Refinery Outage, Shipping Act Crimp Hawaiian Supply

As of mid-March. a large number of Hawaiian homeowners and businesses were enduring the third week of a statewide propane shortage. Customers hooked up to Honolulu’s gas pipeline system were not affected. However, residents and businesses in the rest of the state that need propane were using as little as possible, hoping to make their supply hold out until propane production at one of the island's refineries was back on line.

More than 70,000 customers have been affected.

Problems at the Chevron Corp. (San Ramon, Calif.) refinery in Hawaii in late February resulted in the shortage. In a meeting with its large customers and state officials March 1, Chevron reported that it was having “operational difficulties” at the refinery and was unable to produce propane. Repairs were originally expected to take from 10 days to two weeks, and equipment and technicians needed were being brought from the mainland.

Reports from Chevron as of press time indicated that its propane unit was up and running by March 19, but not at full capacity. and an LPG carrier arrived in Honolulu at about the same time.

Chevron, one of three propane suppliers to The Gas Co. (Honolulu), the state’s largest propane marketer, also operates a synthetic natural gas plant that feeds the pipeline system that delivers gas to about 28,000 customers on Oahu. While the Honolulu pipeline customers have not been affected, other pipeline customers on Oahu and the other islands have been. The two refineries in Hawaii are operated by Chevron and Tesoro Corp. (San Antonio, Texas). Reportedly, Tesoro has increased production as much as possible.

According to Chevron, the refinery was temporarily shut down due to heavy rains and flooding. During the process of restarting the facility’s different units, the propane unit didn’t come back on-line properly.

The Gas Co. arranged for a shipment of propane, which arrived by March 19.

Obtaining waterborne imports for Hawaii can be difficult. Any shipments from the U.S. mainland must be delivered by U.S.-flagged ocean-going vessels. Since there is confusion whether there is even one still operating in the Pacific region, the product must be sourced from another country unless Congress grants a waiver to the Jones Act, which stipulates how inter-U.S. shipments are delivered.

(The propane business is a little different in paradise-this office and bulk plant (top) seems just like any on the mainland, except for its idyllic location. Local deliveries are by bobtail to stationary tanks, and cylinders are refilled at the plant. But deliveries between the islands are in ISO containers (above) that are transported by barge.)

Hawaii’s governor and legislators were prepared to ask Congress for the waiver.

Gas deliveries between the islands is done by barge, with the fuel loaded in ISO containers—large pressurized tanks that are surrounded by a steel box-like framework.

Shortly after Chevron’s meeting with state officials and its customers, The Gas Co. found an available gas carrier, however, it was in the Atlantic. Once it passed through the Panama Canal, the vessel was to pick up fuel in Peru. Reportedly, the ship was on its way to the Panama Canal by March 4.

The state asked consumers and businesses to conserve fuel and not use propane for appliances such as tiki torches, pool heaters, or even water heaters until an adequate supply is available. The Gas Co. and AmeriGas Propane (Valley Forge, Pa.), which also operates in the state, have also requested that customers reduce their fuel usage. Both companies and their resellers were rationing fuel, generally by not fully filling cylinders and tanks.

Deliveries to commercial customers, except for hospitals, schools, and some resellers, were temporarily stopped. At the same time, a number of businesses said they were or may have to shut down until they could get more fuel. Apartment landlords were telling residents that there would be no hot water for laundry and showers.

Once the Chevron plant is running at full capacity and the LPG carrier is unloaded, it still may be a couple more weeks before The Gas Co., AmeriGas, and other marketers are able to fill their customers' tanks and ship fuel from Oahu to the other islands.

-Ann Rey