LPGas Setiembre 2013

SEPTEMBER 2013

Winter preview: Marketers urged to cultivate several propane supply options

Vital Signs: Plant incident probed in Florida

Snapshot: Maine retailer’s rapid transformation

THE PROPANE INDUSTRY’S PREMIER INFORMATION SOURCE | www.LPGASmagazine.com

Chemicalreaction

Propane is a wanted commodity in the petrochemical sector and part of a growing process called dehydrogenation

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The propane industry’s premier information source

www.LPGasmagazine.com September 2013 LPGas | 3

SEPTEMBER 2013

VO L U M E 73 | N U M B E R 9

On the cover | PetroLogistics LP’s propane dehydrogenation plant in Houston

6 | OPENING DELIVERY | Pop culture hasn’t 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 Ford’s 2014 F-150, available this fall.

31 | SAFETY FIRST | Learning from industry incidents

IN HIGH DEMANDMarketers urged to cultivate several propane supply options prior to winter’s arrival.

22 |

CHEMICAL REACTIONPropane is a wanted commodity in the petrochemical sector and part of a growing process called dehydrogenation.

28 |

Features

Departments

XX

22

28

LP Gas (ISSN 0024-7103) is published monthly by North Coast Media LLC, IMG Center, 1360 East 9th

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ONLINE. Visit www.lpgasmagazine.com to get news, numbers and events listings as well as features and columns from the most recent issue of LP Gas Magazine. Plus: Top 50 Retailers, Propane Suppliers Guide, State of the Industry Report, Buyers’ Guide and direct links to propane associations. Social media: Also find us on facebook.com/lpgasmagazine and twitter.com/lpgas_mag.

4 | 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 retailer’s 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 McClendonPrincipal & 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 RosePresident/CEO,

Propane Gas

Association of New

England, Epsom, NH

Larry OsgoodPresident,

Consulting

Solutions LLC,

Monument, CO

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Propane and popular culture haven’t 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 Channel’s “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 realityAnd 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 didn’t 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 hadn’t 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 wordMaybe we can’t 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 don’t educate your cus-tomers and potential customers about propane, who will? LPG


[email protected]

EDITOR IN CHIEF | BRIAN RICHESSON

Perceptions of propaneIt’s our message against Hollywood’s – 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 efficiency and integrity:

• You’ll receive a purchase plan that’s clear, flexible,

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 confidential 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, you’ll rest easy about the transition.

[ N E W S B R I E F S]

I N D U S T RY N E W S & N U M B E R S

The 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 Rhino’s parent company. Twenty-four em-ployees were working the second shift at the time of the incident, the Tavares Fire Depart-ment’s 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 2014The 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 customersParaco 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 dealGestion 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-Par’s 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 capacityNGL 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

[ P R O PA N E M A S T E R L I M I T E D PA R T N E R S H I P CO M PA R I S O N] Fiscal Recent Total Units Year Quarter Price Current Current Est. Tax Debt/ OutstandingCompany End End (8/19/13) Distribution Yield Deferral Capital (millions)AmeriGas (APU) Sept. June $42.27 $3.36 7.9% 75% 61% 92.8Ferrellgas (FGP) July April 22.50 2.00 8.9 90 103 79.1NGL Energy Partners (NGL) March June 29.35 1.98 6.7 80 48 62.3Suburban Propane (SPH) Sept. June 44.99 3.50 7.8 80 53 60.2Average: 7.9% 57%

[ L A S T T W E LV E M O N T H S] Gross Gross Gross Profit Gross Profit Retail Gallons Sold Percent Gross ProfitCompany Revenue Profit Margin (Per employee) (millions) Change (Per gallon)AmeriGas $2,864 $1,309 46% $151,193 1,243 29% $0.97Ferrellgas 1,605 649 40 186,966 638 3 0.72NGL Energy Partners 1,155 175 15 88,650 149 61 0.16Suburban Propane 1,341 742 55 178,960 527 105 1.41Average: 39% $151,442 49% $0.82

Source: FactSet, partnership reports and Wells Fargo Securities LLC

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Five people were still hospitalized as of Aug. 20.

[ N E W S B R I E F S]


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 company’s number of saltwater disposal wells from six to 10.

Court rules against rest break provisionThe 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 70,000More 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 FromState July Norm Months NormAlabama 0 0 2660 -179Alaska 138 -92 11050 -144Arizona 0 0 1935 -225Arkansas 0 0 3504 -2California 0 -10 2264 -370Colorado 1 -32 7117 -291Connecticut 7 3 5698 -371Delaware 0 0 4418 -322Dist. of Columbia 0 0 3776 -279Florida 0 0 533 -104Georgia 0 0 2815 -68Hawaii 0 0 0 0Idaho 0 -39 6568 -340Illinois 36 31 6311 -43Indiana 31 26 5845 -49Iowa 33 22 7257 198Kansas 8 6 5254 135Kentucky 0 -1 4573 -43Louisiana 0 0 1724 -60Maine 14 -21 7592 -420Maryland 0 -1 4680 -169Massachusetts 2 -5 5994 -413Michigan 19 5 6709 -240Minnesota 25 -7 8875 119Mississippi 0 0 2514 -49Missouri 12 10 5280 62Montana 3 -86 7557 -753Nebraska 21 10 6641 117Nevada 0 -5 3298 -505New Hampshire 6 -12 7058 -530New Jersey 0 -1 5210 -234

New Mexico 0 -5 4372 -464New York 1 -7 5643 -473North Carolina 0 0 3544 19North Dakota 58 8 9794 346Ohio 26 20 5803 -169Oklahoma 0 0 3786 36Oregon 10 -53 5102 -48Pennsylvania 14 6 5754 -155Rhode Island 7 2 5719 -170South Carolina 0 0 2808 13South Dakota 30 -6 7842 -6Tennessee 3 3 4079 79Texas 0 0 1790 -207Utah 0 -13 6234 -379Vermont 36 5 7665 -445Virginia 0 -1 4433 -46Washington 18 -59 5318 -195West Virginia 1 -4 5275 -21Wisconsin 57 34 7903 112Wyoming 0 -59 7753 -551United States 8 -1 4346 -178

[BY LEO MICHAEL]

JULY

[H E ATI N G D EG R E E DAYS BY S TATE]

Data courtesy of the Climate Prediction Center/National Weather Service

PERCENT RETURN

NOT ME ANINGFUL

LOWER THAN AVER AGE HE ATING

DEGREE DAYS

HIGHER THAN AVER AGE HE ATING

DEGREE DAYS

A sampling of notable tweets and posts from LP Gas’ social media pages.

twitter.com/lpgas_magwww.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 fireplacesLennox 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 alertThe 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 IslandsThe 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[ N E W S B R I E F S]


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.

Continued from page 8


THE SOCIAL SCENE

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The signing came after WAPA’s 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 WAPA’s 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 WAPA’s fuel costs by about 30 percent and result in sav-ings for all WAPA customers.

Blackmer, Ebsray look ahead to World LP Gas ForumBlackmer 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 benefit prostate cancer researchThe sixth annual Pros4Care golf event to benefit the Prostate Cancer Foundation will take place Oct. 14 at Eldorado Country Club in McKinney, Texas.

This year’s 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 [email protected] for regis-tration and sponsorship information.

Bergquist draws 300 to open housesBergquist hosted its ninth annual open houses Aug. 20 and Aug. 22 in Toledo, Ohio, and Bowling Green, Ky., respec-tively. Don Montroy, the company’s director of marketing, says Bergquist drew about 300 people between the two open houses.

Palfinger names dealer in MichiganPalfinger 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.

Continued from page 10[ N E W S B R I E F S]

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Troy PrewittVice President, Corporate Development

[email protected]

Travis FisherDirector, Corporate Development

[email protected]

Nancy CoopBusiness Development Executive

[email protected]

Have you been waiting for the right time to sell your propane company?

The right time is now.

Take the fi 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

Krupa’s previous employers.

Inergy LPDavid 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 he’s the former president, CEO and director at Murphy Oil Corp.

NGL Energy PartnersJohn 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-tion’s industry growth plan, continues. Ferrell had previously held the associa-tion positions of executive assistant and board manager.

VenturoIan 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 PropaneTony Forster, who owned two propane compa-nies and dedicated his career to the industry, died Aug. 7. He was 80 years old. Forster’s 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.

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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 you’re doing when you hear change dropping to the floor, you’ll 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. Visit www.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.


©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 country’s 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 company’s 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

confidential 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 it’s the right one.

Dan Donovan, President & CEO

Star Gas Partners, L.P. 203.325.5450

Safety concernIntegrity doesn’t 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 doesn’t return to its original fill station is a testament to the integrity delinquency enveloping grill tank cages. Not only is that plastic hiding imperfections, it’s 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 tank’s 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 StrawserBillman PropaneLaGrange, Ind.

Price regulationsIf 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 it’s 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 isn’t 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 isn’t right. Till this is fixed, electric will take over in the Midwest.

Jay LiningerClarinda Co-op Co.Clarinda, Iowa

Email your letters to [email protected] or [email protected], or write to LP Gas Magazine at 1360 East 9th St., Suite 1070, Cleveland, OH 44114.

[ L E T T E R S T O T H E E D I T O R]

FOCUS ON

SPONSORED BY

Propane an option on Ford’s 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 YouTube—search “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.


One topic discussed during the Propane Education & Research Council’s 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 who’s 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 that’s 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

�italSignS [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 staff? 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 offered? • 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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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 [email protected] 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.

VitalSigns

• 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 [email protected] 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@

westernpga.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 [email protected] or

202-452 -8975.

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September 2013 LPGas I 21

With record levels of LP gas exports, plus pressure on the avail-ability of rail tankers and truck transports due to the nation’s

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 wouldn’t just be buying from the single cheapest source. This isn’t the year to be

giving away your supply security.”Too many marketers are reluctant

to pursue this key strategy, according to Lerum.

“They don’t look at it as an insur-ance cost, which is what it is. It’s like saying you’re not going to buy home insurance because ‘I don’t think my house is going to burn down this year.’ It’s 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.

Conway’s propane prices jumped

IN HIGH

DEMAND


Marketers urged to cultivate several propane supply options

prior to winter’s arrival

B Y J A M E S E . G U Y E T T E | CO N T R I B U T I N G E D I T O R

S U P P LY A N D P R I C I N G

over Mont Belvieu’s 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.

“They’re taking everything they can to the Gulf Coast for export,” she says. “There’s 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, I’d 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: Let’s 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,



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 they’ll be ready for it,” he reports. “Farmers are pretty sophisti-cated, so they’ll 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 Agriculture’s 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.



Continued from page 23 Propane prices flat over last 12 months

Natural gas liquids spot prices are flat or down relative to 2012

Ethane

PropaneButaneIsobutane

Natural gasoline

Brent crude

May-13Mar-13Jan-13Nov-12Sep-12Jul-12May-12Mar-12Jan-12

Cents per gallon

0

50

100

150

200

250

300

350

Aug. 4, NASS forecasts this year’s 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 diversificationSustained 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.

“There’s 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-one’s 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 account’s 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 winter’s onslaught, Alex-ander says.

“The No. 1 thing is to diversify your supply, and there isn’t one supply point that’s 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 wouldn’t 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 don’t have railcars sitting around, and there’s not any backup be-cause trucks are in short supply.”

Echoing Alexander, Lerum also en-courages diversification in making ar-rangements for supply needs.

“They’d better do it now before it breaks apart or they’ll 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.

Propane’s production amounts were higher than the load disseminated dur-




80

60

40

20

5-year Range WeeklyDec-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 costsBecause 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 won’t pay the money and they’re 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 everyone’s 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 that’s a lot of miles. I’m a huge fan of budget plans.” LPG



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.com952-935-5350

Sign up online to purchase my safety newsletter today!

JAYJOHNSTONThe 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.

Chemicalreaction

Propane 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 nation’s 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 to consume 650,000 barrels of propane per day by 2017, he adds.


Propane is a wanted commodity in the petrochemical sector and part of a growing process called dehydrogenationBY BRIAN RICHESSON | EDITOR IN [email protected]

PE T R O C H E M I C A L S

“The capability of the petrochemi-cal and export markets to take in more propane is growing,” Fasullo says. “It’s 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.

“We’ve 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 downPropane 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




PetroLogistics has the nation’s only PDH facility, but new projects are in the works.Photos courtesy of PetroLogistics

Bentek Energy/NGL Market Call

U.S. Propane Supply and DemandMb/d

1,6001,4001,2001,000

800600400200

02013 2014 2015 2016

Gulf Coast Exports Mariner East ExportsPDH PetchemResidential/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 dehydrogenationEnter 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-day’s 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 company’s 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 company’s 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 playersCompanies 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 isn’t 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



U.S. EN E RG Y IN FORM A TI ON AD M I N I STRA TI ON

U.S. Production of Natural Gas Liquids by Type 2005-12 (million barrels per day)

Ethane IsobutanePropane/propylene Pentanes plusn-Butane

2005

2006

2007

2008

2009

2010

2011

2012

0 1 2 3 4


COLUMNIST | JAY JOHNSTON

On 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 safetyIn 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 [email protected].

Seeking answersIncidents allow us to learn, better the industry


COLUMNIST | VINNY MULLINEAUX

So, I’ve been following (I’m 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, I’ve been

a big fan of “monitoring” for about a decade now – though of a slightly dif-ferent flavor than that preferred by our government.

I’m 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.

Let’s 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. Don’t 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 [email protected] or 203-952-7666.

Under surveillanceMonitoring 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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COMPANIES TO WATCH

The reputation of Midnight Energy, a 12-year-old propane and heating oil company in Newcastle, Maine, had crum-

bled. Customer reports on Midnight Energy’s reputation and service in the field were disappointing, and the com-pany’s 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 company’s director since February, identified several areas holding the company back. One trou-bling area was the company’s 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 didn’t 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, we’ve 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 that’s 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, we’ve taken a company that was kind of sleepy and its value propositions were not well understood by our customers or employees. And overnight, we’ve 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


Seacoast Energy SolutionsMaine retailer’s rapid transformation puts it back on the mapBY KEVIN YANIK | MANAGING [email protected]

LOCATION: Newcastle, Maine

FOUNDED: 2002

EMPLOYEES: 26

ONLINE: www.seacoastenergysolutions.com

When you partner with family-owned and operated ThompsonGas,

you won’t 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 won’t even consider. We’ll 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

[email protected]

DANIEL CARRIGAN

Business Development Consultant

913-638-8677

[email protected]

THE TRUSTED NAME IN PROPANE www.ThompsonGas.com/Acquisitions

James DriverThompsonGas Partner

Value Creation After Partnering with ThompsonGas

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LPGas Setiembre 2013

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