LPG Business Review

I doubt anyone reading this is wondering, but in case there is someone, LPG is really just a fancy name for the usual cooking gas you know. It is an acronym that means Liquefied Petroleum Gas, so you need not worry about it being some big term you have no need for.

With the rising costs of Kerosene and instability of electricity, many people have resorted to finding an alternative for cooking. Imagine the horror of cooking in the night, completely famished and the power goes off. Therefore, to be the wiser, a lot of people have found other means and most have settled for LPG because it is ultimately cheaper and also cooks food faster.

How LPG is Produced?

For many years when there was no use for LPG, it was regarded as a wasted product from refining crude oil, thus, for long, it was considered just a by-product. The production of LPG does not entail manufacturing because it already exists in another product.

So, it could actually be referred to as a by-product but a useful one. LPG is processed via two distinct methods. It is either processed by cleaning natural gas of impurities such as hydrocarbons which include the methane, ethane, ethene, propene, isobutene, butadiene, pentane and pentene, and fluid, through a plant frequently called stripper plant. It can also be obtained by refining crude oil. When crude oil is pumped into a distillation tower to pass through distillation, different products are extracted at different stages of the refining – one of them is LPG.

The distillation power has been programmed to extract these products that include petrol, diesel, kerosene, LPG among others at certain temperature degree. The LPG obtained from crude oil is usually called ‘associated,’ which simply just translates to associated with oil and that not obtained from crude oil is called, ‘non-associated.’

How LPG is Distributed:

LPG value chains start from the production, naturally. It then moves down to refineries for further processing and then to terminals, then to bottling and storage where they are stored into the gas cylinders and finally it moves to the retail sellers who sell through cylinders to consumers.

[Production – Refining – Downstream Terminals – Bottling and Storage – Retail Distributors]

After knowing what LPG is all about and how it is obtained, it wouldn’t be a far-fetched thought to try to understand how LPG is stored and what a storage plant is all about. We all know what a plant is generally and I know you know we don’t mean a plant as it relates to agriculture, but the plant in question here is in relation to factories or industries. A plant according to the dictionary simply means the land, buildings, machinery, apparatus, and fixtures employed in carrying on a trade or an industrial business.

What Is An LPG Plant And Types Of  LPG Plant?

LPG must be stored in pressure vessels, therefore an LPG plant can be said to be the land, buildings, machinery, apparatus, and fixtures that are carrying out the industrial process and trade of LPG. The plant contains everything that has been put in place in order to ensure the smooth utilization of LPG by consumers. However, there are different kinds of LPG plants, starting from the bulk storage of LPG to the end user;

A spherical LPG pressurized vessel used in refineries and terminals for bulk storage in large volumes with truck loading facility

Auto LPG Filling Stations for filling LPG in cars.

LPG bulk plants with vaporizers for use of LPG as burning fuel in industries, LPG bulk plants for use of Liquid LPG in Aerosol and perfumes

LPG Filling plants for filling LPG cylinders.

We are going to stick to LPG filling plants for filling LPG cylinders considering that we are talking about cooking gas. Many people would see investing in LPG plant as a good move and this belief is not misplaced because as mentioned earlier, a lot of people are now treading the route of cooking gas for its profitability. There are however, certain points that must be taken into consideration in order to have a proper smooth running LPG plant.

Technicalities On How To Set Up A LPG Cylinder Filling Plant:

Having an idea of the technicalities involved in setting up an LPG cylinder filling plant is crucial and has a lot to do with one’s success in the business. It is one thing to do a business and another to know how to succeed in a business. Therefore, it is not enough to know how to invest in cooking gas but it is equally important to know how to work the business to succeed. After all, nobody sets out to fail in a business venture.

The first thing to take note of is the location. Having a good location is important to reach the consumers and for the sake of convenience. If you open a business where the consumers cannot reach you, you might just as well close it as it defeats the whole purpose of having a physical location.

The second is to register your business. You need to get a license in Nigeria before you can get the permit to operate. Then of course, every other business venture is expected to register with the CAC (Corporate Affairs Commission) to be recognized as a legitimate business and even to protect your business.

Then, you need to construct your filling plant. It is important to scout for a good and affordable – depending on what you can afford – company that specializes in construction of LPG filling plant so as to get the best for your money.

After that, you need to employ capable hands that have same vision as you do and are ready to work with you.

Get knowledge and apply your newly learned wisdom. Get information on everything available on LPG and apply it.

And be sure to advertise – You need to get your business out there for people to know.

The location needs to be strategic because if you get your location wrong, it could affect the entire business. The location needs to be a place that is close to customers. All things being equal, customers would prefer to patronize a seller close to them, so identify a target market in setting up your plant. Also, you are not supposed to be too close to residential buildings to prevent hazards. You are dealing with gases and they can be extremely hazardous to health of everyone if no handled properly.

The trick, therefore is to be close to customers who would largely be in residential areas but not too close to the houses so as to avoid health hazards. The DPR (Department of Petroleum Resources) requires a standard plant to be located on four plots of land. The minimum distance from a tank and a fixed source of ignition (residential buildings, filling shed, storage building etc.) which should be 15 metres.

LPG Design And Construction:

In constructing an LPG plant, one needs to remember all the requirements of DPR concerning having a plant. After you get all the equipment and accessories mentioned below, it is always better to contract the construction to safe and trusted hands who will design the plant as recommended by the government of the land.

To fill 6kg, 12kg, 25kg and 35kg cylinders, the filling container should be equipped with three electronic filling machines. The LPG storage should consist of one (1) LPG tank with a geometrical capacity that is dependent on the size of the plant. And of course, the general construction would involve installing LPG fractionation system, compressors, refrigeration system, mini LPG storage, hot oil heating system, power generators and other supporting units.

The Different sizes of LPG cylinder refilling plant:

There are different sizes of LPG cylinder refilling plants and the difference is based on the size of their gas storage tank. There is the mini plant with 10,000 litres gas storage tank, the medium plant with 20,000 – 30,000, and the large plant with 40,000 – 50,000 litres gas storage tank. The mini plant of 10,000 is recommended to be the minimum size for operation.

LPG Plant Cost In Nigeria

It is difficult to really estimate the cost of LPG plant because of various market and social factors that could come into play when planning to build an LPG plant. Undoubtedly, it is a good business to invest in and expect to get profit because not only do most homes rely on cooking gas, but it is also used outside the home as well in restaurants, hospitals, hotels and even government organizations.

Therefore, the initial costs should not be a discouraging factor. As expensive as it is expected to be, it is worth the money. Certain factors like the price of oil in the global market and price of other facilities could change but it is a risk worth taking. Some of the factors that are necessary for a LPG plant include; land, license – depending on location, gas supply, the actual construction, and facilities like gas tank (the metric ton of the tank varies by size and of course, cost), a fire proof pump, filing systems, safety goggles, boots and overall, weighing scales and pressure gauges, return hoses, and fire extinguishers among others. All these would have to be calculated in the cost of the LPG plant.

LPG Plant Equipment

Every plant needs equipment. They are part of the heart of every plant. They include the testing pool, valve screwing, electronic carousel, mechanic carousel, electronic scale, mechanic scale, test unit, conveyor band, gas detector, level gauges, and fire extinguisher. It is important to note at this juncture that LPG plant equipment is not limited to those mentioned here. So apart from trying to make your job easier by providing you information, it is not out of place for you to do your homework when setting up your

[LPG BUSINESS REVIEW]

By: UWANDU IFEANYI