Hawai’iGas on track to boost state propane reserves by 25%

Hawai‘iGas is nearing completion of a project to increase its propane storage capacity statewide in a move that will allow the utility to better weather potential supply disruptions, such as a shutdown of one of the local oil refineries.

Hawai‘iGas is boosting its propane storage by 540,000 gallons, or about 25 percent, bringing the company’s total supply on hand to more than 30 days, according to company officials.

"Our increased investment in propane storage facilities and our ability to import bulk propane enables Hawai‘iGas to mitigate any disruptions from the local refineries," said Alicia Moy, president and chief executive officer of Hawai‘iGas.

The company has already completed work to expand storage by 180,000 gallons on Maui and 60,000 gallons on Kauai. New storage tanks scheduled to be completed in October will add 270,000 gallons of storage capacity on Oahu and 30,000 gallons on Hawaii island.

Hawai‘iGas provides propane to about 40,000 residential, commercial and industrial customers on Oahu and the neighbor islands. Another 28,000 customers on Oahu receive synthetic natural gas via a pipeline distribution system.

About a decade ago, 100 percent of the propane purchased by Hawai‘iGas was produced at the state’s two oil refineries operated on Oahu by Chevron Corp. and Tesoro Corp. However, output at both refineries has declined since then, resulting in a commensurate drop in propane production.

This year Hawai‘iGas expects to ship in 60 percent to 70 percent of all the propane it sells in the state, said Joseph Boivin, a spokesman for the company.

Concerns about whether Tesoro Corp. would be able to sell its Kapolei refinery or have to shut it down caused a heightened level of concern among Hawai‘iGas officials about possible propane supply disruptions, Boivin added. Tesoro announced recently that it found a buyer for the facility.

"We wanted to make sure we had redundant or multiple sources of supply so there would be no danger of running out," Boivin said.

In addition to addressing energy security, the ability of Hawai‘iGas to ship in larger quantities of propane means the company will able to negotiate lower prices with suppliers, Boivin said.