Use wood chips in a propane BBQ by first soaking them in water. Remember, you are trying to make the wood smolder and smoke, not burn into ashes. While hickory, applewood and mesquite wood chips are often favored due to their aromatic qualities, some avid grillers report success with the wood from any fruit or nut tree, especially cherry and pecan.
Make a shallow tray out of aluminum foil, with the edges just high enough to keep the wood chips in place during the cooking process, and to trap any moisture that might otherwise collect at the bottom. The size of the tray will depend upon the size of your grill, and how much room you will need on the grill for other types of food, such as roasted ears of corn.
Place another sheet of aluminum foil around the burners at the bottom of the propane BBQ grill and shape it to direct the flames toward the tray full of wood chips. You may wind up removing the bottom vented plate of the grill so that the flames will not directly touch the wood in the aluminum tray.
Light the propane grill and place the tray of wood chips on the bottom rack of the grill. Close the lid of the grill for a few minutes, and allow the smoke to accumulate. Wait until the smoke and aroma are flowing consistently from the propane BBQ grill before placing the meat inside.
Use the upper rack that is attached to the lid of the propane grill for the meat and any additional food you are cooking. While you may want to check the wood in the tray on the bottom rack to ensure that it is not burning too quickly, you will want to keep the smoke from escaping, so only open the lid periodically. Add more wood chips as needed.