Dakotas reveal propane industry opportunities, challenges

The Dakotas serve as a microcosm of the opportunities and challenges that exist in the propane industry.

Map image: Kolonko/iStock / Getty Images Plus/Getty Images

In some cases, North Dakota and South Dakota check the traditional boxes of having vast rural areas, cold winters and propane supply concerns. In other cases, state leaders are pursuing new markets, growth opportunities and projects aimed to place the state propane industries on firm footing for the future.

Location alone makes North Dakota and South Dakota – two of the three states featured in this month’s Propane Fuels America series – among the coldest places in the country. In fact, North Dakota sits behind only Alaska for the most heating degree-days – both for 2019 and over a five-year period (2015-19), per National Oceanic and Atmospheric Administration data sourced in the 2019 Annual Retail Propane Sales Report.

Cold winters usually equate to more propane gallon sales, but supply issues are often front and center for Mike Rud and Dawna Leitzke, executive directors of the North Dakota and South Dakota state propane associations, respectively.

Since the Cochin pipeline ended propane supply service into the U.S. from western Canada in 2014, North Dakota has sought supply alternatives. Suppliers and marketers have responded with their own infrastructure builds, and Rud is supporting an effort to develop underground salt cavern storage in western North Dakota.

“Most of the natural gas being processed here in North Dakota is shipped to Conway [Kansas] and fractionated there,” Rud says. “We have to have it shipped back here or go farther than that to get it.”

Similarly, supply issues are constant in South Dakota.

“[Wolsey and Yankton on the NuStar pipeline] are the only entry points in our state, and we always get shorted because we’re a small state, our volume is less than other states around us, and we’re also at the end of the line,” says Leitzke, praising her members for going “above and beyond” to keep customers in supply.

Leitzke supports any product that will boost business for her members. Lately, those discussions have centered on electric vehicle charging stations at convenience stores and truck stops, and building relationships with marijuana growers for their energy needs.