US LPG retailer Suburban Propane started the first ever commercial sales of a propane and renewable dimethyl ether (rDME) blend in late April. The "propane+rDME" product is being distributed from the firm's terminal in Placentia, California, with the rDME sourced from Oberon Fuels' Maverick plant that started commercial output last year. Suburban acquired a 39pc stake in Oberon in September 2020, and in March this year bought a 25pc stake in Virginia-based Independence Hydrogen while launching a new renewable energy division. Argus spoke with Suburban chief executive Mike Stivala about its new propane+rDME product:
What are the initial volumes of propane+rDME available to customers?
We have a 12,000 USG storage tank for holding rDME and a 22,000 USG tank for the blended product at our Anaheim plant in California. We will have additional capacity for rDME and propane+rDME storage at our Fresno, California, plant in the coming weeks. As Oberon scales and expands the production of rDME, we too will scale and expand our blending capacities for propane+rDME to additional locations.
What is the initial price of the product?
Similar to propane, the price is based on multiple factors, including the volume purchased. Propane+rDME is a premium product because adding rDME to traditional or renewable propane further enhances their already clean energy qualities.
Who are the customers?
We are offering the product to a select subset of our existing customers with whom we have strong and long-standing relationships. We will be making propane+rDME available to additional customers in the coming months. The initial supply is being used in material handling and [road haulage] engine applications. These currently include forklift operators and propane-powered fleet vehicle operators. Over time, we will expand availability to all applications currently using propane, including residential and commercial heating and cooking.
What is the blend ratio of the initial propane+rDME product?
In order to develop a market, we launched the product at a blend rate that provides us and our customers with confidence that the fuel will be a safe and reliable drop-in replacement for their existing propane equipment. We are working to partner with manufacturers and other industry players to test the product at higher rates so that we can offer customers blends with a higher percentage of rDME in the future.
What incentives will the product receive in California as a lower-carbon fuel?
Traditional and renewable propane currently generate California LCFS [Low Carbon Fuel Standard] credits, and our propane+rDME product is also eligible. As states and governments re-authorise existing incentive programmes and enact new low-carbon fuel standards, we anticipate that propane+rDME will be eligible for additional LCFS, federal alternative fuel tax and renewable fuel standard credits.
What plans does Suburban have for rDME and other renewable fuels this year?
We are a significant renewable propane retailer in California and continue to source new supply to expand its availability there and across our 42-state footprint. We are also investing in hydrogen. Propane+rDME is an outstanding hydrogen carrier that can leverage existing propane infrastructure. We expect to bring low-carbon-intensity hydrogen to market in northeast US this year through our 25pc stake in Independence Hydrogen. And we are advancing our long-term goal of building out a renewable energy platform through our new Suburban Renewable Energy arm.
