Propane Fuels America: South 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 South Dakota.

Total odorized propane demand (2019): 98 million gallons

U.S. rank for gallons sold: T-35

Gallon sales trend: South Dakota had been on the rise over the past several years, selling 73 million gallons in 2017 and 83 million in 2018, before the 98 million in 2019.

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 1,871 school buses in South Dakota in 2020, two were fueled by propane. Given its cold weather climate, the state may be a good candidate for expanding propane consumption by converting school buses to run on propane, especially if incentives are increased.

Market Pointers

⦁ South Dakota sells 64 percent of its retail gallons into the residential market. There’s also an opportunity to expand this sector based on the number of houses that still use heating oil, kerosene or wood for heating.

South Dakota sells 64 percent of its retail gallons into the residential market. Photo by Dawna Leitzke

⦁ Agriculture is the state’s primary industry, in which propane also plays a role. The Missouri River divides the state into sections known as the east river and west river. Much of the farming (especially for corn) is done in eastern South Dakota, while cattle ranches are predominant in the western part of the state.

⦁ With only two pipeline terminals for propane and its position near the end of the line, South Dakota can often face challenges on the supply side. Propane industry members can obtain product from NuStar’s pipeline terminals in Wolsey and Yankton, South Dakota. Growmark owns a propane storage and rail terminal in Canton.

⦁ Last November, South Dakota voters approved ballot measures to legalize medical and recreational marijuana. The medical marijuana program is on schedule for implementation, while the recreational program has been slowed in court. Meanwhile, Dawna Leitzke, who leads the South Dakota propane marketers association, says it’s time for the industry to partner with cannabis growers for their energy needs. She calls it an opportunity in an evolving industry.

Fast facts

State association affiliation: South Dakota Petroleum & Propane Marketers Association (sdp2ma.com), the only association in the state representing those in the petroleum and propane businesses exclusively. Seventy-five percent of members are involved in both petroleum and propane, says Dawna Leitzke, its executive director. The association turned 100 years old in 2018.

Programs: The association trains roughly 200 people a year on the Certified Employee Training Program. It’s also a firm believer in holding its training seminars in person. “We stick to what we do best – that’s safety training,” Leitzke says. “That’s the most important thing we can do for our propane members.”

Marquee events in 2021: Its annual convention and expo was held Sept. 14-15 in Deadwood.

Before COVID-19: The propane industry in South Dakota had contributed about $509 million to the 2018 state economy. It’s too early to assess COVID-19’s impact on the state’s gross domestic product.

“We need to sell energy to our customers no matter what form it’s in. I feel like there’s a place for all of these products.” – Dawna Leitzke, executive director of the South Dakota Petroleum & Propane Marketers Association, referring to her board’s unanimous vote to embrace electric vehicle charging stations at convenience stores and truck stops

What’s the weather?

Average temperature (2020): 46.7 degrees F

Annual heating degree-days five-year average (2015-19): 7,408
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; South Dakota Petroleum & Propane Marketers Association; U.S. Energy Information Administration’s State Energy Profiles