Propane’s potential in agriculture, autogas and other applications

July 10, 2015 By    
Roy Willis

Roy Willis

Roy Willis, president and CEO of the Propane Education & Research Council (PERC), sat down with LP Gas magazine at the National Propane Gas Association (NPGA) Southeastern Convention & International Propane Expo in Atlanta. While PERC decides how to proceed without a federal restriction on its consumer education efforts, LP Gas Managing Editor Kevin Yanik asked Willis market-specific questions. Several topics were discussed, including the growth and potential of agriculture, autogas and boating.

LP Gas: PERC has referenced Lehr, a manufacturer of low-horsepower boat engines, in marine market discussions in the past. What will it take to make the marine market more attractive for the interests of PERC and the greater propane industry?

Willis: Gallons. This is a conversation we’ve had with Lehr. They make their money selling lots of units. But they make lots of units that use very little propane. Our perspective is we’d be happy if they’d sell one unit that consumed 1 billion gallons. That’s where the economics of further investment in the marine market, especially for outboard motors, need to go.

We need to get up to the higher horsepower – 150, 200 horsepower – engines that are used in harbor patrols [and] fish and wildlife service. That’s where the economics make sense from an investment perspective for PERC.

[Lehr] is moving in that direction. I think there are other players who are starting to pay attention. And that’s not to say the technology is not worthwhile. Lehr has been good at promoting propane as a fuel. I respect the work they do, and I don’t regret the investments we’ve made in the past with them. We just need [an engine] that justifies the investment based on the gallons it’ll produce.

PERC

“As farmers are looking to replace their old diesel equipment, we want to be there,” PERC President Roy Willis says. 

Profitable gallons have become increasingly the benchmark by which we look at all development projects. You can make low-margin products that the propane marketer will be reluctant to support, simply because it’s very difficult to make a profit. Profitable gallons are also one of the challenges we’ve faced in the agriculture market.

LP Gas: What are your thoughts on the state of propane irrigation engine technology and the potential that equipment has in the ag market?

Willis: Farmers are big consumers of propane, and offering them new equipment and new engines that are more efficient is the way we’re going to keep their business.

The ag market, because farmers are such big energy consumers, is also a target for natural gas expansion. If we don’t improve the efficiency of propane, the economics of bearing the costs and extending a natural gas system to your farm becomes more favorable to natural gas. We have to stay competitive in that space.

[Propane] irrigation engine technology is world class. It is definitely efficient and reliable. The economics of using propane make sense compared to diesel. What we’re doing now is targeting the top irrigation states in the country. We’re going to introduce this technology to them over the next year or two.

As farmers are looking to replace their old diesel equipment, we want to be there. This story is almost the identical one you’re seeing in the school bus market. They want to replace buses, so they look at propane versus diesel, and propane has a really great story to tell.

LP Gas: You mentioned at the April PERC meeting that getting to the 13 to 15 percent market-share threshold within the on-road vehicle space qualifies a product as sustainable. Where is propane on its road to that threshold?

Willis: I think we’re getting closer there in the school bus market than any others in terms of percent of new sales. We’re getting pretty close to the [threshold]. We’re down this year somewhat, and because of the drop in oil and gasoline prices, businesses and schools are not replacing as many vehicles this year. If you’re a fleet manager, the number one cost factor (fuel costs) in your budget was cut in half and you didn’t have to do anything.

Still, the fleet managers we talk to say they don’t expect these low gasoline prices to stick around forever. We expect them to go back up in the future.

The one thing that keeps propane in the conversation is that our prices have dropped along with gasoline and diesel. We still have a viable argument to make for propane.

LP Gas: How do you feel about propane autogas’ journey to reach that 13 to 15 percent market-share threshold? Has the market progressed at the anticipated pace?

Willis: We look at it by the individual product and not by a market segment. On school buses, it’s taken a little longer than we expected in part because of the initial start with Blue Bird. We hit a wall when the GM engine was taken out of service and we had to find a replacement engine. Once they did and they got back on track, we started seeing sales increase.

Now, you’re seeing other key players in the school bus market coming forward with their own propane versions. We just crossed that threshold this year. That’s why I say I get a clear sense of momentum in that particular technology.

LP Gas: You’ve recently been reaching out to different groups, including the national media, to promote propane’s value. Can you share a little about your experience with PERC’s thought leadership program and what the industry has gained through your efforts?

Willis: Most of my work is talking to non-propane audiences about propane. For the most part, propane is not on the menu for those audiences. So the first goal is to force propane onto the menu – and to talk about the rationale for using propane in sustainability programs.

For example, what can you do today that reduces your carbon footprint and enables you to save money? That’s essentially the message, and we take that message to school districts, universities, park services and to broader audiences like the Clean Cities coordinators.

We’ve also been aggressively involved in the National Association of State Energy Officials (NASEO), educating them about the role that propane can play in their own energy planning for states. Most states are going through some kind of an energy-planning process on a regular basis. Being involved with these organizations enables us to identify states where we have opportunities to discuss propane in their overall energy-planning efforts.

LP Gas: How do you think states have received your messages?

Willis: There are some states like California where it’s very difficult, and other states that are more receptive. For example, there’s a general opposition to shale development in the environmental community. If you’re talking about the growing supply of propane from shale development, there are some states like New York that have banned fracking. That presents a challenge, but we still go and engage them in the conversation because even in New York there are almost 350,000 homes that use propane. And oh, by the way, you have 1.8 million homes using fuel oil, so you ought to be thinking about using more propane. If you replace some of that fuel oil consumption, you’re going to improve the environment and quality of life in your state.

The other thing we’re trying to do is elevate propane in the national media environment. We do fairly well in local media and in specialty trade media, but getting the Wall Street Journal, New York Times or the Los Angeles media to cover a propane story is one of our goals.

Kevin Yanik

About the Author:

Kevin Yanik is the senior editor of LP Gas Magazine. Contact him at kyanik@northcoastmedia.net or 216-706-3724.

1 Comment on "Propane’s potential in agriculture, autogas and other applications"

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  1. Steve Newman says:

    Great article, I appreciate reading positive news regarding propane. I would reinforce as the “feet on the street” AutoGas representative, that we are also seeing a transformation in our industry. Private industry is not strapped by the bureaucracy that State, County, and City entities run into, we are truly gaining traction in Atlanta within the private industry.

    Propane is sustainable and abundant, we can offer “fixed-rate” fuel costs for operations and fleet managers, this truly helps private organizations control and forecast fuel expenditures.

    It is the private companies that have the ability to “pull the trigger” faster than public entities. I believe it is private industry that can take us to the next level in the next 5 years. Campbell-Parnell has done a remarkable job at leading Isuzu NPR-HD customers to propane AutoGas, as propane Dual-Fuel technology is proving to be a tremendous fuel cost saver. It is interesting to see private industry grasp this concept at a near record pace, as this component is the fastest market we are experiencing here in Atlanta.

    Mr. Willis has a difficult job and he is 100% correct about speaking to non-propane audiences. Many of our potential clients either misunderstand or just don’t know enough about propane to look into it. I feel much of my job responsibility is educating people about the benefits of propane and going back to propane 101, but once the private fleet or operations manager gets it – most of the time I hear “why did I not know about this sooner?”

    Propane is a solution to fuel cost problems private fleets face and once you demonstrate the savings, you cannot put the vehicle systems on fast enough for them.