Propane 101: How is it produced? Why should I care?

If you’ve ever used propane at your home, you probably haven’t taken a whole lot of time to think about how it got there. But here at Tankfarm we think understanding where this critical fuel comes from isn’t just interesting, it’s important in more ways than one.

Propane source #1: Refining

Propane is derived from two different processes, all of which happen right here in the United States. The first is the crude refining process. As oil companies take crude and begin to ‘crack it’ into its various parts like gasoline, jet fuel, diesel, and kerosene…propane is a natural bi-product of the process. So much of what we use each day comes from US refineries.

Propane source #2: Natural gas production

The second process is natural gas production. So when exploration companies stick a well in the ground a whole mish-mash of hydrocarbons come out of the ground. To get natural gas, these companies have to strip out the other gases that naturally occur underground- those gasses are called ‘wet gases’ like butane and propane.

As most of us know, the US has become a hotbed of energy exploration over the last decade, and we are on our way to becoming the largest producer of natural gas in the world. That means we are likely to become the largest propane producer in the world too. In fact, between oil refining and natural gas production, virtually all of the propane used in the US is domestically produced- making it (almost) 100% Made in the USA.

The other unique thing about propane is that, unlike natural gas, it can be transported easily. When placed under pressure it goes from being a gas to becoming a liquid. Natural gas can do this too but it requires pressure AND to be very cold- which presents more challenges for transportation and storage.

The good news for US citizens is that we’re sitting on a nearly inexhaustible supply of this resource, which should keep prices in check long-term. However, other countries have a strong appetite for it too and are willing to pay higher prices than we are. That’s why the US has become a major exporter in recent years which will continue to place pressure on pricing.