Propane Distributors Seek To Boost Demand with Lawn Mowers

September 19 -- The propane industry has set its sights on that symbol of American middle-class achievement: the lawn mower.

Blame it in part on the natural-gas drilling boom, which has left distributors scrambling to find new ways to increase demand for propane.

A liquid cousin to natural gas, propane is best known for home heating and backyard barbecues, although it is also used in the chemical industry and as a fuel in farm equipment. It is easier to transport in liquid form than natural gas, so it generally served areas disconnected from natural-gas pipelines.

But when domestic natural-gas production took off late last decade as companies found ways to economically tap into vast shale formations, more pipelines were built and the steady decline in propane's domestic market share accelerated.

To protect their turf, propane distributors focused first on improving the performance of farm equipment to keep agricultural customers happy. Now, the industry sees propane's role as a fuel for small engines as a growth area, says Roy Willis, head of the Propane Education and Research Council.

By promoting the benefits of propane lawn mowers—which have lower emissions, are cheaper to run and last longer—the group is betting it can grow to a 3% share of all commercial mowers sold in the U.S. by 2016 from 1% now. That would goose propane consumption by the machines to 23.8 million gallons by 2016 from about 7.9 million gallons this year.

Though propane mowers can cost more than comparable gasoline mowers (about 10% more in some cases), they can last two to three years longer because they burn so much cleaner, says Ivan Giraldo, president of landscape-maintenance firm CleanScapes Inc., which has used propane mowers in San Antonio and Austin, Texas, since 2006.

How much the push into lawn mowers will help propane retailers remains to be seen. The market for propane in mowers is much smaller than the residential market, so the industry has a lot of ground to cover. In addition, the U.S. has become a net exporter of propane in recent years—supplying countries such as Mexico, Brazil, Ecuador and Chile with propane for residential heating and cooking. That is starting to push wholesale prices up from their historically low levels of recent years, threatening propane retailers' margins.

Exports grew to about 8.7 million barrels in July 2013 from 2.7 million in July 2010, according to data provider IHS Waterborne Energy. And big exporters such as Enterprise Products Partners LP and Targa Resources Partners LP are expanding capacity in anticipation of even more growth.

Rusty Braziel, an energy-supply analyst with RBN Energy LLC, says that isn't sitting well with the propane distributors he spoke with this summer. "They were a pretty depressed bunch by the time I was through."

Tom Fowler             www.online.wsj.com