Power Growth: Propane expanding in irrigation share

2014-06-24T14:05:00Z Power Growth: Propane expanding in irrigation shareBy Chad Smith, Midwest Producer Midwest Producer
June 24, 2014 2:05 pm  • 

As most of the nation's crops are now in the ground, irrigation units across the country are firing up to help those crops advance through early growth stages. Diesel has long been the choice fuel for irrigators, but propane has recently begun to make inroads into diesel's market share.

Propane has long been fueling the nation's grain dryers at the end of a wet harvest season. However, because of cost factors and efficiency standards, propane is making an appearance at the other end of the growing season.

"We've seen a lot of sales of propane-driven engines take off," said Mark Leitman, the director of marketing and business development for the Propane Education and Resource Council (PERC). "We're hearing of interest in propane from farmers, from applicants to our incentive program, and from engine dealers, most of whom specialize in both diesel engines and propane engines too."

Leitman said, "I had one dealer, who sells diesel, propane and natural gas engines, tell me their typical volume was 80 percent diesel and 20 percent everything else, and this was just a few years ago. Now, it's swung to a more even 50-50 split, and they see that moving in the direction of a majority of their product being spark-ignited engines that run on propane and natural gas."

Phil Smith is one of the lead salesmen in the Aurora Cooperative's Energy Department. "We are seeing an increase in propane fuel. We're still selling a lot of diesel, but with the pricing of propane in the last few years, and the correlation to higher diesel fuel prices, propane is looking more attractive these days.

"We have increased sales in propane for irrigation. The newer engines are more efficient, they use less gallons per hour, and so it's good for our propane folks."

Leitman said the other benefit of propane is it's a domestically produced fuel. "Propane comes from natural gas, which is domestic. North America is a huge producer of natural gas, which comes out of the ground containing propane. When the natural gas is processed, that propane is pulled off, and that's where most of it's coming from."

PERC offers an incentive program to the nation's farmers who may be thinking of switching to propane. Leitman said one of the requirements for participating is keeping a little data on fuel usage. "In 2013, we had almost 150 farms around the nation that took part in the program, running approximately 200 engines on propane."

"Farmers that went with a new propane engine in 2013 reported using 37 percent less fuel per hour than the diesel engine they replaced," said Leitman. "When you factor in the cost of propane, the total cost saved was 56 percent over the previous year with diesel. That's a farmer-reported improvement of the advantage of propane engines."

However, the question that must be dealt with in regard to propane is supply, especially after what happened to both supply and price last winter.

The United States produces more propane than it can use domestically, but despite that, propane shortages were well documented during an especially brutal winter in part of the Midwest and the Northeast. Smith called it "a perfect storm in the wrong direction."

He said, "It was the perfect storm of supply disruption, coming on the heels of a large corn drying season in the fall, followed by an extremely cold winter heating season, so the stars all aligned completely wrong." Smith said, "I've been involved in the propane industry since the late '80s and we've had spot outages of propane as we have with all of the products we work with, but nothing to that extent."

Leitman agreed. "Propane is like any other energy source or farm input, with plenty of room for volatility. It was the perfect storm, with one event piling up on another to lead to an unfortunate outcome. Low propane prices led to increased export demand overseas, which left the Midwest with a lower than normal propane supply."

"We also had transportation challenges because of the intensely cold winter, and had a hard time getting product to where it needed to go," he said.

Supply levels look good for the next several years. Leitman said, "Because of the growth in natural gas exploration and production, we've seen a lot more propane come on the market in the U.S. We do still have a large supply of propane in place."

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