DES MOINES, Iowa – Late last month, energy titan Kinder Morgan reversed the Cochin pipeline that runs through eastern Iowa, in order to send thinning agents north into Canada’s oil fields. The move that will cost Iowa’s propane users about 13 percent of the total supply.
Ag Marketing Program Executive Officer Harold Hommes with the Iowa Department of Agriculture and Land Stewardship says reversing the pipeline will put pressure on Iowa’s propane inventories in another, albeit indirect, way.
“The Cochin supplies about 38 percent of Minnesota’s annual propane needs,” he says. “So the combination of our loss of that 13 percent, in addition to those 38 percent of retailers looking to send their trucks to various terminals to load out from Minnesota; I’m afraid the combination is going to result in a lot of extra tags from trucks showing up from Minnesota. So, there’s going to be new pressure on our remaining terminals, where we still continue to enjoy adequate propane supplies.”
Hommes says foreign demand for propane has also become more attractive, pulling inventories to Mont Belvieu, Texas, and its proximity to export terminals, rather than the landlocked facility in Conway, Kansas, closer to Iowa. And that’s to say nothing of the continued dearth of pressurized rail cars able to haul propane which aren’t being used to haul natural gas liquids out of North Dakota’s Bakken Formation. But does that mean Iowans will have to endure another winter with tight propane supplies?
“If only I could see into my crystal ball; I’m hesitant to say so because last year was so unique,” says Hommes. “We’ll know more when we get there, I guess, but meanwhile I’m just encouraging people on those things they can take action on themselves, i.e., controlling their own inventories; on-farm inventories, or whether it be residential, or whether it be at that grain facility, livestock facility. Think a little bit out of the box if you can afford to get on order, or get an extra tank in place.”
A good strategy, says Hommes, whether or not a propane shortage is in the cards. Last year’s shortage came about due to a near-perfect storm of factors, including a longer-than-usual drying season for grains and a persistently cold winter that sent domestic propane demand skyrocketing. Hommes says all that’s changed.
“Overall, the propane situation is very bright for the U.S.,” he explains. “We are sitting on near-record nationwide inventories. Production is busting from its seams, so to speak. The North Dakota propane production should match what came into Iowa via the Cochin, alone; just production from North Dakota.”
To hear more about what the reversal of the Cochin pipeline means for Iowa, click here.
