Business model

Propane-powered CHP division augments retailer’s business model

We drive along the coast. In the distance stands El Morro, a massive fort built in the 16th century to repel the enemies of the Spanish Empire. We walk down one of the cobblestone streets of Old San Juan to get a better view of San Juan Bay.

Ramón González Simounet, VP and CFO of Empire Gas, and my host for the day, points to the features on the horizon. We see the chimneys of a power station. He explains that many of them run on diesel in Puerto Rico. The bay supports some industrial shipping and commerce, including fuel imports, but much of the LPG his business distributes enters ports in the south of the island.

Invisible to us is a looping pipeline looping beneath the streets of San Juan. Owned and operated by another of González’s businesses, San Juan Gas, the pipeline distributes synthetic natural gas, formed by mixing LPG and compressed air, directly to customers. Less expensive to ship and distribute than natural gas, LPG and synthetic natural gas uniquely meet the energy needs of an island that imports all of its fuel, González says.

The importance of propane as an energy source in Puerto Rico is evident when we visit one of Empire Gas’ business operations. I watch customers load bottles into trucks at the gas station. Most of the bobtails parked at the site are on the road, delivering fuel to the company’s residential and commercial customers. The company serves all regions of the island with 50 factories like this one. This particular operation moves 1 million gallons per month and is one of eight centers with bulk tanks in Empire Gas’ service area.

In 1988, the site consisted of a rented house on a 1 acre property. Today the property spans 5 acres and employees have settled into the “house”, now a bustling office space. It’s something of a theme in the world of Empire Gas — the house in San Juan where González’s father founded the family business in 1967 remains the company’s headquarters.

“Propane Never Weakened”

Empire Gas serves residential and commercial customers throughout Puerto Rico. (Picture by LPG Staff)

As we tour the business operation, González bumps fists with masked employees who he says stepped in as first responders during the pandemic.

The COVID-19 lockdowns were just the latest in a series of emergencies that Puerto Rico and the company have faced over the past five years.

González praises a “handyman” operations employee for his round-the-clock service to customers in the aftermath of Hurricane Maria, which made landfall in Puerto Rico as a Category 4 high range on September 20, 2017. .

The storm devastated the island’s power transmission and distribution infrastructure, leaving 1.5 million customers without power for months and causing the largest blackout in US history. At the end of 2017, nearly half of Puerto Rico’s residents were still without power, according to the National Hurricane Center. Almost a year passed before, in August 2018, the Puerto Rico Electric Power Authority announced that it had restored full service.

Empire Gas’ propane service, on the other hand, remained uninterrupted throughout the emergency.

“Propane never faltered with Maria,” González says.

Following Maria, Empire Gas’ combined heat and power (CHP) division has been a key contributor to energy resilience. The cogeneration systems the company offers use propane to produce multiple energies, such as electricity and hot water, for industrial processes and other energy-intensive facilities like hospitals.

As other hospitals closed and evacuated, Hospital de la Concepción in southwestern Puerto Rico remained operational and continued to receive patients through a propane-powered cogeneration system supplied by Empire Gas.

Recycled oil producer Olein, another Empire Gas customer, installed a propane cogeneration system months before the hurricane and was able to restore service within days of sustaining damage.

A Bristol Myers factory that makes cancer drugs has also weathered the storm with a cogeneration system. The CEO invited Empire Gas to a thank-you meeting at Bristol Myers headquarters for its role in providing the required propane and maintaining production of lifesaving drugs, González says.

Innovate and Prepare

One reason Puerto Rico’s electric utility wasn’t prepared for the hurricane was because it didn’t invest in innovation, González says.

That’s not Empire Gas’ plan.

Halfway through our tour, we hop into one of the company’s autogas propane vehicles—another propane market that Empire Gas serves—and drive just outside of San Juan to Vega Baja . We come to a propane-fired cogeneration plant that Empire Gas designed, built and now operates for a Viatris pharmaceutical plant.

Customers like Viatris are drawn to cogeneration when they need reliable power to protect their products, González says. Others seek cost savings and a better environmental profile.

“[These customers] want to have their own destiny in terms of energy,” says González. “They don’t want to be controlled by government and government energy tariffs.”

To meet demand, Empire Gas has created its own CHP division of 25 employees who provide engineering and technical expertise. The company has designed, built and now operates five propane-fired cogeneration plants. It supplies propane to 20 more and expects another 10 to 15 cogeneration customers to come online over the next two years.

On site at Viatris, we meet Marlon Cabrera, Engineering Director of Empire Gas. He shows me how one of these cogeneration systems works.

Empire Gas operates five propane-fired cogeneration plants. (Photo courtesy of Empire Gas)

The propane produces 4 megawatts (MW) of gas-electric power, while the solar panels produce an additional 4 MW to supply the total energy for the pharmaceutical plant. In a process often called cogeneration, the propane system simultaneously produces additional forms of energy for use at the plant: 1,000 tons of chilled water and 30,000 pounds per hour of steam and hot water.

Two 30,000 gallon bulk tanks supply propane to four Siemens SGE-48SM propane gas engines which convert gas to electricity.

Waste energy from engine combustion is recovered to power four boilers which produce steam to clean and maintain conditions in the pharmaceutical plant. The boilers also run directly on propane and replaced the diesel boilers that were used in the past.

The waste energy recovery system also produces hot water which is used for humidity control and process heating in the plant.

This hot water also feeds an absorption chiller which produces chilled water for the plant’s air conditioning and humidity control systems.

“Essentially, it’s free energy,” Cabrera says of chilled water production.

The total energy efficiency of the cogeneration plant is 89%, compared to 18% for the network, explains Cabrera.

The energy efficiency of the cogeneration system and its compatibility with renewable energy is a key part of its value proposition in light of the government’s mandate to achieve 100% renewable energy in Puerto Rico by 2050.

Another point of pride for Cabrera: these systems support clean energy jobs for the people of Puerto Rico.

Photo by LP Gas Staff

picture by LPG Staff

Journey to the top

Ramón González Cordero, father of Ramón González Simounet, founded Empire Gas in 1967 from his family home, which still serves as the headquarters of Empire Gas in San Juan, Puerto Rico.

Nearing 100 Million Gallon Mark, Empire Gas Ranks 11th LPG’ Ranking of the best propane retailers this year.

González Cordero was inducted into the LPG Hall of Fame in 2019.