This page outlines the requirements for land, buildings, storage tanks, and trucks necessary for starting a new propane business. These are suggested guidelines, recognizing that each situation may differ. Typically, tribal land is accessible for the retail site or ‘bulk plant’, offering a significant advantage over other startups that must bear additional costs for land acquisition. A propane business requires equipment such as bulk storage, propane delivery trucks, a service truck, and residential tanks. Optionally, a propane dispenser can be included for filling forklift, RV, and barbecue cylinders. Detailed descriptions and pictures of the equipment are provided below.
>> This page features TIP’s in green text offering suggested strategies, cost-saving ideas and other recommendations to improve profitability and business performance. <<
Land
Most retail propane bulk plants consist of an office, a building for parts and supplies, one or more bulk propane storage tanks, space for empty cylinder storage, a loading and unloading station, parking space for delivery trucks, and room for transports to make deliveries. We recommend 3-5 acres to accommodate everything. TIP: When considering a location, plan on about a 50-mile delivery radius. Beyond that distance, it becomes less cost effective to make deliveries.
Buildings
Most retail propane bulk plants typically require two separate buildings: an office and a storage facility for supplies. For the office, plan for a structure approximately 500 square feet, ideally around 20×20 feet. A pole barn measuring 30×30 or 30×40 feet is well-suited for storing parts and supplies.
Equipment
- Bulk Storage – The first piece of equipment required is a bulk storage tank. Bulk storage tanks are used to store propane that has been purchased at a wholesale price. At least one 30,000 gallon tank is recommended, but depending on forecasted demand or the necessity of having a backup, two tanks might be required. Bulk storage is available either as a bare tank which will require valving, piping, a pump and other installation work or as a turnkey skidded unit that is ready for use when they arrive. TIP: Whenever possible, fill your bulk storage tanks during summer months when the price of propane is typically at its lowest.
- Delivery Truck / Bobtail – The next piece of equipment to consider is the propane delivery truck, otherwise known as a bobtail. The bobtail is filled with propane from the bulk storage tank and delivered to homes, businesses, agricultural or commercial customer locations at a retail price. TIP: As a new propane business it is critical to establish yourself as a reliable supplier. Nothing will hurt the business more than failure to meet customer needs due to equipment failure. The delivery truck is a critical piece of equipment and as such we recommend having one new truck and one backup. A used truck in good condition will suffice for the backup.
- Service Truck – Service trucks are used for residential tank delivery or general service calls. Service trucks come with a crane installed to lift tanks from the truck to the customer location. They also have cabinets built in to hold parts and supplies.
- Residential Tanks – Residential or domestic tanks come in various sizes and are primarily used to store propane for home heating or to power home appliances. Most common tank sizes are 250, 500 and 1000 gallons. Residential tanks are purchased by the truckload. As a result, retail propane businesses usually carry some amount of inventory in their yard. TIP: Residential tanks are either sold to customers or made available through a monthly lease. For accounting purposes, the lease option moves the tanks to the balance sheet as a company asset and improves near-term return on investment.
- Propane Dispensers – Dispenser systems are used for filling forklift, RV, and barbecue cylinders. The dispenser system includes a tank mounted on a steel skid, an aluminum cabinet, pump and meter mounted inside the cabinet, everything plumbed and wired. A dispenser is most often located at a convenience store, gas station, RV park or other site frequently visited by customers. Propane dispensers specifically designed for “AutoGas” are also available. When propane is used as a fuel for an on-road vehicle it is referred to as AutoGas.
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Learn More
If you would like to find out more about the equipment required for a lucrative propane business that is operated on tribal land by tribal members, then please fill out the form below or call us direct at 800-632-2038.
