A growing industry is budding around the country. And in one community near Las Vegas, propane is at the heart of it.
That industry is marijuana, which is on the rise as laws around its recreational use relax across the U.S. Nevada legalized recreational marijuana sales in the summer of 2017, triggering an uptick in the number of cultivation and production operations across the state.
To help the emerging industry ramp up, the city of North Las Vegas, Nevada, is offering lower business costs to growers and producers who set up at Apex, an 18,000-acre business park. However, several of those companies say sufficient utilities — including natural gas — have yet to be delivered to the site.
To stay on track, they turned to propane.
“It was easy for us as an industry to step in and say, ‘Not only can our product run generators, not only can it run AC and heating pumps, not only can it run water heating systems … [it can also] run water recirculation systems'” that heat the soil to cultivate nutrients, said Mark Orr, branch manager at Delta Liquid Energy in North Las Vegas. “If you were in the middle of the desert and I had a tank of propane, I could run a complete grow facility.”
As of December 2017, the company was supplying a total of 11 2,000-gallon propane tanks to three companies at Apex. It is in talks to supply propane to a handful of other growers in the area.
Making room for marijuana
Marijuana is still considered an illegal drug by the federal government, which means it can’t cross state lines. To feed the local weed market in Nevada, a stable supply of in-state growers was necessary.
Enter Apex. The business park has a complicated history. The site was annexed by the city in the 1980s but was underutilized until 2013, when current Mayor John Lee saw it as a way to help the financially struggling city bolster its tax base. There was one problem: Apex lacked water, sewer, and natural gas utilities. That meant the city would need to attract a company large enough to support some or all of the infrastructure development.
Faraday Future, a Los Angeles–based electric car maker, was supposed to be that company. Faraday broke ground on a 3-million-square-foot manufacturing facility at Apex in April 2016, according to The Las Vegas Review-Journal.
“We want to educate the growers. They have a lot of options. They’re not locked into the power company that has the corner on the market; they’re not locked into natural gas. We provide an alternative that is at a competitive price.”
Faraday’s presence would lay the groundwork for other companies to come to Apex, including the cannabis industry. For cannabis, specifically, the city carved out a “green zone” at Apex with lower business costs. There, origination fees are $25,000 for a marijuana production facility and $30,000 for a cultivation facility; elsewhere in the city the fee is $60,000. Additionally, cannabis companies there are subject to a 2 percent gross revenue business license fee versus the standard 3 percent.
The city of North Las Vegas issued cultivation and production licenses for at least four companies at Apex from May 2015 to May 2017, with the majority in May 2017. As of late 2017, the city had issued business licenses for four dispensaries, 29 cultivation facilities, and 22 production facilities across the jurisdiction.
However, financial issues plagued the Faraday project and by August 2017, the company had backed out of the deal entirely.
As the city’s financial situation improved, Faraday’s role in getting utilities to Apex became less important, according to a city spokeswoman. She said the city is moving forward with bringing water and sewer to the site, using Faraday’s engineering and design work.
The propane solution
Ready access to propane ensured the marijuana companies at Apex could move forward with their plans.
One of Delta’s customers at Apex is producer and cultivator Circle S Farms. Its 32,500-square-foot indoor production space there uses a propane-powered HVAC system. The company is building a 22,000-square-foot greenhouse on the site that is expected to be finished in the first half of 2018 and will use an evaporative cooling system.
To power the LED lighting in the production and greenhouse facilities as well as the HVAC air handlers, the company is using a Capstone C1000 microturbine, which will feature a bank of five turbine generators producing roughly 1,200 amps. Auxiliary power from NVEnergy will lighten the demand load on the microturbine as necessary.
Looking ahead, the company is considering a co-gen power system that will use waste-gas exhaust from the microturbine to generate cooling HVAC. “We can get about 400 tons of free HVAC from the microturbine exhaust [with the microturbine running at full capacity], so it takes our efficiency of using the propane gas to about 92 percent on a co-gen setup,” said Circle S’s owner, Curtis Huffman.
Keeping costs down
Propane is cost-competitive with electric, which encouraged Marapharm, another grower at Apex, to use it to power their operations. “We [expect to] see a return on the initial investment within 16 to 18 months of putting in our infrastructure,” said Kurt Keating, director of operations at Marapharm. Low overhead costs are critical for cannabis companies in a state where the recent legalization of retail sales risks driving down wholesale prices considerably.
Marapharm is building two 5,000-square-foot buildings for cultivation and production that are expected to be complete in late January 2018. Those buildings will be heated and cooled by a water chiller run on propane-powered engines, as well as dehumidifiers.
“[Propane] made a lot of sense for us because Delta is so close to our site that we have the ability to bring in propane with low transportation costs,” Keating said. The propane tanks will join 125,000 gallons of fire-suppression water, 24,000 gallons of potable water, and two 4,000-gallon buried septic tanks on-site.
The company is also planning a 65,625-square-foot building at Apex that will likely use co-gen powered by gas-to-fire turbines that use captured heat for HVAC absorption chillers. Propane would “most likely be the short-term usage,” he said, until natural gas is delivered to the site — something that’s still an unknown.
“We have no idea when, or if, we’ll ever see natural gas in our development,” he said.
That has given propane an opportunity to show its value to an emerging industry. “We want to educate the growers,” Orr said. “They have a lot of options. They’re not locked into the power company that has the corner on the market; they’re not locked into natural gas. We provide an alternative that is at a competitive price.”