By Kevin Killough, State Energy Reporter
Some propane distributors are having to drive longer distances to get supplies because of a decision by a Wyoming company to stop pulling propane from its natural gas stream.
Tom Clark, executive director of the Rocky Mountain Propane Association, said Williams Co. was telling customers that it would no longer produce propane at its Opal natural gas processing plant, which is about 15 miles east of Kemmerer.
“They just refuse to honor the contracts,” Clark said.
That the company isn’t honoring propane contracts just isn’t true, Williams Co. says.
Natural Gas Prices
On Wednesday, a spokesperson for Williams told Cowboy State Daily that the company is honoring contracts.
“Williams has been operating in Wyoming for decades and we employ nearly 200 individuals in the state,” the statement says. “We are proud to be a part of Wyoming’s economy and take pride in being a good corporate citizen.
“As such, we are committed to working transparently with our customers to meet their propane supply needs at prices that align with current market conditions. We have offered to produce propane for our customers at a break-even point for Williams and we remain committed to that offer.”
Natural gas prices at the Opal Hub have skyrocketed in the past week.
The hub, which is located in Lincoln County, is a convergence of several interstate gas pipelines. It’s a key source of natural gas for the West Coast and an important trading hub for natural gas for southwest Wyoming and surrounding region.
Between Dec. 7 and Dec. 13, according to the Energy Information Administration, natural gas prices at the Opal Hub rose from $20.82 per million British thermal units (MMBtu), a measure of natural gas volume, to $26.37 MMBtu.
At the Henry Hub in Louisiana, which is a key national hub for natural gas, the price was $6.60 per MMBtu on Dec. 13.
Clark said the way the propane contracts are written, Williams has the option to get out of contracts even in the middle of the peak season.
“It’s unfortunate that natural gas prices and corporate greed has got us into this situation,” Clark said.
The propane stoppage at the Opal Hub doesn’t account for a lot of propane, Clark said, and it won’t prevent anyone from getting their propane delivered. It just takes drivers a lot longer, which will add costs that are passed on to consumers.
“Now they have to drive to different refining points or storage facilities. The biggest storage facility is in Utah, four hours away from that Opal plant,” Clark said.
A round-trip of eight hours adds an extra day to getting supplied, Clark said.
The association was one of the groups that reached out to Gov. Mark Gordon this month to see what could be done to address the supply issue.
Gordon responded by issuing an emergency order suspending federal regulations that limit the number of hours a propane delivery driver can work. The emergency order will be in effect for 30 days.
Clark said the federal regulations, even when the Opal plant is producing propane, can be a hindrance to propane deliveries, and sometimes a safety concern.
“Maybe a driver is trying to beat a winter storm or trying to get on the road early after a storm, but the federal government says you’re not ready to drive,” Clark said.
The association has propane retail and wholesale distributors throughout Wyoming, and Clark said Gordon’s emergency order will go a long way toward helping drivers navigate the winter storms coming this week.
He said under federal regulations and the situation at the Opal hub, drivers would end up sitting in long loading lines and using up all the hours they’re allowed to work, even though they’re not being fatigued by driving.
“Wyoming residents are not going to run out of propane. It’s going to take longer to get it. And we really appreciate the governor’s help so that we can make sure that nobody runs out,” Clark said.
Meanwhile, In Laramie
The situation at the Opal plant doesn’t impact all propane distributors.
Donnie Baggs, manager for Suburban Propane in Laramie, said its suppliers are in a much better position to keep propane flowing than distributors in southwest Wyoming.
“We have a network of suppliers so that way we never run short,” Baggs said.