Buried Treasure

Far removed from the grueling pace of a frigid Northeast winter season, Dayne Brady wipes the sweat from his face, squints into the brilliant sunshine and recounts the details of his company’s $3 million investment to more than double the bulk storage at the only propane company that has ever operated in the Caribbean Islands.

Photographs By Katie O’Neill, Bodden Holdings Ltd.

Home Gas Ltd. – a division of Bodden Holdings – is increasing its onsite storage capacity from 210,000 gallons to 540,000. The nine-month project replaces an assortment of 10,000-gallon, 12,000-gallon and 30,000-gallon above-ground tanks with 18 new 30,000-gallon vessels in a state-of-the-art, mounded facility that features product withdrawal from the bottom.

The expansion is designed to guarantee supply to the company’s 5,800 island customers while opening new sales opportunities in neighboring Jamaica and other Caribbean countries.

Grand Cayman – the largest of three islands that comprise the Cayman Islands – covers 76 square miles of tropical delight. Located about 150 miles south of Cuba, 480 miles southwest of Miami and 180 miles northwest of Jamaica, its balmy weather and azure waters lure millions of cruise-ship tourists to experience the postcard beauty of its wild banana orchids, silver thatch palm trees, shops, restaurants and beaches.

Tankers delivered product about every three weeks before the Home Gas bulk storage expansion.

Two hundred years ago, the remote island was an ideal refuge for buccaneers. Through the 1960s, its population was less than 8,000 and Caymanians made their living from subsistence farming, fishing and making thatch-rope.

Today’s Cayman Islands comprise the world’s fifth-largest financial centre. With no income, inheritance, sales, corporation, capital gains or withholding taxes, it is a bustling haven for the international investment community and those who profit from their services.

Those lucrative incentives have sped a diverse island growth. More than 90 different nationalities are represented among the islands’ 53,000 residents, the majority of which are Caymanian (61 percent), Jamaican, British, American, Canadian, Philippine and South American.

Home Gas employees use a motor boat to connect fuel hose from the ship to shoreline.

That makeup poses a unique communication and education challenge for Brady, who came to Home Gas as general manager in 2005 after running the Georgetown, Del., district office for Tri-Gas & Oil out of Federalsburg, Md.

“With so many nationalities here – and a considerable disparity in income levels – the real challenge is to communicate effectively,” Brady explains.

Using marketing materials developed by the Propane Education & Research Council as well as locally produced TV and radio spots, Brady pushes hard to expand sales by teaching local residents that propane is ideal for much more than traditional home cooking. Tankless water heaters, clothes dryers, refrigerators, pool heaters and propane-fueled generators are new product lines that are gaining sales traction with homeowners and commercial accounts alike.

Almost 1,000 feet of hose are needed to reach the ship mooring.

“You have to work it. You have to sell the customer using demonstrations and various types of marketing. We’ve put a lot into our marketing because it’s education marketing,” Brady says.

Unique Market

Home Gas sits atop a unique market position that provides sales opportunities most U.S. propane marketers can only dream about.

Since it opened in 1957, Home Gas has run a monopoly as the only gas supplier on the island. Twenty-seven employees operate five cylinder trucks and four bobtails between the three islands to deliver 2.1 million gallons annually. Almost 80 percent of those customers exchange 100-pound cylinders.

No propane or natural gas competitors means the company can target electricity as the premier energy source for the island’s 36,000 households. And with the cost of electricity at a whopping 32 cents per kilowatt-hour – three times the average in the United States – propane offers a great financial incentive to customers concerned about energy efficiency.

Shoreline pumps deliver product from the ship to storage tanks 2,800 feet away.

So how do you grow a monopoly already doing $6 million in annual sales?

“We are working to teach realtors and home builders that using LPG in their spec homes allows them to market the property as energy efficient compared to paying $700 to $800 per month for electricity. It shows them the money. And if they use a full complement of LPG appliances, it will save them an average of 36 percent on their energy bill. That means they can pay off the cost of the appliances in just over a year,” Brady says.

Upgrading applications beyond cook stoves is one strategy. Brady says he gets about 10 requests a week for propane air conditioners – a technology that is in the pipeline among PERC research and development projects – and could be the perfect answer in a community that has no building heating systems.

He also has an ideal market for the new composite cylinders that are entering the U.S. market. High humidity and the constant salt-water sea breezes cause major problems with steel tank corrosion. Even brand-new tanks arrive rusted, forcing Home Gas to sand-blast vessels an average of four times a year, Brady says.

Much of the massive equipment had to be moved at night to avoid congestion on narrow island roads.

The company, which has more than 4,000 20-pounder cylinders in circulation, believes it can save substantial machine shop costs by switching to the fiberglass models. The goal is a full replacement by the end of the calendar year.

Even at a $20 difference in price ($81 for a full composite; $61.50 for steel), Brady says his customers all want composite because of its lighter weight and translucent shell that allows the liquid gas volume to be seen.

“The people here love it,” he says.

Twenty exchange cabinets around the island dispense about 200 20-pound cylinders a day. Brady sells another 23,000 gallons each month in 100-pounders, plus more than 200,000 gallons a year in forklift cylinder sales.

The Wrath of Ivan

Hurricane season is a way of life in the Cayman Islands. From June through November the small, flat island is particularly vulnerable to rising sea levels due to storm surge.

On Sept. 11, 2004, Hurricane Ivan – a monstrous Category 5 storm – decimated the entire island. It took three to eight weeks for electricity and telephones to be restored and almost months in some locations for water supplies.

Each tank is enclosed by a concrete wall.

The savage destruction purged the island of most all the dilapidated residential buildings inland, as well as huge sections of high-end commercial property along the coastline. Since then, Grand Cayman has been frantically rebuilding.

“Some people are of the mindset that they have to rebuild anyway, so they may as well upgrade since it comes from insurance money,” Brady says.

Others took their insurance settlement and never came back, allowing the island’s many affluent businessmen to buy up land and build bigger and better structures.

All are prime targets for Home Gas marketing efforts.

With a number of new housing developments planned or under construction, Brady is burning up the phone lines to make believers of prospective home buyers.

“I go to the developer and ask him to give me the names of the prospective home owners. Then I personally call and talk to them about using propane appliances, which is usually the decision-maker for them,” Brady says.

“In four of the six developments, I talked to every one of them. And keep in mind that many of the homeowners don’t live here on the island full time.”

The bottom of the 47-foot-long tanks rest 6 feet below grade.

His efforts have paid off as several underground propane piping systems are being installed where housing developments will rise. Brady wants to get as much of the island on these centralized, metered systems as possible to reduce the volume of steel and the number of tanks that can float away in post-hurricane flooding.

Supply and Safety

The tropical island does pose a substantial logistical challenge for the propane marketer: No pipeline, no rail and no truck transport to deliver supply. Its busy shoreline doesn’t even have a pier where tankers can dock.

Instead, the company contracts for ocean-bound ships to bring 4,235 barrels of fuel every three weeks or so. Home Gas employees in a small motor boat run a 3-inch hose with seven couplings 800 feet from shore to the ship’s moorings. It takes up to eight hours to move 4,235 barrels of product ashore, where it is pumped another 2,800 feet underground to the marketer’s storage tank farm.

Rough weather can prevent the tankers from discharging, choking supply across the island for days at a time.

The tanks are backfilled to provide insulation.

The added storage, which was completed in June, will lengthen the time between ship deliveries from 26 days to 45. Up to 10,000 barrels can now be pulled from the ship in under 12 hours hours using a new 6-inch manifold to the storage tanks.

Dale Blessing, owner of Applied Engineered Systems in Johns Island, S.C., is the engineer who designed the project. He says the new bulk facility does more than secure supply against the seasonal rants of Mother Nature.

An automated system allows Home Gas employees to monitor and control tank valves remotely. It also provides instantaneous supply inventory based on liquid level and temperature.

The project likewise utilizes the latest technology to ensure the plant operates as safely as possible at the mounded plant, which is located just 1,200 feet from a school and just outside the glide path of the Grand Cayman airport runway.

Using a pump system that draws fuel from the bottom of the storage tank instead of the top enabled Home Gas to meet the local government’s 10-foot height restriction. The bottom of the 47-foot-long tanks now rest 3 feet underground; the pumps sit at 4 feet below grade.

Dayne Brady

Each tank is enclosed by a concrete wall and back-filled with a quarry sand material to provide 2 feet of insulation. Two self-contained manifolds allow flexibility throughout the product distribution.

Blessing says the mounding, which added about 40 percent to the project cost, minimizes any possibility of explosion and guards against losing the tanks to post-hurricane flooding.

As part of the project, fire suppression was upgraded with a sprinkler deluge system around the cylinder exchange filling dock and a fixed fire monitor to protect the bobtails during filling operations. Additionally, a diesel-driven fire pump system was replaced with an electric turbine pump and a 100kw standby generator to guard against the common electricity outages.

“Every element of each safety system has at least two backups,” Blessing notes.

“The new system has also been protected against corrosion with additional measures in place that can detect and deal with any deterioration. We are installing a system that can monitor any corrosion.”

Brady says the biggest obstacle facing his team was trying to build the new system while keeping the original tank farm operational. Much of the material and massive equipment had to be moved to the site at night to avoid congestion on the island’s narrow roads.

The process was simplified by using prefabricated components where possible. Many of the parts used were designed and built offsite by Applied Engineered Systemsand put together on the Home Gas site.

“Logistically the project has run smoothly, and transporting the equipment to the site posed very few problems,” says Brady, who also has been overseeing the upgrade of the company’s computer network to facilitate wireless truck and tank monitoring telemetry.

Despite the extensive investment in equipment, Brady remains a staunch believer that his company’s sales growth depends on its ability to educate consumers that propane is a safe, reliable and cost-effective energy choice. It’s not an easy sell.

“Many people here live in fear of LPG because of unsafe practices of people using garden hoses and clamps. We have taken that fear away through education. We have to tell the story that propane is safe and that we as a company will be there to ensure each experience is a good one,” he says.

That responsibility extends beyond customers to include vendors, independent contractors who install gas appliances and local government officials. Brady, a certified trainer, offers courses covering the basics and principles of propane along with basic distribution based on National Fire Protection Association code.

He also extends training through his Tarantin Tank sales representative, Bill Woodward.

“We are trying to put everyone on the same page in terms of what is an acceptable standard installation,” Brady says.

“I am a full-service dealer. I am a big believer in that concept. I’m from the old school that says your job doesn’t end after the fuel delivery is done.”

In addition to Applied Engineering Systems, the primary propane industry contractors and suppliers for the Home Gas bulk plant project were Tarantin Tank and Equipment, Trinity Containers, Corken, Gas Equipment and Tempaco.