Although tied to the production of natural gas and crude oil, LPG has its own distinct advantages and can perform nearly every fuel function of the primary fuels from which it is derived.
When natural gas and crude oil are drawn from the earth, a mixture of several different gases and liquids are extracted, with LPG typically accounting for roughly a total of 5%. Before natural gas and oil can be transported or used, the gases that make up LPG - which are slightly heavier – and are separated out.
The process of refining oil is complex and involves many stages. LPG is produced from oil at several of these stages including atmospheric distillation, reforming, cracking and others. It is produced because the gases of which it is composed (butane and propane) are trapped inside the crude oil. In order to stabilise the crude oil before pipeline or tanker distribution, these 'associated' or natural gases are further processed into LPG.
In crude oil refining, the gases that make up LPG are the first products produced on the way to making the heavier fuels such as diesel, jet fuel, fuel oil and gasoline. Roughly 3% of a typical barrel of crude oil is refined into LPG, although as much as 40% of a barrel could be converted into LPG.