LPGas Setiembre 2013

SEPTEMBER 2013
Winter preview: Marketers

urged to cultivate several
propane supply options
Vital Signs: Plant incident
probed in Florida
Snapshot: Maine retailers
rapid transformation
THE PROPANE INDUSTRYS PREMIER INFORMATION SOURCE | www.LPGASmagazine.com
Chemical
reaction
Propane is a wanted commodity
in the petrochemical sector and
part of a growing process called
dehydrogenation
Who is Quality Steel
Corporation?
Others talk about it...
weve made QUALITY our
name for over 50 years!
Quality Steel was founded in 1957 with
a single purpose in mind...build a better
propane tank. We are a family and
employee owned business that
specializes in taking care of our
customers needs in order to make their
propane tank purchases easier. Our
tanks are produced in Cleveland, MS,
and we are extremely proud that they
are 100% USA made. What other
companies offer as options we make
standard equipment, because we
believe your customers should get the
best tanks offered.
Please Contact Us Today
800-345-2495 (toll free)
662-843-4048 (fax)
qsc@propanetank.com (email)
www.propanetank.com (web)
What Makes QSC Worth More?
The Difference
is Clear
100% USA Made - we are reinvesting
in the United States.
Warranty - our 5 year warranty on AG
product is the best in the industry.
Delivery - our lead times are
consistently better than other
companies. We invest in inventory so
you dont have to wait.
Customer Service - we do what we
say, when we say it.
Technology - we continually reinvest
capital in order to continue improving.
Our goal is simple... provide you and
your customers the best tanks
available.
Rego Valves - we make them
standard in our tanks. No need to ask,
no need to worry.
D450327T012 2013 Emerson Process Management Regulator Technologies, Inc. All rights reserved.
Fisher, Emerson Process Management, and the Emerson Process Management design are marks of the Emerson Process Management group of companies.
The New Fisher
H732A Transport Relief Valve

Engineered to resist vibration under severe conditions
Your transport trailers are being driven for longer hours over rougher roads. The new
Fisher Type H732A has been specifically designed to meet these new demanding conditions.
Emerson is committed to continuous improvement and product safety and strives to provide customers with the
most reliable and maintenance free products. The Fisher Type H732A is designed to withstand the greater rigor
of todays transport usage.
Old Design
New H732A Relief Valve:
Technologically Improved Design
Fixed and extended spring guide:
Threaded connection between
spring guide and body creates
greater resistance to bending fatigue
A
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o
n

(
g
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w
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T
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Lower Frequency Higher Frequency
Trailer Vibration and Acceleration Profile
Normalized Time Data Maximum Acceleration (W/O Rumble Strip) Maximum Acceleration (Rumble Strip)
H732A
Natural Frequency
& Dwell Time
Spring guide
free to move
The propane industrys premier information source
www.LPGasmagazine.com September 2013 LPGas
|
3
SEPTEMBER 2013
VOLUME 73
|
NUMBER 9
On the cover | PetroLogistics LPs propane dehydrogenation plant in Houston
6
|
OPENING DELIVERY
|
Pop
culture hasnt exactly helped
public perceptions of propane.
8
|
VITAL SIGNS
|
Investigators
seek to uncover the cause of a
massive propane plant explosion.
16
|
BLUE FLAME BLOG
|
A
routine for retailers to ponder
important business topics
18
|
FOCUS ON PROPANE
AUTOGAS
|
LP gas and CNG
are options on Fords 2014
F-150, available this fall.
31
|
SAFETY FIRST
|
Learning
from industry incidents
IN HIGH DEMAND
Marketers urged to
cultivate several propane
supply options prior to
winters arrival.
22
|

CHEMICAL REACTION
Propane is a wanted
commodity in the
petrochemical sector and
part of a growing process
called dehydrogenation.
28
|

Features
Departments
XX
22
28
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LPGas September 2013 www.LPGasmagazine.com
32
|
TECH EDGE
|
Propane retailers should realize the
importance of rightsizing their operations to meet
customer demand.
40
|
SNAPSHOT
|
Maine retailers massive transformation
puts it back on the map.
COMING UP: Autogas gets top billing in October, while
November features our annual propane suppliers guide
and December our state of the industry report.
40
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Editorial Advisory Board
Patrick Hyland
Director of Industry
Programs, Propane
Education & Research
Council, Cleveland, OH
Dale Delay
President,
Cost Management
Solutions,
Livingston, TX
Daryl McClendon
Principal & Owner,
DFM Enterprises,
Willowbrook, IL
Tom Jaenicke
Owner, ATomiK
Creative Solutions,
Charlevoix, MI
Ed Varney
Eastern U.S. Sales
Manager, Emerson
Process Management,
Houston, TX
Joseph Rose
President/CEO,
Propane Gas
Association of New
England, Epsom, NH
Larry Osgood
President,
Consulting
Solutions LLC,
Monument, CO
We offer the following services and products:
Refurbished ASME tanks
Used ASME tanks as is
Well refurbish your ASME tank
FREE storage yards
Transportation for ASME tanks
Buy scrap in whole load lots
Crist Propane Services, LLC
13344 E Hwy 60, Irvington, KY 40146
www.cristpropaneservices.com
Don Fulton
MI, IN, OH, IL, WI, NC
989-745-8892
donfulton@gmail.com
Joe Crist
All other states
270-668-3448
cpsinc@bbtel.com
Charlie Russ
KY, TN, MS, AL, GA, SC
270-668-5269
cruss.cpsinc@bbtel.com
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P
ropane and popular culture
havent exactly had a smooth
marriage.
From the television screen
to the big screen, propane is often
linked to fire and outlandish actions.
Examples are aplenty.
A new series on CBS called Under
the Dome portrays propane in a
sinister way. Corrupt city officials are
using it to manufacture drugs. And
one recent episode involved a shootout
and subsequent explosion of a truck
carrying propane tanks.
Former television series CSI:
Miami had a 2011 episode titled Pro-
pane Killer, in which investigators
probe a propane explosion at a hotel.
A short video promoting the
recently released animated Disney
movie Planes features the airplane
character El Chupacabra, who, in tout-
ing his strengths and abilities, leaves
a path of destruction in his wake. In
one scene, wind from the plane shat-
ters the windows of an airport control
tower and leads to a J&E Propane
tank explosion.
Over the Hedge, another animat-
ed movie that was released in 2006, in-
cludes a scene where two characters are
jettisoned high into the air on a propane
cylinder. While they parachute down
on an umbrella, the cylinder crashes
into a car and causes an explosion.
In the 2006 movie Casino Royale,
James Bond creates a fireball by shoot-
ing a 100-pound propane tank with
a handgun, prompting the Discovery
Channels MythBusters to test the
action by actually shooting at empty
and filled tanks. At least one propane
company houses the YouTube footage
that disproves the actuality of the Bond
scene.
So what gives? I wonder whether the
portable nature of our product, which
makes it so valuable to customers, leads
Hollywood writers to create such wild
scenes and storylines.
Back to reality
And then there are the real-life inci-
dents that can affect perceptions.
Extensive media coverage of two
particular propane incidents severe
burns suffered by ESPN anchor Han-
nah Storm in a December 2012 grill
explosion and the July explosion at a
Blue Rhino production facility in Flor-
ida (see page 8) have drawn national
attention to propane.
The industry must focus now, more
than ever, on safety and education. We
must learn from these incidents and
lead, using every opportunity to re-
mind customers about the safe use of
propane while easing their concerns.
Hannah Storm was a real hero,
says Stuart Flatow, vice president of
safety and training for the Propane Ed-
ucation & Research Council. She was a
woman severely burned, and she could
have really taken the propane industry
to task. And yet, I think her bottom line
was there were things she didnt know
about operating the grill.
During a Rose Parade broadcast on
Jan. 1, Storm explained in an emotional
segment what went wrong when her
grill flame went out on a cold Decem-
ber evening and she attempted to reig-
nite it. The propane hadnt dissipated
and it exploded in her face.
Storm took time to explain to
her audience about the need to wait
before relighting a grill many grill
manufacturers say to wait at least five
minutes, according to Flatow. These
seemingly little details can make a big
difference.
Spread the word
Maybe we cant control Hollywood and
the negative attention on propane, but
we can control our safety messages and
accentuate the positive aspects of the in-
dustry to customers and communities.
Who can forget Hurricane Sandy
last fall and the heroic response of the
industry to come together to provide
power, heat and hot meals for custom-
ers, the portable nature of our fuel
coming through? What positive im-
pact is your company making in the
community?
Some marketers might want to
consider inviting neighbors on a plant
tour to show how pristine some of
them are, the safety devices there and
how buttoned up and straight-laced
their operations are, Flatow suggests.
Propane is a safe, versatile and
valuable fuel you know what it can
offer. If you dont educate your cus-
tomers and potential customers about
propane, who will? LPG
6
|
EDITOR IN CHIEF
|
BRIAN RICHESSON
Perceptions of propane
Its our message against Hollywoods who will prevail?
Seemingly little details
can make a big difference.
If you feel the time is right to sell your business, consider calling
Suburban Propane. With over 80 years of experience in the
propane industry, you can trust us to see the process through
with the highest level of efciency and integrity:
Youll receive a purchase plan thats clear, exible,
and promptly executed
Your employees will be respected for their years of service,
their knowledge of your customers and the foundation you
and your employees have put in place to service those
customers over the years.
Your valued customers will receive exceptional service
during and after the transition
For a condential consultation call Mark Wienberg, Vice President
Operational Support & Analysis at 973-503-9628.
Thinking
of selling?
Talk to us. With our long history
of customer satisfaction,
youll rest easy about the transition.
[
NEWS BRI EFS
]
I NDUSTRY NEWS & NUMBERS
T
he cause of explosions that rocked a
Blue Rhino production facility and re-
portedly injured eight workers July 29
in Tavares, Fla., is still unknown, but
the incident is under investigation, accord-
ing to the local fire department.
Tavares is about 35 miles
northwest of Orlando, Fla.
Four employees and a mem-
ber of a staffing agency remained
hospitalized on Aug. 20, says
Scott Brockelmeyer, vice presi-
dent of communications and
marketing at Ferrellgas, Blue
Rhinos parent company. Twenty-four em-
ployees were working the second shift at the
time of the incident, the Tavares Fire Depart-
ments incident report states.
Our thoughts and prayers are with our
employees and the families affected by this
incident, says Steve Wambold, Ferrellgas
president and CEO, in a written statement
from July 30. We would also like to ap-
plaud the excellent work of local emergency
personnel their quick response, ability to
accurately account for all em-
ployees and seeing to their im-
mediate medical needs certainly
helped to comfort everyone
involved.
The incident occurred at
one of nine company-owned
production facilities, where 20-
pound cylinders are returned,
refurbished and filled. An estimated 53,000
cylinders were on site, and most of them
ignited, according to Tavares Fire Chief
Richard Keith.
The facility serves all of Florida, southern
Midwest show moves
to Ohio in 2014
The Midwest Propane
Gas Convention & Trade
Show is on the move, get-
ting a new date and host
city for 2014. The show,
held in Indianapolis since
1996, is now scheduled
for June 5-7 in Columbus,
Ohio. For more informa-
tion about the event, visit
www.propaneshow.com.
Paraco Gas acquires
AmeriGas customers
Paraco Gas Corp. acquired
the Long Island, N.Y., cus-
tomer base of AmeriGas,
the company announced.
The acquisition gives
Paraco Gas 12,000 new
customers and 40,000
total on Long Island.
Canadian companies
complete deal
Gestion Jerico Inc., a
commercial tank and
home heating com-
pany, acquired 90 per-
cent of Pro-Par Group, a
Canadian manufacturer
of storage tanks, dispens-
ers and transport units.
Pro-Pars management
will continue to own the
remaining 10 percent of
the company.
According to a press
release, Pro-Par has
operations in Quebec and
Ontario. The company
employs 80 people.
NGL Energy Partners
adds disposal capacity
NGL Energy Partners pur-
chased a water disposal
and hauling company,
adding four high-capacity
oil and gas water disposal
Continued on page 10
Incident at Blue Rhino production facility
remains under investigation in Florida
[
PROPANE MASTER LI MI TED PARTNERSHI P COMPARI SON
]
Fiscal Recent Total Units
Year Quarter Price Current Current Est. Tax Debt/ Outstanding
Company End End (8/19/13) Distribution Yield Deferral Capital (millions)
AmeriGas (APU) Sept. June $42.27 $3.36 7.9% 75% 61% 92.8
Ferrellgas (FGP) July April 22.50 2.00 8.9 90 103 79.1
NGL Energy Partners (NGL) March June 29.35 1.98 6.7 80 48 62.3
Suburban Propane (SPH) Sept. June 44.99 3.50 7.8 80 53 60.2
Average: 7.9% 57%
[
LAST TWELVE MONTHS
]
Gross Gross Gross Proft Gross Proft Retail Gallons Sold Percent Gross Proft
Company Revenue Proft Margin (Per employee) (millions) Change (Per gallon)
AmeriGas $2,864 $1,309 46% $151,193 1,243 29% $0.97
Ferrellgas 1,605 649 40 186,966 638 3 0.72
NGL Energy Partners 1,155 175 15 88,650 149 61 0.16
Suburban Propane 1,341 742 55 178,960 527 105 1.41
Average: 39% $151,442 49% $0.82
Source: FactSet, partnership reports and Wells Fargo Securities LLC
- 0ollot hutes |n m|ll|ons, excet lot et-un|t Joto.
- kevenue onJ toss toht Joto ote coseJ on totol toone ollons solJ.
- lmloyee Joto |s coseJ on most tecently comleteJ hscol yeot.
- NCls tevenue onJ toss toht Joto |ncluJe the sole ol J|st|llotes onJ
othet notutol os l|qu|Js.
5hoton lu| - onolyst, wells loto 5ecut|t|es llC
8
|
Five people
were still
hospitalized
as of Aug. 20.
[
NEWS BRI EFS
]
|
9
facilities through the
acquisition of Oilfield
Water Lines.
According to a press
release, the acquisi-
tion gives NGL Energy
Partners about 90,000
barrels per day of addi-
tional disposal capacity
in the Eagle Ford shale
in southern Texas. The
acquisition increases the
companys number of
saltwater disposal wells
from six to 10.
Court rules against
rest break provision
The Federal Motor Carrier
Safety Administration will
not enforce a 30-minute
rest break provision for
short-haul drivers in the
hours-of-service final rule
that took effect on July 1,
the agency announced.
The announcement
came following an Aug.
2 appeals court ruling
on litigation brought by
the American Trucking
Associations and Public
Citizen.
Char-Broil grill recall
exceeds 70,000
More than 70,000 Char-
Broil patio grills across the
United States and Canada
were recalled due to an
electronic ignition issue
that poses a burn hazard.
The recall involves two
Bistro models: the 240
full-size grill and the 180
tabletop grill. Char-Broil
has received at least 26
reports of the burner
flame going out and then
unexpectedly reigniting
when consumers turn the
Deviation Deviation
From Last 12 From
State July Norm Months Norm
Alabama 0 0 2660 -179
Alaska 138 -92 11050 -144
Arizona 0 0 1935 -225
Arkansas 0 0 3504 -2
California 0 -10 2264 -370
Colorado 1 -32 7117 -291
Connecticut 7 3 5698 -371
Delaware 0 0 4418 -322
Dist. of Columbia 0 0 3776 -279
Florida 0 0 533 -104
Georgia 0 0 2815 -68
Hawaii 0 0 0 0
Idaho 0 -39 6568 -340
Illinois 36 31 6311 -43
Indiana 31 26 5845 -49
Iowa 33 22 7257 198
Kansas 8 6 5254 135
Kentucky 0 -1 4573 -43
Louisiana 0 0 1724 -60
Maine 14 -21 7592 -420
Maryland 0 -1 4680 -169
Massachusetts 2 -5 5994 -413
Michigan 19 5 6709 -240
Minnesota 25 -7 8875 119
Mississippi 0 0 2514 -49
Missouri 12 10 5280 62
Montana 3 -86 7557 -753
Nebraska 21 10 6641 117
Nevada 0 -5 3298 -505
New Hampshire 6 -12 7058 -530
New Jersey 0 -1 5210 -234
New Mexico 0 -5 4372 -464
New York 1 -7 5643 -473
North Carolina 0 0 3544 19
North Dakota 58 8 9794 346
Ohio 26 20 5803 -169
Oklahoma 0 0 3786 36
Oregon 10 -53 5102 -48
Pennsylvania 14 6 5754 -155
Rhode Island 7 2 5719 -170
South Carolina 0 0 2808 13
South Dakota 30 -6 7842 -6
Tennessee 3 3 4079 79
Texas 0 0 1790 -207
Utah 0 -13 6234 -379
Vermont 36 5 7665 -445
Virginia 0 -1 4433 -46
Washington 18 -59 5318 -195
West Virginia 1 -4 5275 -21
Wisconsin 57 34 7903 112
Wyoming 0 -59 7753 -551
United States 8 -1 4346 -178
[
BY LEO MICHAEL
]
JULY
[
HEATI NG DEGREE DAYS BY STATE
]
Data courtesy of the Climate Prediction Center/National Weather Service
PERCENT
RETURN
NOT
MEANINGFUL
LOWER THAN
AVERAGE
HEATING
DEGREE DAYS
HIGHER THAN
AVERAGE
HEATING
DEGREE DAYS
A sampling of notable tweets and posts from LP Gas
social media pages.
twitter.com/lpgas_mag
www.facebook.com/lpgasmagazine

The @EIAgov says U.S. #propane stocks remain at
about 62 million barrels, about 13 percent lower than
the same period a year ago.

Propane exhibit in the works at the National Museum
of Industrial History.

NGL Energy Partners has completed six acquisitions
since April, primarily to expand its water services and
crude oil logistics businesses.

Suburban Propane sold 92 million retail gallons in the
third quarter, up from 49 million in the prior-year quar-
ter; reflects Inergy deal.

New #propane-fueled water heating system for
large-scale commercial applications in the works from
@Tecogen_Inc.
And for the latest news, visit www.lpgasmagazine.com.
knob off. The 26 reports include four reports of burns and
seven reports of burned or singed hair.
Consumers are being asked to stop using the grills,
which were sold at Ace Hardware, Amazon.com, Home
Depot, Sears, Target, True Value and other retailers.
Consumers are also being asked to contact Char-Broil for
instructions on how to order and install a free repair kit.
Lennox recalls propane, natural gas freplaces
Lennox Hearth Products recalled 11,500 fireplaces because
of a gas leak and fire hazard risk. The recall involves nine
different models that are fueled by propane or natural gas.
Lennox, based in Nashville, Tenn., has received eight
reports of gas connectors leaking in fireplaces. No injuries
have been reported. Customers with recalled units are
asked to immediately stop using the fireplaces, turn off the
gas to them and contact Lennox for free inspections and
connector replacements.
The recalled units were sold at fireplace stores and by
heating, ventilation and air-conditioning retailers and
installers across the United States from April through
December of last year.
PHMSA issues odorant-related safety alert
The Pipeline and Hazardous Materials Safety
Administration (PHMSA) issued a safety alert to notify the
public of the risks associated with the under-odorization
of LP gas.
PHMSA recommends doing a quality control check
when manually injecting an odorant to LP gas. In addition,
when LP gas is automatically injected, PHMSA recom-
mends doing a periodic equipment-calibration check to
ensure consistent injection levels of a required odorant.
PHMSA also issued recommendations to avoid odor
fade. Specifically, PHMSA recommends notifying people
who receive new or recently cleaned tanks that the tanks
are, in fact, new or recently cleaned. PHMSA then recom-
mends tank recipients implement quality control mea-
sures to address potential odor fade.
In addition, PHMSA recommends that all LP gas trans-
ported in railcar tanks or cylinders be odorized in accor-
dance with the federal requirements of 173.315(b)(1) under
the Hazardous Materials Regulations unless the odoriza-
tion would be harmful in the use or further processing of
the LP gas.
Propane to generate electric power for Virgin Islands
The Virgin Islands Water and Power Authority (WAPA)
signed an agreement with the Vitol Group, an energy sup-
plier, to use propane instead of fuel oil as the primary fuel
for power generation in the U.S. Virgin Islands.
Continued from page 9
[
NEWS BRI EFS
]
Georgia and southern Alabama, and the only interruption
to service occurred in the Orlando area the following day,
Brockelmeyer says. The national company, with about 450
employees, was able to reallocate assets to service customers
much like it can do to satisfy demand during holidays and
severe weather events.
Blue Rhino sustained an estimated $3 million in dam-
ages $2 million in property losses and $1 million in the
loss of other items, the incident report shows. Brockelmeyer
says the company
intends to reopen the
facility following site
cleanup, which is ex-
pected to take six to
eight weeks.
We have been
humbled and overwhelmed by the response we have re-
ceived from the industry, Brockelmeyer adds. We have
been reminded through that outreach just what a great
family we have in the propane industry.
An August event was planned by local businesses to rec-
ognize and honor first responders to the incident, Brockel-
meyer says.
10
|
THE SOCIAL SCENE
For more information on gas piping safety, visit www.CSSTFACTS.org
Visit our new website at www.tracpipe.com
Copyright Omega Flex 2013
OmegaFlex, Inc.
451 Creamery Way
Exton, PA 19341
1-800-671-8622
ISO 9001 Registered Company
FGP-731 08/2013

Flexible Gas Piping by OmegaFlex
CONTRACTOR GRADE CSST
FOR CONTRACTORS ONLY
At OmegaFlex
we are committed to supplying the safest

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Thats also why we dont sell to the DIY Home Centers too
After nine years of use and thousands of miles of
installations, we can safely say that CounterStrike is the
most proven conductive jacketed CSST in the market!
Do the right thing for your customer
and your business by calling us today!
The signing came after WAPAs gov-
erning board voted unanimously to
proceed with the agreement, which
entails a minimum five-year propane
supply contract.
The agreement between WAPA and
the Vitol Group includes infrastructure
construction to deliver, receive and
store propane, as well as the conver-
sion of WAPAs turbines by General
Electric at the St. Thomas and St. Croix
plants to burn both propane and diesel
fuel, if necessary.
According to a press release, using
propane will reduce WAPAs fuel costs
by about 30 percent and result in sav-
ings for all WAPA customers.
Blackmer, Ebsray look ahead
to World LP Gas Forum
Blackmer and Ebsray, a recent Blackmer
acquisition, plan to exhibit Oct. 1-3
at the World LP Gas Forum and 2013
AEGPL Conference in London, England.
Blackmer plans to give attendees
a look at its LGL Series sliding vane
pumps and its LB Series reciprocating
gas compressors. Ebsray will showcase
regenerative turbine pumps that are
designed for low-flow, high-head
applications, such as those found in
propane autogas installations. Ebsray
will also display sliding vane pumps.
Pros4Care golf event in October
to beneft prostate cancer research
The sixth annual Pros4Care golf
event to benefit the Prostate Cancer
Foundation will take place Oct. 14 at
Eldorado Country Club in McKinney,
Texas.
This years outing begins at 9
a.m. with a shotgun start. The event
includes breakfast and lunch. Former
Major League Baseball manager Art
Howe and Toronto Blue Jays pitcher
Brad Lincoln are scheduled to partici-
pate. The event has generated more
than $150,000 over the last five years.
Contact Ed Varney at 214-578-4339
or bostoned@sbcglobal.net for regis-
tration and sponsorship information.
Bergquist draws 300 to open houses
Bergquist hosted its ninth annual open
houses Aug. 20 and Aug. 22 in Toledo,
Ohio, and Bowling Green, Ky., respec-
tively. Don Montroy, the companys
director of marketing, says Bergquist
drew about 300 people between the
two open houses.
Palfnger names dealer in Michigan
Palfinger named Cannon Truck
Equipment a dealer for Pal Pro
mechanic trucks, telescopic service
cranes, hoists and pickup liftgates
throughout Michigan. Cannon Truck
Equipment is located in Shelby
Township, Mich.
[
NEWS BRI EFS
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Troy Prewitt
Vice President, Corporate Development
913-661-1817
TroyPrewitt@ferrellgas.com
Travis Fisher
Director, Corporate Development
913-661-1805
TravisFisher@ferrellgas.com
Nancy Coop
Business Development Executive
510-418-7839
NancyCoop@ferrellgas.com
Have you been waiting
for the right time to sell
your propane company?
The right time is now.
Take the rst step. Please contact us today or visit
www.ferrellgas.com/Our-Company/Acquisitions
Global Gas Inc.
Jim Boese was named vice
president of operations
and Tom Krupa joined the
company as vice president
of Northeast sales. Boese
previously worked for Global
Gas sister company, Global
Propane, as manager of
retail operations in Kansas
and Wyoming. Krupa has
more than 25 years of expe-
rience in propane, heating
oil, and heating, ventilation
and air-conditioning busi-
nesses. Suburban Propane
and Inergy are two of
Krupas previous employers.
Inergy LP
David Wood was appointed to the
board of directors. According to a press
release, Wood has more than 30 years
of experience in the oil and gas indus-
try, and hes the former president, CEO
and director at Murphy Oil Corp.
NGL Energy Partners
John Raymond was elected to the
board of directors. In addition, William
Zartler, who served on the board since
2010, resigned from his board post.
National Propane Gas
Association (NPGA)
Peter Ferrell was named director of
the PropanePAC. He is responsible for
the day-to-day operations of the politi-
cal action committee and overseeing
its strategic utilization as the imple-
mentation of Vision 2014, the associa-
tions industry growth plan, continues.
Ferrell had previously held the associa-
tion positions of executive assistant
and board manager.
Venturo
Ian Lahmer was named marketing
coordinator. He previously worked in
publishing and eye
care manufacturing
doing design, web
development and
marketing manage-
ment.
Milltown
Skelgas/H&R
Propane
Tony Forster,
who owned two propane compa-
nies and dedicated his career to the
industry, died Aug. 7. He was 80 years
old. Forsters propane career began
in Minnesota with Local Gas, which
he eventually managed. Forster also
served Lakes Gas as a manager, and he
later owned a pair of propane compa-
nies: Milltown Skelgas in Wisconsin and
H&R Propane in Nevada.
Standard Stock Custom Builds Financing Delivery Arranged
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The Walker Group
A Division of Wabash National
Contact Jason Soulon, Randy Krauth or Dan Hermansen
800-255-0008
sales@tristatetank.com / www.TriStateTank.com
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[
PEOPLE
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Krupa
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14
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16
|
WWW.PALFINGER.COM
SERVICE BODIES, MECHANIC TRUCKS,
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LIFETIME EXCELLENCE
Have you ever noticed when you
buy a new car, you see the same
vehicle everywhere? Our minds
work like that.
Our subconscious is always on
the lookout for new information
when we focus on something, even
though we may be doing something
unrelated. You can put that strength
to work by selecting 13 topics that
are important in your business life
one per week for the quarter.
Block out a certain time each
week to close your office door and
concentrate on the subject. Topics
may include retirement preparation
or exit strategy, family life, a five-
year plan, health or finances. By the
end of each quarter, you will have
covered all of your topics.
Start again at the top of the list
so that by the end of one year, you
will have covered each topic four
times. Keep a sheet of legal paper
for each subject to take notes and
add your thoughts and experiences.
Download articles that are relevant
as you discover them.
Just as you stop what youre doing
when you hear change dropping to
the floor, youll be alert to valuable
information that normally would
have escaped your notice.
Sometimes the best advice is just
to think about it.
Ken Albrecht is president of Reliable
Propane in Clarence Center, N.Y.
Visitwww.reliablepropane.com.
Blue Flame Blog
Take a moment to ponder
PROPANE-RELATED REFLECTIONS FROM WWW. LPGASMAGAZINE.COM
|
KEN ALBRECHT
Our subconscious is always
on the lookout for new
information.
|
17
2013 Star Gas, L.P.
As the parent company of Petro, Meenan and Champion Energy, with local operations
throughout the Northeast and Mid-Atlantic, Star Gas, L.P. has made multiple successful
acquisitions in recent years and is actively searching for professional, full-service heating
oil and propane companies to add to our local family. Here are just a few reasons to join
the Star Gas family:
Over 100 years of industry leadership.
We are the countrys leading provider of home heating oil so we understand the complexity
of acquisitions and how critical it is for you to be able to work through the process while
running your business.
Grow with our family and grow your business.
Our experience, large network and resources uniquely position us to make a seamless
transition for you, your employees and customers. Your companys identity, reputation and
place in the community will be preserved and protected.
If you are considering selling your business, please call us today for a discreet and
condential consultation.
Steven J. Goldman, COO/Executive Vice President
Star Gas Partners, L.P. 516.686.1615
Deciding to sell your heating oil
or propane business is an important decision.
Trust Star Gas to help you make sure its the right one.
Dan Donovan, President & CEO
Star Gas Partners, L.P. 203.325.5450
Safety concern
Integrity doesnt mean what it used to.
In our propane company, it means ev-
erything. The integrity of the product,
of the equipment, of the company peo-
ple. When that integrity is jeopardized
by inferior products that other compa-
nies are allowed to distribute, that not
only demeans our company, but also
too the propane industry.
Every plastic-wrapped grill tank
that doesnt return to its original fill
station is a testament to the integrity
delinquency enveloping grill tank
cages. Not only is that plastic hiding
imperfections, its causing more. The
major enemy of steel is rust. What does
plastic on steel cause?
Adhesive decals form an airtight
barrier, no rust or tank degradation.
All the information on plastic is on de-
cals. Will it take a major lawsuit when
a grill tanks integrity is proven to be
compromised for plastic sleeves to be
discontinued?
They are a bane to the propane
livelihoods, and when disaster happens
it will not be only the grill tank sleeve
slippers who foot the bill.
Monty Strawser
Billman Propane
LaGrange, Ind.
Price regulations
If you want more people to use LP,
you need to regulate the price more
like electric prices. I lose customers
every year to electric because it re-
mains cheaper. Now its ground source
with electric backup. When LP prices
change because this country shipped
hundreds of millions of gallons over-
seas and it makes our prices higher,
something isnt right. We pay to pro-
duce these products here in our coun-
try so they can be shipped overseas
at very low prices and we pay higher
prices? That isnt right. Till this is fixed,
electric will take over in the Midwest.
Jay Lininger
Clarinda Co-op Co.
Clarinda, Iowa
Email your letters to brichesson@
northcoastmedia.net or kyanik@
northcoastmedia.net, or write to LP
Gas Magazine at 1360 East 9th St.,
Suite 1070, Cleveland, OH 44114.
[
LETTERS TO THE EDI TOR
]
FOCUS ON
SPONSORED BY
Propane an option on Fords next F-150
To learn more about the S2G LPG Commercial Chassis, visit
freightlinerchassis.com or call Freightliner Custom Chassis
at (800) 545-8831. For ordering details, contact your local
dealer. See it in action on YouTubesearch S2G Truck.
The 2014 Ford F-150 will be available
this fall with an option to run on pro-
pane autogas. Ford plans to offer the
option on the 3.7-liter V6 engine, as
well as an option to run F-150s on com-
pressed natural gas (CNG).
According to Ford, when engines
are equipped with propane autogas/
CNG engine packages, vehicles are
capable of being driven more than 750
miles on one tank depending on the
tank size selected.
Ford also says prepping an engine
with propane autogas from the factory
costs about $315. This is before custom-
ers choose a Ford Qualified Vehicle
Modifier to supply fuel tanks, fuel lines
and unique fuel injectors. Upfits run
between $7,500 and $9,500, depending
on fuel tank capacity, the company says.
The F-150 will give Ford eight ve-
hicles with the capability to run on
propane autogas or CNG. Ford says
it expects to sell 15,000 LP gas/CNG-
prepped vehicles this year, an increase
of more than 25 percent from 2012.
18
|
One topic discussed during the
Propane Education & Research
Councils Marketer Technology and
Sales Training seminar on propane
autogas is developing leads and
actions marketers can take to iden-
tify prospective customers. Here are
a few ideas:
1. Lean on the web. Companies
often project their leadership teams
online with names, job titles and
contact information, making it easy
to find a person to reference.
2. Get involved in a chamber of
commerce. Another great source
for referencing key contacts at pro-
spective companies.
3. Get to know your school
board, administrators, etc. School
districts are one of autogas top
customers. Successfully sell to one,
and your sales pitch to other school
districts is made that much easier.
4. Stop by and say hello. Visit
landscape companies, hardware
stores and other companies in your
area with fleets. Ask questions and
find out whos a good fit for pro-
pane autogas.
Kevin Yanik
Developing autogas leads for your company
Ford says a tank of fuel will net 750 miles.
Icom North America earned Envi-
ronmental Protection Agency (EPA)
certification for the Ford 6.8-liter en-
gine thats available on several of its
2014 trucks. The certification means
fleet managers interested in convert-
ing vehicles to autogas now have
more options to consider.
[The certification] allows us to
immediately install our propane liq-
uid-injection system for customers as
soon as the vehicle purchase is made,
says Ralph Perpetuini, Icom CEO.
Icom specifically attained EPA
certifications for all 2014 Ford E- and
F-series vehicles that contain its JTG
II propane liquid-injection systems.
The certifications apply to E- and
F-series models from 2009 to 2014 in
the 14,000-to-33,000-pound gross ve-
hicle weight rating range. Both com-
mercial and consumer vehicles are
EPA certified, and Icom offers both
single- and dual-fuel options.
The Propane Council of Texas hosted
a propane autogas promotional event
in Lubbock to educate fleet operators,
landscapers and agribusinesses.
Among the industry representa-
tives who attended were Bill Van
Hoy, executive director of the Texas
Propane Gas Association, and Franz
Hofmann, president of Gearhead
Consulting LLC.
Representatives from Pinnacle
Propane, Schiller Bob Cat and Ferris
Industries were also present to dis-
play autogas mowers and trucks dur-
ing a ride-and-drive session.
EPA certifies propane
liquid-injection system
for Ford vehicles
Texas event promotes
lawn mowers, trucks
itSignS
[IN THE KNOW]
Safety Training
Propane Resources surveyed 434
retail propane marketers across the
United States regarding safety training.
Twenty-three responded. Here are the
results.
Outcomes:
Most survey respondents (76 percent)
say their companies spend 5 percent
of total operating expenses on safety
training.
The types of programs used to train
staff vary, from the industry's Certified
Employee Training Program (CETP)
(26 percent), to Propane Education &
Research Council (PERC) safety train
ing (24 percent), to state association
sponsored safety training (21 percent).
Training offered by insurance companies
and vendors each received 12 percent
of survey responses. Write-in responses
included in-house training, supplier
sponsored training and J.J. Keller.
1. What percentage of your total
operating expenses is spent on safety
training?
Less than 5 percent ...................................... 5%
5 percent .................................................... 76%
10 percent .................................................... 5%
Unknown ................................................... 14%
2. Whattype of safety training do you
use in training your staf?
CHP ............................................................ 26%
PERC safety training ................................... 24%
State association-sponsored
safety training ............................................ .21%
Insurance-provided training ...................... 12%
Vendor-sponsored safety training ............. 12%
Other ............................................................ 5%
3.lf you are not regularly sending
employees for safety training, why not?
Too far away ............................................... .31%
Costs too much ........................................... 15%
As for reasons for not regularly send
ing employees for safety training, 31
percent of responding retailers cited
the long distance to the training site as
a factor, while 15 percent said they were
Can't do without them, even for short
periods of time ........................................... 15%
Other .......................................................... 39%
4. What incentives would it take for
you to spend more time and investment
dollars on safety training?
Lower insurance premium ......................... 46%
PERC rebates .............................................. 27%
Reduced number of safety incidents ...... 13.5%
Other ....................................................... 13.5%
5. What type or aspects of safety
training are missing from the industry
that you'd like to see ofered?
More information on training for tank
procedures (changing valves, etc.)
Appliance installation
Troubleshooting
More homeowner and residential training for
safe operating of appliances, etc.
Training made by companies designed for
in-house presentations
affected by cost. Another 15 percent
said they couldn't manage without their
employees. Write-in responses included
taking online PERC training and in
house training.
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20 I LPGas September 2013 www.LPGasmagazine.com
In order for retailers to consider
spending more time and investment
dollars on safety training, 46 percent of
respondents said they would be incen
tivized by lower insurance premiums,
27 percent by PERC rebates and 13.5
percent by a reduced number of safety
incidents. Write-in responses included
offering training closer to home, mak
ing it mandatory by law and making
hands-on training mandatory instead of
offering training online.
A few aspects of safety training that
retailers would like to see offered are:
more information on training for tank
procedures, appliance installation,
troubleshooting, more homeowner
and residential training for safe operat
ing of appliances, and training made
by companies designed for in-house
presentations.
In the Know is presented as a partnership
between LP Gas Magazine and Propane
Resources.
[ EVENTS]
OCT. 1-3 World LP Gas Forum &
AEGPL Congress at Queen Elizabeth
II Conference Center in London, Eng
land. For more information, visit www.
worldlpgas.com.
OCT. 6-8 NPGA Fall Board of Direc
tors Meeting at The Nines in Portland
Ore. For more information, contact
'
Peter Ferrell at pferrell@npga.org or
202-355-1338.
OCT. 9-10 PERC Meeting atThe
Nines in Portland, Ore. For more
information, contact Anna Lombardo
at 202-452-8975 or anna.lombardo@
propane.com.
OCT. 13-15 Virginia/Mid-Atlantic
Propane Gas Association Fall Meeting
at The Tides Inn in Irvington, Va. Con
tact Baron Glassgow at bglassgow@
npga.org or 866-881-6309.
VitSigns
OCT. 15-17 Sunbelt Ag Expo in
Moultrie, Ga. For more information,
visit www.sunbeltexpo.com.
OCT. 16-17 Colorado Propane Gas
Association Meetings at The Steam
boat Grand in Steamboat Springs,
Colo. For details, contact Baron
Glassgow at bglassgow@npga.org or
866-881-6309.
OCT. 30-31 Western Propane Gas
Association Meetings at the Rancho
Las Palmas Resort in Rancho Mirage,
Calif. Contact Lesley Garland at exec@
westerpga.org or 916-447-9742 .
NOV. 14-15 PERClNPGA State
Leadership Benchmarking Summit
at the Renaissance Washington, DC
Dupont Circle Hotel in Washington,
D.C. For details, contact Kristen Healey
at kristen.healey@propane.com or
202-452-8975.
Introdu n ...
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Repeat the procedure along the
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Indicator will turn From red to
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of the cllinder.
September 2013 LPGas I 21
W
ith record levels of
LP gas exports, plus
pressure on the avail-
ability of rail tankers
and truck transports
due to the nations
heightened shale drilling activity, pro-
pane retailers are being advised to line
up several product sources going into
the winter heating season.
Factor in a bumper crop of fall
grain-drying load expected this year
and retailers have plenty to track as
temperatures move downward.
Get supply security by diversifying
your supply points in your locale, sug-
gests consultant Marty Lerum at Pro-
pane Resources. What are the alterna-
tives in your area? Every area is unique.
I wouldnt just be buying from the single
cheapest source. This isnt the year to be
giving away your supply security.
Too many marketers are reluctant
to pursue this key strategy, according
to Lerum.
They dont look at it as an insur-
ance cost, which is what it is. Its like
saying youre not going to buy home
insurance because I dont think my
house is going to burn down this year.
Its not very smart you really want to
diversify your supply.
Bountiful crop-drying draws, driv-
en by wet weather and a large late-spring
sowing season, could have a significant
impact. Prolonged late-summer heat or
crop damage from severe storms have
the potential to alter the ag estimates.
There are some big volumes that
will be coming out, Lerum says. It
will have more of an impact on the dis-
tribution systems; marketers may have
to go farther for their propane, and that
may push costs up 15 cents a gallon be-
cause of higher trucking costs.
And with more natural gas liquids
pipeline infrastructure in place by this
winter, more propane will bypass Con-
way and go straight to Mont Belvieu. If
enough demand arises in the Midwest,
inventory could get tight in Conway
and force prices up, above those being
paid at Mont Belvieu, Lerum says.
Conways propane prices jumped
IN
HIGH
DEMAND
22
|
Marketers urged to cultivate
several propane supply options
prior to winters arrival
BY JAMES E. GUYETTE
|
CONTRI BUTI NG EDI TOR
SUPPLY AND PRI CI NG
over Mont Belvieus by more than 10
cents a gallon in 1989, 1990, 1993, 2003
and 2008, he notes.
The inventories are tight, says D.D.
Alexander, president of Global Gas Inc.
in Englewood, Colo., which covers a 21-
state marketplace from Wyoming east-
ward to the Atlantic coastline.
Theyre taking everything they can
to the Gulf Coast for export, she says.
Theres going to be a lot more propane
shipped to Mont Belvieu, so supplies
could be tight in the Midwest. If I was a
Midwest marketer, Id seriously look at
locking in my supply and price.
Most of the Corn Belt is having a
good year, says Mark Leitman, direc-
tor of business development and mar-
keting at the Propane Education &
Research Council (PERC). It put the
industry on alert we have a late crop
and a wet crop: Lets make sure we have
a strong supply nearby. It can really
strain our delivery structure if we have
a spike in demand.
In an extremely heavy grain-dry-
ing year, we can see at least a 200-mil-
lion-gallon increase in propane use in
the grain-drying states, says Leitman,
|
23
The amount of propane used for crop
drying in the fall factors into the supply
picture heading into the winter heating
season. As of mid-August, a favorable
crop-drying season had been expected.
citing figures from the high-volume
2009 season.
Our propane industry is preparing
for this, and theyll be ready for it, he
reports. Farmers are pretty sophisti-
cated, so theyll be planning ahead.
American growers planted more
than 97 million acres of corn this year,
amounting to the highest corn acreage
since 1936, according to the U.S. De-
partment of Agricultures National Ag-
ricultural Statistics Service (NASS).
Hampered by cold and wet weather
in early spring throughout much of the
major corn-producing regions, only 5
percent of the crop was planted by April
28, making it the slowest seeding pace
since 1984. In May, however, weather
conditions improved enough to make
great strides in planting, NASS says.
With 64 percent of the corn crop
rated in good to excellent condition as of
Daily spot prices for natural gas liquids propane, ethane, normal butane,
isobutane and natural gasoline have moderated because of a combination
of ample supply, flat or moderating demand, export constraints and
domestic infrastructure constraints,
according to a report by the U.S.
Energy Information Administration.
Spot propane traded at an
average of 89 cents per gallon in the
first half of 2013, compared to $1.12
per gallon in the first half of 2012.
Since July 2012, propane prices have
remained relatively flat. The average
propane price for the second half of
2012 was also 89 cents per gallon,
the same as for the first half of 2013.
Net propane production was
up 8 percent through April 2013
compared with the same time
period in 2012. The price effects of
increased production have been
mitigated by increased exports.
Propane/propylene exports,
primarily going to Latin America,
are up 42 percent through April this
year versus the same period last
year, according to EIA.
Colorado-based energy market
analyst Bentek Energy says it
expects propane prices to average
$1.05 per gallon in 2014 and $1.15
per gallon in 2015.
24
|
Propane prices flat over last 12 months
Natural gas liquids spot prices are flat or down relative to 2012
Ethane
Propane
Butane
Isobutane
Natural
gasoline
Brent
crude
May-13 Mar-13 Jan-13 Nov-12 Sep-12 Jul-12 May-12 Mar-12 Jan-12
Cents per gallon
0
50
100
150
200
250
300
350
Aug. 4, NASS forecasts this years yield at
154.4 bushels per acre, the third-highest
amount on record.
There will be a lot more drying,
up by 50 percent throughout the entire
Midwest, says Brent Smith, owner of E.
Brent Smith Farm in Zionsville, Ind.
Smith says in a normal year his farm
uses about 60,000 gallons of propane,
and this year he anticipates a load of
80,000 gallons to 90,000 gallons. His
biggest year was 2009, when he used
120,000 gallons.
The Southern States Cooperative,
with 200,000 members in 17 states, re-
lies on advanced stockpiling and spot
buys of propane to meet its crop-drying
needs. Vice President Tracy Amburgey
expects an above-average season, adding
that climate conditions leading up to the
four-to-six-week drying period will ulti-
mately dictate the draw.
It has the potential for being very
good, he says, but it depends on the
end of the season.
Encouraging diversification
Sustained cold snaps and subsequent
spikes in demand could spark bottle-
necks and worse during the winter. And
wise marketers are taking heed, accord-
ing to Alexander.
Theres a pretty good pre-buy de-
mand out there; people will go ahead
and lock in their prices. Everybody un-
derstands the allocation issue, so every-
ones trying to get their customers tanks
filled by the end of September, she says.
Expecting a bumper year in fall
fills, Lerum reports that propane re-
tailers on average have been dispensing
100 gallons more into each household
accounts tank during this summer/fall
The end of the growing season will
ultimately determine the extent of
farmers crop-drying needs.
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American growers planted
the highest amount of corn
acreage since 1936.
season than they did last year, adding up
to some 600 million gallons in increased
demand from June through September.
Retailers own storage should also
be up to capacity, and arrangements
with several supply sources should be
made prior to winters onslaught, Alex-
ander says.
The No. 1 thing is to diversify your
supply, and there isnt one supply point
thats the answer, she asserts. For the
Northeast, with the international mar-
ket being so strong, people have to rely
on pipeline, some rail and the refineries.
With railcars being so tight, there might
not be spot railcars available, and that
goes for trucks also. I wouldnt just be
leaning on the railroad people have a
false sense of security.
Alexander observes that a lot of peo-
ple have switched to rail in the North-
east, but if we get a lot of snow and ice
on the rails, it slows them down.
In addition, cold temperatures can
wreak havoc on the air brake lines, forc-
ing an interruption in rail operations.
We just dont have railcars sitting
around, and theres not any backup be-
cause trucks are in short supply.
Echoing Alexander, Lerum also en-
courages diversification in making ar-
rangements for supply needs.
Theyd better do it now before it
breaks apart or theyll pay through the
nose or not get the service, he says. So
many trucks have gone into the shale
oil plays, and railcars are tight for the
same reason.
Expanded exports and a domestic
demand for more heat can only exacer-
bate the situation.
If we have a normal winter, we
could see the distribution system break
down, Lerum says. A mild winter may
result in an overall pattern of flat pric-
ing as supply holds. Should a cold winter
unfold, I think people will be surprised
at how high prices will go.
Lerum also says retailers have not
positioned as much propane this year as
they did last year and in previous years
because they believe the price will go
down, and it did last year.
Propanes production amounts were
higher than the load disseminated dur-
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80
60
40
20
5-year Range Weekly
Dec-11 Mar-12
Million barrels
Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13
U.S. Energy Information Administration
U.S. Propane Stocks
U.S. propane inventories stood at about 62 million barrels in August about 13 percent
lower than the same period a year ago, according to EIA.
With more pipeline
infrastructure in place,
propane will bypass Conway
and go straight to Mt. Belvieu.
ing the winter of 2012-13, but the pen-
dulum has swung the other way, Lerum
says. The demand is up, and it is out-
stripping production.
Reducing routing costs
Because having a steady cash flow is so
much better for the bottom line, Lerum
laments that so many marketers have
yet to earnestly embrace signing their
customers up for monthly billing cycles.
Propane retailers are terrible at get-
ting people on budget pay, he says, cit-
ing the effort and financial investment
needed to mount direct mailing cam-
paigns, personal interactions and other
marketing techniques.
They wont pay the money and
theyre too lazy, Lerum continues, tell-
ing of a dealer on the East Coast who was
bringing in just $3,000 a month seven
years ago, threatening the very existence
of his business.
Upon pushing budget pay, however,
the company is now ringing up $90,000
per month, and the owner no longer
needs to seek bank loans to pull him
through.
Another appealing aspect of budget
pay is the ability to slash overhead by
routinely keeping everyones tank full to
the brim.
Your routing costs go down because
you can fill them at any time, Lerum
points out. Every mile you cut off will
save you $3 a mile on every one of your
bobtails. You can get 5.2 deliveries down
to 2.7 deliveries per customer, and thats
a lot of miles. Im a huge fan of budget
plans. LPG
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Prevent Accidents And Save Money!
Sure, there are many who would prefer to stick their collective heads in
the sand, but that is not an enviable position when an accident occurs.
With over 35 years experience in the propane industry, I am committed
to presentations that eliminate complacency, expose liability threats and
motivate employees to take safety compliance from the head to the heart.
www.thesafetyleader.com
952-935-5350
Sign up online to purchase my safety newsletter today!
JAYJOHNSTON
The Safety Leader
Why You
Should Care.
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Propane Resources Marty Lerum says
the demand for propane is now rivaling
production and impacting prices.
Chemical
reaction
P
ropane dehydrogenation PDH, for
short.
The process is becoming a phe-
nomenon in the propane and petro-
chemical industries and another result
of the U.S. shale boom and increasing
natural gas liquids production. PDH
converts propane into propylene, a common petro-
chemical building block used in the manufacture
of plastics and other products.
A vast domestic supply of low-cost propane and
a shortage of propylene are motivating companies
to plan and build PDH facilities, mainly on the
Gulf Coast, ripe with production capacity and ex-
port capability.
With higher propylene prices and lower pro-
pane prices, PDH plant margins in the United
States have been increasing in the last five years,
favoring new plants relying on the PDH process,
according to a report by Intratec Solutions LLC.
PetroLogistics LP operates the nations only
PDH facility, on the Houston Ship Channel, but
several new units planned by 2018 could consume
an additional 2.3 billion gallons of propane per
year, according to ICF International research pre-
sented in the 2013 Propane Market Outlook.
The growth in the petrochemical and export
markets represents a great source of propane de-
mand at a time when U.S. consumer propane use
has fallen.
Early this year, petrochemical consumption
reached about 500,000 barrels of propane per day,
an increase of about 100,000 barrels from tradi-
tional amounts, notes Peter Fasullo, cofounder of
Houston-based energy consultancy En*Vantage.
And, combined with new PDH plants , petrochem-
icals will have the capability toconsume 650,000
barrels of propane per day by 2017, he adds.
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Propane is a wanted commodity in the petrochemical sector
and part of a growing process called dehydrogenation
BY BRIAN RICHESSON
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EDITOR IN CHIEF
PETROCHEMI CALS
The capability of the petrochemi-
cal and export markets to take in more
propane is growing, Fasullo says. Its
something retailers need to be conscious
of. We may not have the excess propane
that goes into storage like we typically
have had in the past because a lot can
be exported or consumed in the petro-
chemical industry.
Petrochemical consumption of pro-
pane is nothing new, with the industry
taking in about 40 percent of total pro-
pane supplies. But just as petrochemical
consumption of propane has been in-
creasing, so has the supply of propane,
mainly from domestically produced
natural gas liquids. North American
production of propane from natural gas
liquids is projected to increase from 13.4
billion gallons in 2012 to 15.6 billion gal-
lons in 2015 and to 18.1 billion gallons by
2020, ICF data shows.
Weve become the new Middle
East, Fasullo says. Our hydrocarbon
supply base is quite large.
This new source of supply is low-
ering the cost of propane and making
its use as a feedstock attractive to pet-
rochemicals, which historically have
sought propane in the summer when
demand from the winter heating season
eases and prices dip.
But with the historic mild winter of
2011-12 collapsing prices and leading
to high inventories and the new supply
sources coming online, petrochemicals
have enjoyed propane prices economi-
cally favorable for their operations. Pro-
pane spot prices for the second half of
2012 and the first half of 2013 averaged
89 cents per gallon, according to the
U.S. Energy Information Administra-
tion (EIA).
The major driver is the low feed-
stock cost, as a way for U.S. petrochemi-
cal producers to improve margins and
reaffirm their competitive abilities com-
pared to Asia-based or Latin America-
based competitors, says Mark Chung,
senior manager of NGL analytics at
Evergreen, Colo.-based Bentek Energy.
Breaking it down
Propane is not only used as a feedstock
for propylene production, but it can be
used to make ethylene, another com-
mon petrochemical building block for
the manufacturing of numerous end-
use products, such as pool liners, food
packaging, footwear, tires and adhesives.
Ethylene is created through a process
called cracking subjecting the propane
or other feedstock to high temperatures
in order to break the molecules and form
the compounds.
While propane is versatile enough to
fuel applications in many market seg-
ments, there is another low-cost, do-
mestically produced natural gas liquid,
ethane, which is used only as a petro-
chemical feedstock and mainly in the
production of ethylene. Ethane prices,
which tend to follow natural gas prices,
averaged 27 cents per gallon for the first
six months of the year, more than 45
percent below the same period of 2012,
according to EIA.
The U.S. petrochemical industry
plans to crack more ethane because it is
cheap and gives companies an advan-
tage over foreign competitors that use
more costly oil-based feedstocks, such
|
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PETROCHEMI CALS
PetroLogistics has the nations only PDH facility, but new projects are in the works.
Photos courtesy of PetroLogistics
Bentek Energy/NGL Market Call
U.S. Propane Supply and Demand
Mb/d
1,600
1,400
1,200
1,000
800
600
400
200
0
2013 2014 2015 2016
Gulf Coast Exports Mariner East Exports
PDH Petchem
Residential/Commercial Total Supply (incl. refineries)
as naphtha, Fasullo says. EIA has listed
14 proposed additions of U.S. ethylene
production capacity by 2020, totaling
10.1 million metric tons per year.
This shift toward ethane in crackers
is contributing to the shortage of pro-
pylene. Like propane, propylene is a by-
product of other processes in its case,
petroleum refining and steam cracking
to produce ethylene. Less refining for
gasoline and the increased use of ethane
in the crackers are reducing the amount
of propylene produced on the side. This
is the genesis for the PDH units and the
need to convert propane into propylene.
Propane dehydrogenation
Enter PetroLogistics, which launched its
PDH operation in 2010.
President and CEO Nathan Ticatch
says management recognized an im-
balance building in 2003 due more to a
higher demand for propylene than to-
days contracting supply. About 5 billion
pounds of propylene have come out of a
30- to 35-billion-pound market, he says.
The reason there is so much interest
in the commodity right now and in our
process in particular is because propyl-
ene is very short, Ticatch says. Supply
has fallen off and propane is very plenti-
ful from shale gas.
The company purchased an old
ethylene cracker from ExxonMobil in
2008, demolished certain facilities and
constructed a new facility for about $640
million (a similar unit today would cost
about $1.5 billion, Ticatch says).
Its PDH unit combines propane
(C3H8), heat and a catalyst, which en-
courages a chemical reaction to form
propylene (C3H6). It utilizes the Cato-
fin propane dehydrogenation technol-
ogy, where 1 pound of propane nets 0.85
pounds of propylene.
We get a lot of propylene and not
much else, Ticatch says. The chemical
term is selectivity. We get the product
we really want.
Ticatch says the process originated
during World War II when the United
States converted butane into butadiene,
a key element in synthetic rubber.
PetroLogistics consumes about
25,000 barrels of propane per day the
companys only feedstock with sup-
ply from Enterprise Products Partners
arriving at its facility by pipeline. Pro-
pylene then exits the facility by pipeline
to five contract customers Dow, Total,
Ineos, BASF and Lyondell who then
turn the propylene into another product.
The companys location on the Houston
Ship Channel gives it access to about half
of U.S. propylene consumption, accord-
ing to its website.
PetroLogistics has an annual pro-
duction capacity of 1.45 billion pounds
of propylene. According to its quarterly
report, the company produced 255 mil-
lion pounds of propylene in the second
quarter, which included a 10-day un-
planned outage for repairs and mainte-
nance, and sold 265 million pounds. It
purchased propane for an average of 91.2
cents per gallon.
Asked how higher propane prices
would impact his company, Ticatch says,
We have a product [propylene] that
prices at a premium to crude and a feed-
stock [propane] that prices at a discount
to crude. As long as crude oil prices at a
reasonable level, there will be a margin.
Petrochemical players
Companies involved in petrochemicals
can supply and/or consume propane.
DCP Midstream, Energy Transfer Part-
ners and Targa Resources, for example,
have the capability to supply propane to
petrochemicals.
Midstream giant Enterprise Prod-
ucts Partners has its own petrochemi-
cal division, including seven propylene
fractionation plants and 680 miles of
pipeline, and is one of the companies
planning a PDH facility (for 2015).
Chevron Phillips, ExxonMobil and Dow
are three big petrochemical producers
and consumers of propane.
The growth of the petrochemical
industry isnt limited to within U.S.
borders, however. Sunoco Logistics
Mariner West pipeline is designed to
carry ethane from the Marcellus shale
in western Pennsylvania to the Sarnia,
Ontario, Canada, petrochemical mar-
ket. The Vantage Pipeline also will move
ethane from the Bakken shale in North
Dakota to a Nova chemical plant in Al-
berta, Canada. In addition, China has
been importing high levels of propane
because of low prices and the impend-
ing startup of its own PDH plants, the
PIRA Energy Group reports. LPG
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PETROCHEMI CALS
U.S. ENE RGY INFORM A TI ON ADM I NI STRA TI ON
U.S. Production of Natural Gas Liquids by Type
2005-12 (million barrels per day)
Ethane Isobutane
Propane/propylene Pentanes plus
n-Butane
2005
2006
2007
2008
2009
2010
2011
2012
0 1 2 3 4
COLUMNIST
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JAY JOHNSTON
O
n July 29, an explosion took
place at a Blue Rhino produc-
tion facility in Tavares, Fla.
(see page 8).
My prayers and best wishes go out
to the eight injured employees and
their families in the aftermath of the
incident, and my thoughts are with
those emergency personnel and resi-
dents who lived through this terrify-
ing ordeal. I also want to reach out to
Blue Rhino and Ferrellgas employees.
This has to be tough.
As of this writing, two weeks after
the incident, there are only specula-
tions and no conclusions from fire
officials and investigators as to the
specific cause.
We are waiting to understand and
learn from the cause. In some cases,
such interest is purely speculative
puzzle solving. In most cases, industry
insiders want to know what happened
so they might possibly prevent a future
incident of a similar nature through
training and education.
As an industry, we have experi-
enced very few tragic outcomes involv-
ing deaths of employees and emergen-
cy personnel in relation to the gallons
sold and customers served safely. I am
thankful it appears we have no deaths
in this situation.
Forklift safety
In order to operate a forklift in the
United States, you must first go
through a training course approved by
the Occupational Safety and Health
Administration (OSHA).
This course has several require-
ments, focusing on the driver, the ma-
chine and the workplace. Once the cer-
tification is complete, you have the right
to legally drive a forklift. Keep in mind
these requirements are for all forklift
drivers, including many commercial or
industrial propane customers.
Every employee in your company
must be trained to do his or her job.
Owners and managers may have to
testify in the future as to the compe-
tency of any employee involved in an
accident, so it pays to stay on top of all
training and documentation.
Those are your employees putting
their hands on equipment, driving
transports, bulk trucks and forklifts.
They probably wear the name of your
company on their clothing and they
are ambassadors, not just of your com-
pany reputation but the entire propane
industry.
In the wake of an incident, it may
be more difficult to lease or build
propane plants and facilities within
cities, counties and municipalities.
Rates for real estate and insurance
may increase because of publicity and
adverse exposure. In addition, inci-
dents may impede successful industry
inroads made with marketing pro-
grams, such as propane autogas and
propane mower promotions.
Any employee activity that falls
out of compliance is a risk taken and
a threat to your survival as a company
and our survival as an industry. That
is why training is so important. LPG
Jay Johnston (www.thesafetyleader.
com) is an independent insurance
agent, business consultant, safety lead-
ership coach and motivational speaker.
Jay can be reached at 952-935-5350 or
jay@thesafetyleader.com.
Seeking answers
Incidents allow us to learn, better the industry
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COLUMNIST
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VINNY MULLINEAUX
S
o, Ive been following (Im sure
you have also) the ongoing story
of National Security Agency
(NSA)/FBI surveillance and all of
the drama that continues to unfold.
Truth be known, though, Ive been
a big fan of monitoring for about a
decade now though of a slightly dif-
ferent flavor than that preferred by our
government.
Im not saying NSA monitoring
should be mainstream, but I am say-
ing that it is 2013 and you should be
thinking about monitoring in terms of
fine-tuning your operations.
Monitoring, in my opinion, falls
into two broad categories, namely:
monitoring actual usage data from
remote tank monitors and monitoring
of product delivery data, such as actual
gallons, truck available inventory and
geographic position.
Lets take a closer look at this aspect
of monitoring and the impact.
Monitoring actual propane usage
at the residential or commercial point
of use has been with us for a decade
or more now, but historically plagued
by cost, reliability, installation issues,
poor battery life, lack of cellular cover-
age and (in some cases) even having to
rely on a communication device inside
your customers home.
Consequently, compared to other
countries, the U.S. is quite early and
slow in the adoption of this technol-
ogy. The situation is changing rapidly,
though, and the European propane
industry is leading the way with
widespread adoption of remote usage
monitoring and is now an immoveable
part of its delivery operations.
Driving this change are much
more reliable measuring technology,
much improved battery technology,
widespread availability of both CDMA
and GPRS cellular communication
networks and simple installation.
These drivers are now in the United
States and should encourage a more
widespread adoption of this important
technology.
The benefits of rightsizing your
operations to the actual demand of
your customer base is the end point of
this. For example, imagine a remote
tank monitor triggering a delivery
need and dynamic monitoring/sched-
uling software immediately creating a
ticket and wirelessly sending it to the
best-positioned bobtail (based on loca-
tion, inventory and time) to instantly
replenish the tank. Or, in the worst
case, automatically scheduling a deliv-
ery in the next day.
However, mass deployment of
remote tank monitors requires much
tighter integration with your back-
office system with the current email
alerting system rapidly becoming
untenable based on the sheer volume
of alerts. The combination of live
tank monitoring with live/dynamic
mobile logistics has the potential to
truly drive consistently hyper-efficient
fleets completely right-sized for the
actual consumer demand.
Monitoring actual delivery data
takes surveillance to a whole new
level of increasingly proven value.
There is a rapidly increasing wave in
deployment of live mobile logistics so-
lutions cost-effective mobile devices
comprising dynamic scheduling and
routing, navigation, truck and inven-
tory tracking, pricing and invoicing,
electronic register connectivity, live
update to the back office, etc. but all
in a real-time environment using the
wireless Internet.
The wireless infrastructure in
the United States and Canada is now
widespread and secure enough to
warrant this innovation. Live mobile
allows you to monitor, in real time, the
actual delivery information from the
point of propane delivery, allowing
you to make decisions on adding more
deliveries throughout the day depend-
ing on onboard inventory, time and lo-
cation. I know of many fleets now that
demand that each truck comes back
empty of gas proactively managing
deliveries throughout the day.
My theme here is that unlike the
NSA/FBI version, your monitoring
options have a proven place in your
operations with an increasing set of
tangible possibilities and benefits.
Dont look over your shoulder or up to
the sky to see who might be monitor-
ing you rather, start exploring and
discussing how to leverage true moni-
toring into your own operations. LPG
Vinny Mullineaux is the CEO of Ver-
trax, a provider of back office and
mobile technology. He can be reached at
vmull@vertrax.com or 203-952-7666.
Under surveillance
Monitoring has a whole new meaning in the propane industry
The benefits of rightsizing
your operations to the actual
demand of your customer
base is the end point.
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CLASSIFIED ADVERTISING
All ads must be prepaid by the classied closing date. Visa, Mastercard, & American
Express orders are accepted over the phone. Please send you ad copy with prepay-
ment to the following address: LP/Gas, Attn: Kelli Velasquez, 1360 E. 9th St., Ste. 1070,
Cleveland, OH 44114.
CONTACT SALES EXECUTIVE KELLI VELASQUEZ FOR RATES TODAY!
Direct Dial: 216-706-3767 Email: kvelasquez@northcoastmedia.net
Fax: 253-484-3080
Mail: LPG MAGAZINE / BLIND BOX #
CLEVELAND, OH 44114
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FOR SALE
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Contact Kelli Velasquez
to place your ad in our next issue.
216.706.3767
kvelasquez@northcoastmedia.net
FOR SALE (contd)
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FOR SALE (contd)
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FOR SALE (contd)
2010 FRT M2 260 HP 8.3 Cumm 3560p Auto
3000 gal LCR Meter 3-func base di ff l ock
PW&L ai r control s on S chai ns 53K mi l es 573-
547-5658 or 573-517-1561 cel l 09/13
For Sal e- Large Quanti ty Al umi num 20 LB.
Forkl i ft/Buffer cyl i nders. Fi ve hol e, si ght
gauge and fi l l er val ve. Contact Ray Ani el ski
at Li ndens Propane 440-458-5115. 09/13
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Outside Sales Position- LPG & NH3
Suppl y, Inc., i s l ooki ng for an experi enced
outsi de sal es representati ve to cover
porti ons of MN, IA, and SD. Travel 5 days
per week i s requi red. Must have experi ence
i n the propane i ndustry, be sel f-moti vated,
organi zed and have computer experi ence.
Wages and benefi ts i ncl ude commi ssi on,
pai d vacati on, profi t shari ng, 401K and
heal th i nsurance. Pl ease send i nqui ri es
to cpendi l l @l pgandnh3.com 09/13
CAREER OPPORTUNITIES BUSINESS OPPORTUNITIES
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COMPANIES TO WATCH
T
he reputation of Midnight
Energy, a 12-year-old propane
and heating oil company in
Newcastle, Maine, had crum-
bled. Customer reports on Midnight
Energys reputation and service in the
field were disappointing, and the com-
panys owner, Casey Pratt, realized he
was partly to blame.
I had been an absentee owner,
Pratt says. It was partially my own
fault for not keeping a close enough eye
on my company. We had some issues
retaining employees, and we needed to
do something different.
One of the first things Pratt did to
revamp his company was search for
someone to lead its transformation.
He identified Bob Milliken, who held
senior management positions with Su-
noco and BP Amoco, among other en-
ergy companies, as the person to steer
his company right.
Milliken, the companys director
since February, identified several areas
holding the company back. One trou-
bling area was the companys brand
identity. It was confusing, Milliken says.
Some of our branding was Mid-
night Oil, and some of it had transi-
tioned to Midnight Energy, he says.
The brand was incomplete from one
standpoint to the next. It didnt make
sense.
Midnight Energy, which was ulti-
mately renamed Seacoast Energy Solu-
tions, was also dated in how its internal
and external operations were struc-
tured, Milliken says. The company
lacked the personnel to sell and service
the way it should. One example of its
archaic approach
was doing busi-
ness without a
defined strategy.
Seacoast
Energy Solu-
tions has gone
through a
makeover over
the last several
months, though.
Since Milliken
joined, Temp-
Control, a heat-
ing, ventilation and air-conditioning
(HVAC) company, was acquired as a
key first step. According to Milliken,
the acquisition has transformed Sea-
coast Energy Solutions from a com-
pany that primarily delivered fuel and
offered a few service options to one
that provides installation and mainte-
nance services first and delivers fuel as
an ancillary offering.
We have tripled the business the
[HVAC] company is used to doing on
the service side, Milliken says. When
you blow up a company, put it back to-
gether and layer in a company that has
a good reputation in the service indus-
try, you get an awful lot of attention.
When the new brand was officially
launched in June, Seacoast Energy Solu-
tions hosted a weeklong open house
and offered to fill propane tanks for free
from its new 1,000-gallon fill station.
We filled 470 tanks for free and I
believe 270 of them were new custom-
ers, Pratt says. Since then, weve had
a steady stream of people getting their
tanks and RVs filled.
Propane makes up about 35 percent
of Seacoast Energy Solutions fuel-
delivery business. Its goal is to convert
oil systems to propane because thats
where the greatest service opportuni-
ties are, Milliken says.
Still, these opportunities would
not be realized had Pratt not made
the difficult decision to transform his
company.
Kudos to Casey for realizing
change was required and for adopting
the plan presented to him, Milliken
says. He was willing to invest in the
future of his company. As a result,
weve taken a company that was kind of
sleepy and its value propositions were
not well understood by our customers
or employees. And overnight, weve put
our company on the map in a way that
either has some people around us ad-
miring us, threatened by us or in other
cases saying wow. LPG
40
|
Seacoast Energy Solutions
Maine retailers rapid transformation puts it back on the map
BY KEVIN YANIK
|
MANAGING EDITOR
kyanik@northcoastmedia.net
LOCATION: Newcastle, Maine
FOUNDED: 2002
EMPLOYEES: 26
ONLINE:
www.seacoastenergysolutions.com
When you partner with family-owned and operated ThompsonGas,
you wont be just another acquisition where your customers
and employees are the victims of the transaction. We successfully
acquire businesses like yours because we understand your most
valuable assets are not reflected in your financial statements
your customers, employees and their families, and the respect you
have in your community.
Our well-financed acquisition model offers flexible options, like
continued operational control of your company (if desired)
and direct contact with President/CEO Randy Thompson, that
large, national companies wont even consider. Well get you the
capital you need to grow, without sacrificing your confidentiality,
reputation or values in the process.
When you join our team you experience the ThompsonGas difference:
Lower cost of capital to grow the business
Substantial upside as you continue growing your company
Focused due diligence and a quick close
A long-time partnership with ThompsonGas!
JOHN SIMCOX
Vice President of Business Development
717-991-0506
JSimcox@ThompsonGas.com
DANIEL CARRIGAN
Business Development Consultant
913-638-8677
DCarrigan@ThompsonGas.com
THE TRUSTED NAME IN PROPANE
www.ThompsonGas.com/Acquisitions
James Driver
ThompsonGas Partner
Value Creation After Partnering with ThompsonGas
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