Propane Fuels America: Arkansas

LP Gas’ yearlong Propane Fuels America series takes a deep dive into how each state benefits from the propane industry. Here’s our report on Arkansas.

Total odorized propane demand (2019): 97 million gallons

U.S. rank for gallons sold: 37

Gallon sales trend: Arkansas is on a pretty big upswing since selling 69 million gallons in 2017, a 41 percent increase over several years. It sold 91 million in 2018 before the 97 million in 2019.

Census region/division gallons: South: 2.61 billion/West South Central: 747 million

Propane autogas school buses/districts and contractors: 1/1

Market pointers

⦁ Arkansas sells less than half of its gallons into the residential market (43 percent), with 35 percent coming in the agriculture market. Many propane retailers focus on heating poultry houses, and propane-fueled irrigation engines have gained traction.

Irrigation equipment provides water for a northwest Arkansas crop. In 2019, 35 percent of propane gallon sales came in the agriculture market. Operators are replacing diesel irrigation power units that are in need of overhaul, or replacement, with LPG alternatives, says one power equipment provider. Photo: nameinfame/iStock / Getty Images Plus/Getty Images

⦁ Overall fuel demand in the state’s agriculture sector fell by 14.1 percent between 2014 and 2019. Diesel demand fell by 34.9 percent. Notable, though, is that propane demand grew by 20.4 percent between 2014 and 2019. Electricity demand grew by 27.5 percent during that time, and gasoline demand grew by 33.4 percent.

• Bill Heese of Husker Power Products says LPG-fueled irrigation continues to be a good choice from an operational cost standpoint for many growers. Operators are replacing diesel power units that are in need of overhaul, or replacement, with LPG alternatives due to substantially higher cost and maintenance concerns associated with the Tier 4 final diesel equipment, he adds.

⦁ A high proportion of homes using wood as a primary space heating fuel source provides an opportunity for propane growth. About half of Arkansas households heat with electricity, almost two-fifths use natural gas and most of the remaining homes use propane or wood.

⦁ Propane-fueled school buses are nearly nonexistent in Arkansas, so there’s plenty of room for growth in the autogas market. Replacing the state’s 1,326 diesel buses older than the model year 2007 with new propane buses could reduce NOx emissions by 460,000 pounds a year.

⦁ Arkansas has two oil refineries (Smackover and El Dorado) that have a combined processing capacity of almost 91,000 barrels of crude oil per calendar day. El Dorado, the larger refinery, can process about 83,000 barrels per day into gasoline, diesel fuel, propane, solvents and asphalt products.

⦁ Gov. Asa Hutchinson on March 10 signed legislation into law that prohibits cities and counties from banning propane and natural gas from residential and commercial use.

Fast facts

State association affiliation: Arkansas Propane Gas Association/arkansaspropane.com and the Arkansas Propane Education & Research Council (ArkPERC). Melissa Moody is the state executive.

Programs: ArkPERC funds various projects in the state, including annual safety seminars.

Marquee events in 2021: Co-host of the Mid-States Propane Expo, July 26-29 in Branson, Missouri.

Before COVID-19: The propane industry in Arkansas had contributed about $220 million to the 2018 state economy. It’s too early to assess COVID-19’s impact on the state’s gross domestic product.

“That area of the country is in a unique place and, as a result, gets to do multiple crops – some that I consider ‘Midwest’ (corn) and some that are ‘southern’ (peanuts and cotton). The corn acres do get irrigation in some cases. In addition, livestock in Arkansas plays a fairly big role, and they do get enough cold weather to burn propane.” – Michael Newland, director of agriculture business development at the Propane Education & Research Council

What’s the weather?

Average temperature (2020): 61.2 degrees F

Annual heating degree-days five-year average (2015-19): 3,144
U.S. average: 4,090

Sources: Propane Education & Research Council’s U.S. National and State Propane Market Profiles; Annual Retail Propane Sales Report; propane.com; Arkansas Propane Gas Association; U.S. Energy Information Administration’s State Energy Profiles