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Potential Weld Defects in Propane Storage Tanks Made in Mexico
NPGA has learned of a potential safety concern involving welding of “U” stamped pressure vessels manufactured in Mexico by Maquinado de Equipos y Tanques, S.A. de C.V. (METSA). The Chief Boiler Inspector of the Washington State Department of Labor & Industries asked for NPGA assistance in notifying propane tank owners and distributors of METSA propane storage tanks of the concern described below.
This past June, in the State of Washington, the owner of a 2000-gallon propane tank manufactured by METSA discovered a crack in the tank’s circumferential seam. The tank owner subsequently contacted an authorized repair organization to fix the crack. While the organization was performing the welded repair on the crack, they found that the manufacturer’s weld was actually cracked below the surface for most of the tank circumference.
After completing the repair, they successfully pressure-tested the tank and then released the pressure leaving the vent open overnight. The following morning the tank was found in two pieces approximately ten feet apart. Apparently, the weld on an adjacent circumferential seam several feet away from the repaired joint had failed, causing the tank to split in two. It has also been noted that this same repair organization performed welded repairs on four other circumferential welds on similar tanks manufactured by METSA.
Both the National Board (NB) of Boiler and Pressure Vessel Inspections and the American Society of Mechanical Engineers (ASME) have been notified. ASME is conducting an investigation to determine why the tank split in half. Additionally, the NB indicates that since July 1, 2007, METSA has submitted over 5400 vessels for National Board registration, though it’s unclear where these vessels are now located. The tank manufacturer has been notified, but it is unknown whether that they have taken steps to notify tank owners of the safety concerns.
Based on METSA’s production levels and not knowing the extent of the problem, it is not clear whether these issues are limited to Washington State of more widespread. If you own, or know owners of propane tanks manufactured by METSA who have experienced problems or leaks with the tanks, you should notify both the manufacturer as well as ASME. The manufacturer’s address is:
Mr. Samuel Medina; Gerente General
Maquinado de Equipos y Tanques, S.A. de C.V.
Canario No. 321
Cienega De Flores, Nuevo Leon, C.P., 65550
Mexico
The contact for ASME is:
Mr. Ken Baron, Secretary
Subcommittee on Boiler and Pressure Vessel Accreditation
American Society of Mechanical Engineers
Three Park Avenue
Mail Stop 21W
New York, NY 10016
Email: baronk@asme.org
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FERC Approves NGL Shipments On Dixie; Technical Conference on Remaining Issues Postponed
On October 22, the Federal Energy Regulatory Commission issued an order accepting Tariff 94 filed by Dixie Pipeline to allow shipment of certain NGLs from Mont Belvieu to Anse La Butte and Breaux Bridge, Louisiana. The decision came despite the protests filed by NPGA and others that propane shipments were being disrupted and that the pipeline’s claims of emergency conditions were inaccurate. Under the order, FERC accepts Tariff 94 as filed by Dixie and sets an effective date of September 22.
Earlier in the day, FERC had issued an order postponing to November 20 the Technical Conference to discuss other tariffs altering propane operations on the Dixie Pipeline. In response to these tariff proposals, NPGA’s Executive Committee quickly formed a technical task force to review the filings and direct NPGA actions on behalf of consumers and marketers. Since that time, NPGA has taken an active role in proposed operational changes filed by Dixie Pipeline to alter decades of priority for propane shipments.
The Task Force is comprised of small and large marketers, with a diversity of geographical locations, as well as a representative of a state propane gas association. NPGA and others, including the South Carolina Liquefied Petroleum Gas Board weighed in with FERC expressing deep concerns about the pipeline’s proposals to eliminate the priority for west-to-east propane shipments to allow for more frequent shipments of other NGLs. In response to protests, FERC scheduled the now-postponed technical conference to allow a full airing of the significant supply, contamination, and allocation issues that were at stake.
NPGA looks forward to working with pipeline representatives, marketers, suppliers, and government agencies to ensure that customers continue to have access to propane during the upcoming winter heating season.
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Major Wins For Propane As Financial Rescue Bill Extends Propane Tax Credits
In a major public policy victory for the propane industry, President Bush signed into law omnibus financial rescue legislation on October 3 that contained three high priority propane tax credit extensions. Specifically, the bill extended the 50-cent-per-gallon fuel tax credit through the end of 2009, and the propane refueling infrastructure tax credit through the end of 2010. In addition, the tax credits assisting homeowners with the purchase of high efficiency propane furnaces and water heaters were extended through 2009. *Please Note: These extenders begin in 2009 and DO NOT apply for 2008.
Our industry was one of only a handful to achieve such favorable treatment in this legislation.
This enactment culminated weeks of maneuvering on Capitol Hill as Republicans battled Democrats, the Senate battled the House, and Congress battled the Administration. Both the Senate and the House had passed different versions of energy legislation, and it was never certain that both sides would be able to agree on language to send to the President. In the end however, it was the Senate that first attached the energy tax credit extenders to the financial rescue bill in an attempt to “sweeten” it enough to ensure passage.
In addition, as part of a Continuing Resolution that will maintain funding of the federal government through March 6, 2009, Congress appropriated $5.1 billion for the Low-Income Housing Energy Assistance Program (LIHEAP). This is the first time the LIHEAP program has been funded at the fully authorized level. Although actual funds are distributed through individual state programs, NPGA believes that full funding of LIHEAP will provide much needed support to propane customers this winter heating season.
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SBA-Guaranteed Loans May Help Marketers In Need
As noted in previous editions of NPGA Reports, the U.S. Small Business Administration (SBA) revised the small business criteria for propane marketers. The threshold is now based on total number of employees and set at a level of 50 employees. Although the most direct benefit of this change is on the amount of the annual hazmat registration fee, i.e. the bobtail tax, that marketers are required to pay, marketers should not overlook other benefits f a small business designation, including SBA-guaranteed bank loans.
Within SBA is an umbrella program called CAPLines, which helps small businesses meet their short-term and cyclical working capital needs. Specifically, under CAPLines, there is a problem called Seasonal Line of Credit that provides advances against anticipated inventory and accounts receivables during peak seasons. So, for example, marketers who may have aggressively sold pre-buy customers without a proper hedging program in place may benefit from such a program if they are facing undercapitalization and credit concerns amid higher energy prices.
It is important to note, though, that although the loans or lines of credit are guaranteed by SBA, eligible businesses must work directly with lenders in your area., not SBA. To get more information, you are encouraged to contact a lender relations specialist in your local SBA office for additional details on available programs. You can obtain contact information by going online at www.sba.gov, click on “Local Resources” and then “District Offices.”
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