Natural Gas Engagement a Hot Topic at World LPG Forum

Opportunities resulting from the historical low price of LPG and suggestions that the world LPG industry should be more engaged with the natural gas industry were among the various hot topics under discussion during the World LPG Forum, which took place Sept. 28 to Oct. 2 in Singapore.

James Rockall, CEO of the World LPG Association (WLPGA), told BPN after the event that the Forum usually focuses more on the distribution side of the business and on cylinders or tanks. But “Expanding Horizons” was the theme for this year’s event, and the association sought to move “beyond the bottle.”

“Our industry is bigger than that,” Rockall explained. “Our industry involves companies that are producing LPG and who are shipping it. The investment that we’ve seen in the shipping industry in the last year or so is immense. We have companies who are trading LPG, and we have companies who are using LPG in large volumes for things like big-scale power generation. The scope of our product is a lot broader than [what] perhaps we normally focus on. So expanding our horizons as an association was something that was also important to us. Reaching out beyond the normal customer base to the larger industry was really important.”

Seeing the natural gas industry as more of a partner than competitor was a topic of discussion that fit the “Expanding Horizons” theme of the event. Rockall noted the similarities of LPG and natural gas make them “essentially the same product” for residential and industrial customers — they come from the same place and are consumed almost in the same way. Somewhere in the middle of the production process, the two products are separated, and competing companies transport it and sell it, but Rockall contends that natural gas is not the propane industry’s biggest competitor.

“Our biggest competitors are [energy sources] like electricity or biofuels, and we need to make sure that gas as a bigger industry is represented and that we support each other and advocate together,” Rockall said.

David Carroll, president and CEO of the Gas Technology Institute (Des Plaines, Ill.) and president of the International Gas Union (Vevey, Switzerland), spoke during the opening roundtable at the World LPG Forum about the synergies between LPG and natural gas. “He’s very knowledgeable about LPG,” Rockall noted, adding that WLPGA, working with Carroll, can help the LPG industry reach more people who don’t have access to natural gas.

“If we can leverage that advocacy potential of the natural gas industry to support our market development, we can really work together.”

The low price of propane has presented opportunities for the industry to compete better with other energy sources, and that was another hot topic of discussion at the Forum. Rockall and other attendees at the World Forum in 2014 were surprised at how low propane prices had fallen. By the time the event this year in Singapore started, prices had dropped even further. Presenters and attendees at the World LPG Forum noted that the decline in price creates big opportunities to compete with other energy sources.

That will help because, in the past, people thought of propane as expensive compared to charcoal, wood, and other energy sources in developing countries.

But lower prices have “given the industry a huge opportunity to extend its reach into markets that otherwise were maybe a little difficult to penetrate,” Rockall stated.

He has heard comments in the past that the LPG industry is seen as old-fashioned, but that perception is changing, and innovation could be seen all over at this year’s Singapore event. He described this year’s Global Technology Conference at the World Forum as the best conference yet. The 10 papers presented (BPN, August 2015, p. 27) “described commercial opportunities the industry can exploit for further volume in a way that perhaps we haven’t seen before,” Rockall noted.

He was particularly impressed with a paper by Samik Kumar Hait, et al., of Indian Oil Co. in India titled, “Development of Nanoadditized High-Therm LPG for Metal Cutting Applications,” which describes how LPG can be a less hazardous alternative to oxy-acetylene for steel fabrication.

Acetylene is extremely dangerous, Rockall explained. But the addition of a proprietary nanoparticle to LPG can result in much lower costs for flame cutting, and provides the safety benefits of LPG. “These are the kinds of things that can make enormous benefits all over the world, not just the developing world. These kinds of opportunities are out there for propane.”

B. Ashok, chair of Indian Oil Co. and who recently joined the board of WLPGA as vice president, provided the World Forum’s opening keynote address. He discussed a new direct cash transfer program for propane cylinders in India in which the government subsidy for domestic cylinder costs is transferred directly to people’s bank accounts. This allows cylinders to be sold at market price, eliminates the unsafe use of cylinders in domestic applications, and avoids the leakage of subsidy from the target consumers. Rockall believes helping lower-income people afford propane is important, and he thinks other countries can adopt similar programs.

Rockall remembered a portion of Ashok’s presentation that stated 70% of India is rural, and only 25% of the rural market is connected to LPG, meaning a large portion of the country offers opportunity for LPG sales. He noted that India’s rural population is larger than the population of the U.S., Canada, and the European Union combined, which further illustrates the growth opportunities for LPG, along with cylinder, valve, and appliance sales.

The next World LPG Forum, to be held in Istanbul Sept. 27-29, 2016, will highlight additional innovation. The event, in partnership with the European LPG association, AEGPL, will feature the theme, “A Bridge to the Future.” Istanbul is located between Europe and Asia, which have some of the greatest potential for LPG growth. Rockall believes LPG around the world will see growth in the coming years.

“I have the sense that our industry is headed toward something big,” he said. “I heard it a few times at the conference in Singapore. People are saying that they have the feeling the industry is at its tipping point, and that we’ve put in a lot of work over the last few years to raise awareness about a lot of issues. But with the circumstances that we find ourselves in now with prices, the awareness of growing air-quality problems, and also increased understanding that LPG can be a solution to those problems, it seems to be coming together.” —Daryl Lubinsky