane to the right place at the right time. NPGA says the supply issues are caused by limits on the safe transportation of propane from supply points, as well as limits on pipeline capacity.

The NPGA says the propane industry is tracking rail and pipeline distribution to help move propane during peak demand periods.

“CHS Propane has been planning throughout the past year for a number of scenarios, strategically placing propane product and working closely with propane marketers,” says Dennis St. Aubin, director of marketing for CHS Propane West Region Sales and Energy Equipment. “Our planning was intended to exceed our customer needs, but demand has greatly exceeded anyone’s expectations.” 

To help meet demand, the CHS Propane supply team works closely with suppliers and pipeline and rail terminal partners to flex our infrastructure to get propane gallons where they are needed the most. CHS Propane partners with CHS Transportation to help serve customer needs. The efforts resulted in record volumes being moved to customers and owners by CHS Propane in late October and early November. “Our number-one priority is safely working to meet our owners’ and customers’ needs,” says Patrick Hessini, vice president of CHS Transportation

In addition to regular communication with your propane supplier, DeLawyer says preventing future issues will require a closer look at propane storage. “Continued expansion of retailer storage and on-farm storage will be critical to meet the farmer’s ability to harvest crops at today’s increased yields and rates,” he says.

Source: CHS Inc.