Propane Fuels America: North Dakota

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 North Dakota.

Total odorized propane demand (2019): 164 million gallons

U.S. rank for gallons sold: 21

Gallon sales trend: After selling 127 million gallons in 2017, North Dakota saw gallon sales jump almost 30 percent during the three-year period to 2019. The trend dipped slightly in 2018, with 121 million gallons sold.

Census region/division gallons: Midwest: 4.13 billion/West North Central: 1.94 billion

Propane autogas school buses/districts and contractors: Out of an estimated 705 school buses in North Dakota in 2020, 13, or 1.87 percent, were fueled by propane. The slow adoption rate means opportunity exists to expand propane’s penetration in school bus fleets. Autogas could also prove advantageous in helping school districts overcome cold-start issues common with diesel buses in cold climates.

Market Pointers

⦁ Holding about 54 percent of North Dakota’s total gallon sales, the residential market benefits from the state’s high number of heating degree-days. Houses that still use heating oil, kerosene or wood for heating offer expansion opportunities in the residential sector.

⦁ North Dakota owns the second-highest five-year average (2015-19) for heating degree-days (8,925). Only Alaska, at 12,424, has more, per the latest available data from 2019. Measuring the number of heating degree-days in 2019, North Dakota (9,961) also finished runner-up to Alaska (11,844).

⦁ North Dakota ranked second in the nation in 2020 in crude oil production and proved crude oil reserves – behind only Texas. Though the oil patch – most notably the Bakken Shale formation in the western part of the state – is a big driver of economic activity, agriculture is the No. 1 industry in North Dakota. Propane-fueled crop dryers are part of the solution for farmers.

⦁ When the Cochin pipeline ended propane service from western Canada into the Upper Midwest in 2014, North Dakota lost about three-quarters of its propane supply, says Mike Rud, executive director of the North Dakota Propane Gas Association (NDPGA). Companies invested in more storage projects and transports to help offset the lost supply from Cochin.

⦁ The NDPGA has supported legislation, Senate Bill 2065, that could help pave the way to new underground gas storage in western North Dakota. Rud says three potential sites could store 2 million barrels of propane. “We’ve got a ways to go, but hopefully by the end of 2022, there will be some potential,” he says.

Fast facts

State association affiliation: North Dakota Propane Gas Association (NDPGA)/ndpropane.org

In-person training is popular in North Dakota. Photo by Mike Rud

Programs: The association trains about 200 employees a year with the Certified Employee Training Program. Rebate programs have covered water heaters and furnaces, and the NDPGA may look at the popular generator niche. It’s also working to promote propane versus natural gas in rural areas, especially as the industry faces threats from subsidized natural gas expansion.

Marquee events in 2021: The NDPGA annual meeting and convention was held in June in Medora. The North Dakota Petroleum Marketers Association will hold its convention and trade show Oct. 19-20 in Fargo.

Before COVID-19: The propane industry in North Dakota had contributed about $1.4 billion to the 2018 state economy. It’s too early to assess COVID-19’s impact on the state’s gross domestic product.

“We’ve been trying to find a solution since we lost Cochin. I tip my hat to the way marketers and suppliers have stepped up – be it rail terminals or marketers putting in more storage or transports on the road – but we still need supply.” – Mike Rud, executive director, North Dakota Propane Gas Association

What’s the weather?

Average temperature (2020): 42.2 degrees F

Annual heating degree-days five-year average (2015-19): 8,925
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; North Dakota Propane Gas Association; U.S. Energy Information Administration’s State Energy Profiles