Natural Gas Vehicle Market Whitepaper USA 2013-2014

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A marvelous, serious and well-researched "state of play" paper authored by conference company FC Business Intelligence on what's currently happening with natural gas vehicles in the U.S., and what's …

A marvelous, serious and well-researched "state of play" paper authored by conference company FC Business Intelligence on what's currently happening with natural gas vehicles in the U.S., and what's likely to happen in the next 12 months. The paper starts with an excellent overview, addresses the role of government policy, provides key considerations for decisions about converting to NGVs, and wraps up with a look at the infrastructure now in place and what is soon on the way to provide filling stations for NGVs. A really excellent resource. For those serious about NGVs and the opportunities they provide, you must attend FC's 3rd Annual Natural Gas Vehicles USA event, June 11-13 in Houston, TX: http://ngvevent.com/.

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  • 1. Natural Gas Vehicle Market Whitepaper USA 2013-2014 Whitepaper highlights include: NGV USA Market Overview: Comprehensive analysis of the North American NGV Market Government Policies: How they will impact the NGV market over the next 5 years Converting to Natural Gas: Key considerations to address when converting your fleet to NGV’s Infrastructure Development: How to successfully plan and build NGV infrastructure For more information, visit www.ngvevent.com
  • 2. WELCOME Welcome Dear Colleague Thank you for your interest in this FC Gas Intelligence Whitepaper on the Natural Gas Vehicle market in North America, 2013-14, I hope you find it valuable. Natural Gas Vehicle’s (NGV) are at a seminal moment in the United States currently, with a range of stakeholders driving the development of the market. To get a thorough overview the report interviewed over 20 industry experts, drawing their combined expertise into this document to better inform your strategies over the next few years. This Whitepaper is only the beginning of the debate on Natural Gas Vehicle’s, it has been created in conjunction with the 3rd Natural Gas Vehicle USA Conference & Exhibition (June 11-13, Houston) more info can be found here www.ngvevent.com I hope you find the report useful and I look forward to speaking to you soon, With very best wishes Joshua Bull Sector Head | FC Gas Intelligence josh@fc-bi.com For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 2
  • 3. ABOUT FC BUSINESS INTELLIGENCE About FC Gas Intelligence A business intelligence and networking company we help leading corporations define their future strategy and direction, develop growth opportunities and solve the problems facing their sectors. The engines of our business are growth and change. We focus on two types of industry: ■■ Those arising from technology developments which are moving into full global commercialisation. ■■ Those needing to change in order to respond to disruptive technologies or global events. Our aim is to provide companies with insights into strategic options for the future in order that they can capitalise on opportunity. Author Disclaimer FC Business Intelligence Ltd and its partners prepared the information and opinions in this report. FC Business Intelligence has no obligation to tell you when opinions or information in this report change. FC Business Intelligence Ltd makes every effort to use reliable, comprehensive information, but it makes no representation that the information is accurate or complete. In no event shall FC Business Intelligence Ltd and its partners be liable for any damages, losses, expenses, loss of data, loss of opportunity or profit caused by the use of the material or contents of this report. No part of this document may be distributed, resold, copied or adapted without FC Business Intelligence Ltd ‘s prior written permission. © FC Business Intelligence Ltd © 2013 For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 3
  • 4. CONTENTS Contents Welcome . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 About FC Gas Intelligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 List of Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-8 Chapter 1: NGV Industry Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.0 Market Size and Growth Forecasts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.1 Growth drivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 1.2 NGVs on the Road . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 1.3 Locations of Existing CNG and LNG Stations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 1.4 Proposed expansion of CNG and LNG fueling networks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 1.5 Expansion of Small and Midsize LNG Liquefaction Plants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 1.6 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Chapter 2: Government policies: How they will shape the NGV market over the next 5 years. . . . . 22 2.0 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 2.1 Policy in context. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 2.2 Subsidies and tax incentives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 2.3 Procurement policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 2.4 CAFÉ standards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 2.5 Environmental regulation: potential risk?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 2.6 Export policy: potential risk?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 2.8 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Chapter 3: Converting to Natural Gas, Vehicle issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 3.0 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 3.1 Passenger automobiles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 3.2 Light and medium duty trucking vehicle options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 3.3 State subsidies for light-duty NGVS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 3.4 Heavy duty trucking. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 3.5 Factors to consider in HD fleet conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 3.6 State subsidies for heavy-duty fleet conversion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 3.7 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Chapter 4: Building Dedicated Fuelling Infrastructure, CNG and LNG. . . . . . . . . . . . . . . . . . . . 38 4.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 4.2 Basic cost considerations, CNG compared to LNG. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 4.3 Design, planning, and siting of CNG fuelling stations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 4.4 Design, planning, and siting of LNG fuelling stations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 4.5 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 4
  • 5. FIGURES Figures Figure 1 Natural gas consumption by sector, 1990-2040 (trillion cubic feet). . . . . . . . . . . . . . . . . . . . . . . 9 Figure 2 U.S. Natural Gas Vehicle Fuel Consumption MMcf. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Figure 3 Average diesel, gasoline, and CNG prices, 2000-2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Figure 4 Price differential CNG to diesel, by state. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Figure 5 PCT. Growth in public access CNG stations 7/11-8/13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 . . Figure 6 Regional Transportation Corridors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Figure 7 Locations of CNG stations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Figure 8 Locations of LNG Stations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Figure 9 United States truck traffic volumes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Figure 10 Projected expansion of Trillium CNG station network, 2013-2016. . . . . . . . . . . . . . . . . . . . . . . 17 Figure 11 Projected expansion of Love’s CNG network. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Figure 12 Projected rollout of Clean Energy’s America’s Natural Gas Highway of LNG and LCNG stations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Figure 13 Projected network of LNG stations proposed by Shell and TravelCenters of America partnership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Figure 14 Blu LNG operational and pending LNG fuelling network (as of end 2013) . . . . . . . . . . . . . . . 19 Figure 15 Small and Mid Scale LNG Liquefaction plants*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Figure 16 Calculation of light-duty truck payback, based on various fuel price and truck premium assumptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Figure 17 Map of states offering various incentives for light-duty CNG vehicles. . . . . . . . . . . . . . . . . . . 32 Figure 18 Natural gas engine comparison-- power (hp). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Figure 19 Natural gas engine comparison – torque (ft-lb). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Figure 20 Sample calculation of expected payback for HD fleet conversion. . . . . . . . . . . . . . . . . . . . . . . 34 Figure 21 Sample CNG range calculation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Figure 22 Calculation of Heavy-duty truck payback, based on various fuel price and truck premium assumptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Figure 23 Heavy-duty incentives, Canada and US (as of August 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Figure 24 GE CNG in a Box . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Figure 25 GE LNG in a Box™ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Figure 26 Micro LNG. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 5
  • 6. TABLES List of Tables Table 1 CNG average prices per region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Table 2 Reduction of pollutants from CNG use, as compared with reformulated gasoline . . . . . . . 12 . . Table 3 Small and Mid Scale LNG Liquefaction plants in the United States*. . . . . . . . . . . . . . . . . . . . . . 20 Table 4 LNG Export facilities approved. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Table 5 Home fuelling specifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Table 6 Ford CNG model options (as of model year 2014). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Table 7 Chrysler CNG model options (as of model year 2014). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Table 8 GMC and Chevrolet CNG model options (as of model year 2014) . . . . . . . . . . . . . . . . . . . . . . . . 30 Table 9 Summary of state incentives for light-duty CNG vehicles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31 Table 10 Heavy-Duty engine options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Table 11 Weight diesel truck compared to CNG truck and LNG truck (full tanks in lbs). . . . . . . . . . . . . 35 Table 12 CNG to LNG compared. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 6
  • 7. EXECUTIVE SUMMARY Executive Summary FC Gas Intelligence’s Natural Gas Vehicles Market Report USA 2013-2014 provides an up-to-theminute summary of current conditions in this fast-growing market segment. The report’s four chapters summarizes the latest business intelligence vital to understanding issues currently confronting stakeholders in this market, and provides direct guidance for fleet managers looking for first-hand advice on key issues to consider when deciding whether to switch to cheaper, cleanerburning natural gas. Chapter 1: NGV USA Market Overview: Comprehensive Analysis of the North American NGV Market Natural gas has significant potential to transform the transportation sector, particularly for fleets and commercial trucking, due to its cheaper, less volatile price, compared diesel or gasoline. The fuel is largely sourced in North America, in contrast to petroleum-based fuels, which are largely sourced from politically unstable and potentially hostile regions of the world, especially the Middle East. The fuel is also cleaner burning than traditional transportation fuels, and can help provide a bridge to a greener, lower-carbon future. The chapter lays out in detail how the number of CNG and LNG public access fuelling stations is expanding rapidly, with several companies rolling out new NG infrastructure. Detailed information is provided about ambitious expansion plans, launched by companies such as Trillium and Love Travel Stops, in the era of CNG infrastructure, and Clean Energy, Shell, and ENN- Blu LNG on the LNG side. In partnership with Pilot Flying J Truck S, Clean Energy is also exploring LCNG options. The For more information visit www.ngvevent.com net effect of these expansion plans is that some fleets—particularly heavy-duty trucks servicing major interstate transportation corridors may soon be able to convert to natural gas without having to develop independent fuelling infrastructure. Chapter 2: Government Policies: How they will impact the NGV market over the next 5 years Federal and state government policies have been crucial to fostering the development of NG as a transportation fuel. Stakeholders currently operating in this market, as well as companies considering undertaking fleet conversions, need to understand how government policies will continue to shape the future development of the NGV sector in both positive and potentially negative ways over the next five years. The chapter provides an overview of current federal and state policies to promote NGVs, and provides information on what government and private resources are available for getting the latest information about these rapidly evolving policies. Detailed discussion follows of two significant policy areas— environmental regulation, both state and federal, and export policy— that could thwart or at minimum slow development of NGVs. Understanding potential policy risks is important for companies undertaking or continuing significant investments in NGVs or infrastructural development. NGV INDUSTRY OVERVIEW | 7
  • 8. EXECUTIVE SUMMARY Executive Summary Chapter 3: Converting to Natural Gas: Key Considerations to address when converting your fleet to NGVs The higher relative costs of NGVs compared to traditionally-fuelled vehicles has thus far presented a major obstacle to wider use of NG as a transportation fuel. This chapter summarises the current state of the NGV market. OEMs have started to offer a wider range of NG options, from automobiles, to vans—both passenger and cargo—and light and medium-duty truck options. These vehicles cost more than conventionally fuelled models, but some of these costs can be offset by state incentives available for converting to NG. All major heavy-duty truck manufacturers now offer NG options, either in CNG or LNG formats, prodded by customers responding to the potential significant fuel costs savings. The chapter walks through specific examples of how to evaluate the value proposition for fleet conversions, looking at both light-duty, and heavy-duty, examples. For more information visit www.ngvevent.com Chapter 4: Infrastructure Development: How to successfully plan and build NGV infrastructure Infrastructural considerations continue to loom large in decisions to convert all or part of a fleet’s vehicles to NGV. The future U.S. NG infrastructure will combine a network of CNG, LNG, and LCNG stations. This chapter analyses issues fleet managers need to consider in deciding whether to opt for CNG of LNG, based on where their fleets will operate, and what their range needs are. Although more CNG and LNG infrastructure is continually coming online, most fleets must still construct or secure access to independent fuelling infrastructure, as existing public access infrastructure alone cannot support fleet range needs. This chapter discusses the issues companies must consider when deciding whether, where, and how to construct CNG or LNG fuelling stations. Infrastructural specialists are expanding their product offerings, focusing on modular, and lower-cost options that reduce the necessary up-front investments and also lower on-going operational and maintenance costs, for companies constructing both CNG and LNG fuelling infrastructure. NGV INDUSTRY OVERVIEW | 8
  • 9. INDUSTRY OVERVIEW Chapter 1: NGV Industry Overview 1.0 Market Size and Growth Forecasts Citigroup forecasts NG demand in transportation alone to reach 2.2 billion cubic feet per day (Bcf/d) by 2020, while a Reuters poll of analysts is less bullish, Petroleum-based fuels currently dominate the U.S. expecting NG demand in this sector to reach only transportation market, and this lack of fuel diversity 1.2 Bcf/d over the same period. The United States makes this market particularly vulnerable to price Energy Information Administration (EIA) predicts shocks. The United States currently consumes 35 billion gallons of diesel fuel per year. Analysts disagree a gradual rise in NG usage in the transportation sector over the next decade, as shown in Figure 1, about how much of this current energy demand could be displaced by cheaper alternative fuels such as a more comprehensive NG sourcing and fuelling infrastructure is developed, comprising both as natural gas (NG), particularly in the industrial, compressed natural gas (CNG) and liquefied natural power generation, and transportation sectors. gas (LNG). Figure 1 Natural gas consumption by sector, 1990-2040 (trillion cubic feet) The use of NG as a transportation fuel has increased steadily over the last decade, reaching 32,000 Million cubic feet (MMcf ) in 2012. Most of this consumption is currently concentrated in the heavy-duty trucking sector. The American Clean Skies Foundation suggests that NG provides a promising opportunity to diversify fuel sources for both the heavy and medium duty trucking sector, which, taken together, account for 22% of the U.S. transportation sector’s fuel For more information visit www.ngvevent.com use. This diversification would come with another benefit, for the cost of fueling with NG is substantially cheaper than buying petroleum-based fuels, even when necessary costs are included, both buying relatively more expensive NGVs, and developing fueling infrastructure, Fleet operators have a potential opportunity to capitalize on a major cost-saving opportunity, since fuel accounts for their secondhighest cost. NGV INDUSTRY OVERVIEW | 9
  • 10. INDUSTRY OVERVIEW Figure 2 U.S. Natural Gas Vehicle Fuel Consumption MMcf 1.1 Growth drivers Fuel price The principal factor driving growth in interest in NGVs is the lower overall price of NG compared to the cost of either gasoline or refined diesel fuels. Over the last decade, NG prices have dropped dramatically as new North American sources of supply have opened up, with the United States moving from a potential NG importer to a potential significant NG exporter over this time period. Oil prices, by contrast, have been especially volatile over the same time period. Since 2000, refined diesel prices as measured by Diesel Gallon Equivalents (DGEs) have always exceeded NG prices, sometimes by as much as $2, but usually by at least $1.50, per DGE. Similarly, gasoline prices have always exceeded NG prices, when measured by Gasoline Gallon Equiva lents (GGEs), by as much as $1.50 per unit. Figure 3 Average diesel, gasoline, and CNG prices, 2000-2012 Source: Clean Cities Alternative Fuel Price Report, July 2013 For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 10
  • 11. INDUSTRY OVERVIEW Politically stable source of supply Regional price variations In addition to the comparative price advantage, NG supplies are more stable and certain, and virtually all demand can be supplied either domestically, or by turning to Canada or Mexico; the three countries are linked in a fully integrated NG transportation and distribution system. About 85% of the NG consumed in the United States is sourced domestically, from one of the 32 U.S. states that currently produce NG. Overall, 97% of the NG used in the U.S. comes either from the United States, Canada, or Mexico. As Table 1 indicates, CNG currently has a lower average price than diesel for all regions of the country, with the largest difference ($1.83 per DGE) being in the Rocky Mountain region. CNG costs on average about $1.52 less than diesel on a DGE basis. Table 1 CNG average prices per region Region CNG Price ($/DGE) Diesel Price ($) New England $2.86 $4.07 Central Atlantic $2.48 $3.81 By contrast, oil is sourced from politically unstable or Lower Atlantic $2.24 $3.82 potentially hostile places, including Latin America, Midwest $2.08 $3.86 Russia, and especially the Middle East. Political Gulf Coast $2.26 $3.82 instability in the Middle East often translates into Rocky Mountain $2.03 $3.86 price volatility and also raises periodic concerns West Coast $2.71 $4.08 about supply interruptions. Increased use of NG National Average $2.39 $3.91 would translate into lessened dependence on energy imports from these politically unstable parts of the Source: Clean Cities Alternative Fuel Price Report, July 2013 world. Price stability In addition to their more attractive absolute price levels, NG prices also have another advantage for corporate planning purposes in that they have in recent years traded in a much narrower band than either diesel or gasoline prices, with the prices varying since 2000 about $1 from lowest to highest price. Since late 2004, this price spread has been even tighter, varying by no more than $0.75. It has not always been the case that NG prices have traded in such a narrow band, and in fact, until technology increased the domestically produced supply, NG prices had been among the most volatile commodities traded on the New York Mercantile Exchange (NYMEX). Future forecasts of NG supply suggest that future volatility will follow the recent pattern of tighter trading spreads. For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 11
  • 12. INDUSTRY OVERVIEW Figure 4 illustrates price differentials by state for CNG relative to diesel. In this map, negative numbers represent prices for CNG lower than prices for diesel. States not highlighted with a colour did not have any CNG data points in the latest Clean Cities Alternative Fuel Price Report, published in July 2013. For all states for which pricing data are available, CNG prices were cheaper than diesel, with the most favourable relative CNG prices found in states located in the Midwest, Rocky Mountain, and West Coast regions. Figure 4 Price differential CNG to diesel, by state CNG Price Difference Relative to Diesel ($1.99) - ($1.50) ($1.49) - ($0.95) ($2.30) - ($2.00) ($1.99) - ($1.50) ($0.94) - ($0.55) Source: Clean Cities Alternative Fuel Price Report, July 2013 Environmental benefits There are considerable environmental benefits to wider adoption of NG as a transportation fuel, whether in CNG or LNG form. The United States Environmental Protection Agency (EPA) recognizes that natural gas vehicles (NGVs) produce lower levels of harmful emissions, including greenhouse gases, carbon dioxide, nitrogen oxide, particulate matter, and toxic and carcinogenic pollutants. The exact degree of emissions benefits depends on the type and model of the vehicle used, as well as the choice of the conventionally fueled vehicle benchmark. The Alternative Fuels Data Center (AFDC) of the United States Department of Energy (DoE) provides tools for performing detailed emissions comparisons. Many fleet operators are as attracted to NG’s potential to enable them to meet their emissions targets as they For more information visit www.ngvevent.com are to the potential for fuel cost savings compared to using diesel or gasoline. Table 2 Reduction of pollutants from CNG use, as compared with reformulated gasoline Volatile Organic Compounds Carbon Monoxide Nitrogen Oxides Particulate Matter 10% 20-40% 0% 80% Source: A Full Fuel-Cycle Analysis of Energy and Emissions Impacts of Transportation Fuels Produced From Natural Gas, Wang, M.Q. and Huang, H.S., 1999 NGV INDUSTRY OVERVIEW | 12
  • 13. INDUSTRY OVERVIEW 1.2 NGVs on the Road The DoE as of September 2013 estimated that about 112,000 NGVs operate in the United States. Market observers say that these DoE figures lag the actual state of play, and that the number of NGVs currently on the road is probably approaching 150,000. Transit buses currently form the largest category of NGVs, and are powered by either CNG or LNG. Waste collection vehicles comprise the second largest category of NGVs, with roughly half of all such vehicles fueled by NG. Airports are the third largest NGV users, with about 35 using NGVs, either by operating their own fleets or promoting the use of private fleets that burn NG. Wider use of NG in both short-haul fleets and long distance trucking is being facilitated by the development of CNG, LNG, and LCNG fueling networks. Technological innovation is producing more affordable light-duty, medium-duty, and heavy-duty NG truck options, as well as NG-fueled passenger vehicles, largely for fleet use, although the premium for all such vehicles remains high. These premiums are expected to drop as demand for these vehicles increases, but even on current estimates, a viable model for heavy-duty trucks driving 125,000 miles a year suggests that payback on CNG fleet conversion can occur in fewer than 2 years (as described more fully in section 3.__ below). 1.3 Locations of Existing CNG and LNG Stations CNG stations As of September 4, 2013, 602 public access CNG stations operate across the United States, and 633 private access stations. These stations are substantially concentrated regionally. California and Utah have been at the forefront of adopting NG as a transportation fuel, and now each of these two states is covered with a network of stations, with 157 stations operating in California, serving a population of about 38 million, and 42 in Utah, serving a population of approximately 2.9 million. (The state of Utah owns natural gas production facilities and has promoted NG use in transportation; in contrast to other states, Utah has eschewed direct subsidies to this end, and has instead concentrated on building NG infrastructure.) Other states with significant concentrations of CNG stations include the key NG producing states of Louisiana, Oklahoma, and Texas, as well as urban states such as New York. Pennsylvania and Ohio have shown the highest growth rate in building CNG stations in the last two years, and now have 21 and 13 public access stations operating, respectively. Figure 5 PCT. Growth in public access CNG stations 7/11-8/13 Source: NGV Today, August 19, 2013, p. 9 For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 13
  • 14. INDUSTRY OVERVIEW LNG stations There are 33 LNG public access stations, and 40 private access LNG stations operating in the United States as of September 2013. The initial impetus for creating LNG infrastructure for heavy duty NGVs was provided by the development of clean transportation corridors. The first of these, the Interstate Clean Transportation Corridor (ICTC), was a public-private partnership launched in 1995 to link major Californian cities, and Salt Lake City, Las Vegas, and Reno. The ICTC network now comprises 28 public access alternative fuel stations and displaces nearly 8 million gallons of diesel each year. Other regions have followed suit, such as Texas, which created the Texas Clean Transportation Triangle; the Rocky Mountain states, which created the Rocky Mountain Corridor; Pennsylvania, which launched the Pennsylvania Clean Transportation Corridor; and the states linked by interstate highway 75-- Michigan, Ohio, Kentucky, Tennessee, Georgia, and Florida-- which created the I-75 Green Corridor Project. Figure 6 Regional Transportation Corridors 87 82 94 43 39 90 84 5 75 29 81 76 72 ICTC 74 57 64 55 24 40 27 8 29 10 I-75 44 25 65 12 59 35 37 91 85 77 26 30 20 84 89 PCTC 68 70 66 71 79 88 RMC 86 69 96 90 95 4 35 Source: Pioneer Natural Resources, http://www.tamest.org/assets/docs/events/2011-texas-energy-summit/lyon-presentation.pdf Locating CNG and LNG stations The DoE’s AFDC provides up to date numbers on the location of public access CNG and LNG stations across the United States, through an interactive website: http://www.afdc.energy.gov Users of this website may locate public access stations supplying different types of alternative fuels, including but not limited to NG. The website allows users to generate a map to locate facilities within a state, or near an address or zip code, and includes a function to plot CNG or LNG stations located along a particular route. For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 14
  • 15. INDUSTRY OVERVIEW Figure 7 Locations of CNG stations Source: http://www.afdc.energy.gov/locator/stations/results?utf8=✓&location=&filtered=true&fuel=CNG&owner=all&payment=all& ev_level1=true&ev_level2=true&ev_dc_fast=true&radius_miles=5 Some companies have stepped in to make publicly available via the internet not only station location and tracking tools, but other relevant information. CNGprices.com, for example, supplies up-to-theminute information on CNG prices at a particular station, as well as crowd sourced information about station reliability, opening hours, and payment information. http://www.cngprices.com/index.php CNGnow.com incorporates a GPS application. http:// www.cngnow.com LNG suppliers, such as Blu LNG, have incorporated station finder features in their websites, which also include pricing information, opening hours, and payment options. http://blulng.com Figure 8 Locations of LNG Stations Source: http://www.afdc.energy.gov/locator/stations/results?utf8=✓&location=&filtered=true&fuel=LNG&owner=all&payment=all& ev_level1=true&ev_level2=true&ev_dc_fast=true&radius_miles=5 For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 15
  • 16. INDUSTRY OVERVIEW 1.4 Proposed expansion of CNG and LNG fueling networks In the past two years, several companies have announced ambitious efforts to construct public access NG infrastructure. These plans generally closely track major U.S. trucking routes and patterns. In general, to date CNG fuelling station networks have been designed largely to serve local and regional fleets. The thrust of LNG station development has been to connect these regional hubs. Figure 9 United States truck traffic volumes CNG stations In the CNG area, for example, Trillium announced an expansion project in June 2013 to construct and open 101 new CNG stations in 29 states within three years. This project includes plans to build new stations in states that already have extensive CNG infrastructure-- including California, New York, Ohio, For more information visit www.ngvevent.com and Pennsylvania, Texas—and will also locate many new stations in states that currently have few public access CNG stations, including Florida and Georgia, but are nonetheless high-volume parts of current U.S. trucking networks. NGV INDUSTRY OVERVIEW | 16
  • 17. INDUSTRY OVERVIEW Figure 10 Projected expansion of Trillium CNG station network, 2013-2016 Stations Opening 2013-2016 Projected 06/ 13 Existing Trillium Stations Existing Trillium Stations Stations Opening 2013-2016 ojected rP Source: Trillium CNG, http://www.trilliumcng.com/fuel/pdf/expansion_map.pdf Love’s Travel Stops and Country Stores Love’s Travel Stops & Country Stores, a familyowned, Oklahoma City-based company, currently operates more than 300 travel stops across 39 states that include fueling facilities and restaurants. The company has provided NG fueling capabilities at some of its locations for light and medium—duty vehicles since 2010. In 2012, Love’s constructed its first heavy-duty CNG station in its home city of Oklahoma City, specifically for Class 8 vehicles, and the company is adding fast-fill CNG fueling capability to service Class 8 trucks at eight of its travel stops on highways along the Texas Triangle of Dallas, Houston and San Antonio, each intended to be operational by the fourth quarter of 2013. Figure 11 Projected expansion of Love’s CNG network TACOMA WASHINGTON ELLENSBURG NAPAVINE POST FALLS WILLISTON TROUTDALE MONTANA MAINE NORTH DAKOTA MINNESOTA 85 FARGO ROSEBURG ONTARIO IDAHO NEW YORK WISCONSIN OREGON VT NH SOUTH DAKOTA IDAHO FALLS MA OAKDALE HEYBURN MICHIGAN ALBERT LEA SIOUX FALLS BINGHAMTON CT WYOMING CORNING CALIFORNIA OAK CREEK CONNEAUT MARSHALL WELLS WAMSUTTER FERNLEY SALT LAKE CITY PERRYSBURG CHEYENNE NEWTON CLIVE UTICA De MOTTE RIPON ELLIS BOONVILLE MEMPHIS INDIANA OTTAWA PUEBLO LAMAR BOISE CITY ARIZONA BARSTOW KINGMAN MATTHEWS TONKAWA CHOUTEAU MILAN ALBUQUERQUE SANTA ROSA TUCUMCARI AMARILLO BUCKEYE CHANDLER YUMA ERICK CLAUDE ARDMORE ELOY WICHITA FALLS BENSON ATOKA WEATHERFORD FT. WORTH RANGER SWEETWATER ANTHONY HUTCHINS ODESSA EL PASO BATESVILLE TENNESSEE GREENWOOD MINDEN LUFKIN TALLULAH FLOWOOD CLEVELAND WALLER SEGUIN LULING WEIMAR SAN ANTONIO EDNA KATY VINTON LAKE CHARLES HOUSTON DEER PARK SOUTH CAROLINA DUBLIN CLANTON RICHMOND HILL TOOMSUBA EVERGREEN LOXLEY COTTONDALE JASPER LEE BILOXI ORMOND BEACH OCALA BAYTOWN NATALIA THREE RIVERS LAREDO CNG AVAILABLE NOW FEASIBLE CNG STATIONS CNG COMING SOON FA BRUNSWICK TIFTON GEORGIA PORT ALLEN ORANGEBURG JACKSON McCALLA LOUISIANA McCOMB WILLIS COMFORT THOMSON HOGANSVILLE HEARNE NORTH CAROLINA DILLON NEWBERRY EMERSON ALABAMA FAIRFIELD HILLSBORO DUNN BLACKSBURG FT. MILL WACO JASPER CANTON MISSISSIPPI MIDLOTHIAN VAN HORN TEXAS STEELE SKIPPERS LAMBSBURG MARION LENOIR CITY CHARLESTON FAIR PLAY FALKVILLE TUPELO PRESCOTT MT. VERNON ROCKWALL VAN CHRISTIANA MEMPHIS LEARY ANNA DALLAS LAS CRUCES DICKSON COLUMBIA WEST MEMPHIS PALESTINE MORRILTON N. LITTLE ROCK LITTLE ROCK COLBERT DENTON RHOME NEW MEXICO LORDSBURG EUFAULA PAULS VALLEY LAWTON GILA BEND WEBBERS FALLS OZARK OKEMAH NORMAN HINTON MEMPHIS CLOVIS OKLAHOMA CITY ELK CITY CLINTON JACKSON ARKANSAS SOUTH HILL DANDRIDGE BAXTER NASHVILLE OKLAHOMA GALLUP JOSEPH CITY QUARTZSITE VIRGINIA MAX MEADOW HORSE CAVE CALVERT CITY JOPLIN HOOKER CLAYTON LAKE HAVASU COACHELLA RUTHER GLEN GRAYSON CORBIN KENTUCKY STRAFFORD TEHACHAPI MD DE WEST VIRGINIA RICHMOND SHEPHERDSVILLE MISSOURI KANSAS SPARTA WADDY HAUBSTADT INA ROLLA LAS VEGAS RIPLEY OHIO WHITELAND ST. PAUL GREENVILLE CEDAR CITY TULARE LOST HILLS NJ TOMS BROOK JEFFERSONVILLE BELLEVILLE NEVADA SANTA NELLA BORDENTOWN CARLISLE ZANESVILLE RICHMOND PITTSBORO ST. JOSEPH BENNETT HAMBURG MARION WHITESTOWN LEROY ILLINOIS WILLIAMSVILLE RI MIFFLINVILLE JONESTOWN BURBANK N. BALTIMORE KANKAKEE DWIGHT AURORA HUDSON COLORADO HUBBARD GARY DAVENPORT NORTH PLATTE UTAH PENNSYLVANIA ROSCOE IOWA SIOUX CITY NEBRASKA AUBURNDALE FT. PIERCE FLORIDA CNG UNLIKELY KINGSVILLE EDINBURG Source: Love’s Travel Stops and Country Stores, August 3, 2013 presentation For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 17
  • 18. INDUSTRY OVERVIEW America’s Natural Gas Highway Clean Energy Fuels, the largest provider of NG fuel for transportation in North America, in July 2011 was the first private company to jump aggressively into supplying NG infrastructure when it announced plans to construct America’s Natural Gas Highway, a network of 150 public access LNG-fuelling stations, across 33 states. So far, about 70 stations have been completed, although rollout is proceeding slower than originally anticipated, partly due to Clean Energy’s desire to secure anchor tenants before construction of new facilities. Using two liquefaction plants, one planned and one operational, Clean Energy will supply both stages of the supply chain, production and marketing. Clean Energy has also entered into a partnership with Pilot Flying J Truck Travel Centers, which will allow Clean Energy to add NG fuelling options to the services already offered at Pilot Flying J’s extensive network of existing truck stops throughout the United States. Clean Energy also intends to add CNG-fuelling capacity at selected locations on the network, as and where it determines there will be sufficient demand to support such facilities. Figure 12 Projected rollout of Clean Energy’s America’s Natural Gas Highway of LNG and LCNG stations Source: Clean Energy Fuels Shell and TravelCenters of America partnership Shell and TravelCenters of America announced in April 2013 that they would partner to provide a nationwide network of LNG fueling stations for heavy-duty road transportation customers. The companies intend to construct at least two LNG fueling lanes and a storage facility at 100 existing TravelCenters of America or Petro Stopping Centers full service travel centers located along the U.S. interstate highway system. Shell anticipates that the first of these stations will be operational within a year and intends to make it a priority to develop LNG fueling infrastructure along the main trucking corridors. Shell is also investing in both LNG liquefaction and refuelling infrastructure, and plans to build two For more information visit www.ngvevent.com liquefaction plants. These will supply the basis for two new LNG refuelling networks, in the Gulf Coast Corridor (Texas and Louisiana) and the Great Lakes Corridor. These Shell-fueled networks have the potential to link up with planned or existing clean transportation corridors, including the Texas Triangle and the I-75 Clean Transportation Corridor. Market observers suggest that Shell’s entry into the NG market is serving as a wake-up call signaling the growing importance of NG as a transportation fuel, as Shell is a major multinational player with the scale and resources to transform this domestic U.S. LNG market substantially. NGV INDUSTRY OVERVIEW | 18
  • 19. INDUSTRY OVERVIEW Figure 13 Projected network of LNG stations proposed by Shell and TravelCenters of America partnership Source: Shell ENN initiatives Chinese-owned ENN is also investing heavily in U.S. LNG fuelling infrastructure, with plans to build up to 500 LNG stations. ENN has partnered with a small Utah company, CH4 Energy, to create a joint venture trading as Blu LNG. ENN has ambitions of building LNG plants in the future. Figure 14 Blu LNG operational and pending LNG fuelling network (as of end 2013) Source: Blu LNG, http://blulng.com/station-finder/ For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 19
  • 20. INDUSTRY OVERVIEW 1.5 Expansion of Small and Midsize LNG Liquefaction Plants Crucial to the rollout of a wider use of LNG as a transportation fuel is increasing geographic access to its supply, which is partly being achieved by developing small and midscale LNG liquefaction infrastructure. Gas producers, suppliers, utilities, and public companies are planning and building new facilities. Figure 15 Small and Mid Scale LNG Liquefaction plants* *Planned and operational small and mid scale liquefaction facilities in the United States, where the location has been made public or disclosed directly to FC Business Intelligence. Table 3 Small and Mid Scale LNG Liquefaction plants in the United States* Small-Mid Scale LNG Liquefaction Faciliies in the US* Map Key Name Location LNG production Stage 1 Noble Energy Weld County, Colorado 100,000 gal/day P 2 APNG Topock LNG Plant Arizona 86,000 gal/day E 3 Clean Energy California Plant Boron, California 160,000 gal/day O 4 The Pickens Plant Willis, Texas 100,000 gal/day O 5 Shell, Geismar Geismar, Louisiana 250,000 P 6 Shell, Sarnia Sarnia, Ontario 250,000 P 7 Stabilis Energy Eagle Ford Shale 100,000/250,000 R 8 Stabilis Energy West Texas 100,000/250,000 S 9 Stabilis Energy The Bakken 100,000/250,000 S 10 Stabilis Energy Western Oklahoma 100,000/250,000 S 11 Stabilis Energy Haynesville, East Texas 100,000/250,000 S 12 Grande Prairie Elmworth, Canada 190,000 litres/day C 13 Colony Energy Partners Reno 180,000 gal/day (initial) P 14 Spectrum LNG Prudhoe Bay, Alaska 100,000 gal/day P 15 Spectrum LNG Ehrenberg, Arizona 60,000 gal/day O 16 Exxon LaBarge Shute Creek, WY 60,000 gal/day O 17 Prometheus Bowerman LFG to LNG California 5,000 gal/day O P = Planned E = Expansion *Details disclosed/available O = Operational S = Site Selection C = Construction R = Reg. approvals For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 20
  • 21. INDUSTRY OVERVIEW 1.6 Conclusion Natural gas has significant potential to displace diesel and gasoline usage in the transportation sector. NG prices are both cheaper than either diesel or gasoline, and are also less volatile. NG is largely sourced in North America, especially the U.S., in contrast to oil and diesel, which are largely foreign-sourced, from politically unstable and potentially hostile regions of the world, especially the Middle East. For more information visit www.ngvevent.com The number of CNG and LNG public access fuelling stations is expanding rapidly. Several companies have committed themselves to rolling out new NG infrastructure. On the CNG side, Trillium and Love Travel Stops have announced extensive plans, while on the LNG side, Shell, and ENN in a joint venture with Blu LNG, are major players. Clean Energy has also announced an extensive LNG plan, America’s Natural Gas Highway, and in partnership with Pilot Flying J truck stops is also exploring LCNG options. NGV INDUSTRY OVERVIEW | 21
  • 22. INDUSTRY OVERVIEW Chapter 2: Government policies: How they will shape the NGV market over the next 5 years 2.0 Introduction Government policies, at both federal and state levels, have played a significant role in fostering the development of NG as a transportation fuel. The following chapter describes how such policies will continue to shape the future development of the NGV sector, focusing on the next five years. The chapter begins by discussing various state and federal policies to promote NGVs, including subsidies, tax incentives, procurement policies, and emissions standards. The chapter concludes by discussing two potential policy risk factors that could thwart or at minimum slow development of NGVs—environmental regulation, and export policy. 2.1 Policy in context The DoE in 1993 launched the Clean Cities initiative, the flagship federal program designed to reduce petroleum consumption for transportation uses by promoting the use of alternative fuel vehicles. This program created a national network of more than 100 Clean Cities coalitions, which link fuel suppliers, private companies, original equipment manufacturers (OEMs), federal and state agencies, national laboratories, and local governments, among others, in designing and implementing alternative transportation policies for their local communities. Clean Cities seeks to reduce the use of fossil fuels by measures such as using alternative and renewable fuels, making improvements in fuel economy, and promoting emerging transportation technologies. or heavy-duty trucks, compared to diesel or gasolinepowered vehicles; and the lack of a comprehensive fuelling infrastructure for either CNG or LNG vehicles. Both the federal government and many state governments provide a plethora of subsidies, tax incentives, and loan programs to address these two obstacles (some of these incentive programmes are discussed more fully below—see sections 3.__ and 3.__, and 4.__ and 4.__). These public policies promote the use of NGVs (and other alternative fuel vehicles) by defraying their higher upfront costs and also support build-out of more NG fuelling stations. Other policies provide incentives to use alternative fuel vehicles—such as the ability to use high occupancy vehicle (HOV) lanes regardless of the number of passengers in a vehicle. Most of the NG-specific policies the United States has in place promote the use of NG. But one federal excise tax policy currently disadvantages LNG, and this measure has attracted many reform calls among various NGV stakeholders. The federal excise tax on both LNG and diesel is currently 24.3 cents per gallon, but since it takes 1.7 gallons of LNG to produce the same amount of energy that a gallon of diesel produces, LNG is effectively taxed at a rate 70% higher than that of diesel. Both gasoline and CNG are also taxed according to energy output, leaving LNG as the odd fuel out. Taxing the fuels on an energy content basis rather than on a volume basis would create a level playing 2.2 Subsidies and tax incentives field for LNG, and Mac Thornberry, a member of the United States House of Representatives from Texas in 2013 introduced the LNG Excise Tax Equalization Act The significant and sustained lower relative cost of of 2013 (H.R.2202), to achieve that goal. Thornberry NG compared to petroleum-based fuels provides a believes that this reform would promote expanded strong incentive for fleets and individuals to shift to NGVs. Yet those who seek to make such a switch face private-sector investment in LNG infrastructure and production. two significant obstacles: the higher upfront cost of NGVs, whether automobiles, vans, or light, medium, For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 22
  • 23. INDUSTRY OVERVIEW Senator Michael Bennet of Colorado has introduced a companion bill, S. 1103, l into the United States Senate, but as of October 2013, the measures had been referred to their respective committees for consideration, and no further action has been taken on these measures. The federal government currently has twenty-seven NG promotion policies in place, covering a range of areas, including infrastructural development, HOV lane use, aftermarket conversions, public transportation, and technological development. The DoE’s AFDC regularly updated website provides current summaries of existing federal policies: http:// www.afdc.energy.gov/laws/laws/US/tech/3253 All states currently have at least one NG promotion policy in place, and the DoE’s AFDC website allows to search current such policies by fuel, and by state. Many urban states are strong NG supporters, including California (with 27 NG policies in place), Virginia (16), and Indiana (18). States that produce NG also promote its use, these include Colorado (11), Oklahoma (14) Texas (15), and Utah ( 10). http://www.afdc.energy.gov/laws/matrix/tech. Policies fall to three broad areas: those that offset the incremental costs of NGV purchase; those that provide fuel incentives; and those that provide special privileges to NGV users (e.g., access to HOV lanes, additional parking, concessions on emissions inspections). California has led the way in promoting clean air policies, and adopted its Air Pollution Control Act in 1947—nearly a decade before the federal government began to address air quality issues. The state has been at the forefront of promoting the use of alternative fuels, and currently has 27 NG state incentives in place—more than any other state— and these include policies to promote NGVs, to encourage NG infrastructural development, to advance the use of NG for public transit, and to foster NG-related technological development. The DoE’s AFDC website summarises the state’s current policies http://www.afdc.energy.gov/laws/ laws/CA/tech/3253 For more information visit www.ngvevent.com California has pioneered some innovative alternative fuel promotion policies, including parking incentives, and the ability to use HOV lanes regardless of the number of passengers in a vehicle. Drivers of qualifying alternative fuel vehicles—including CNG, hydrogen, electric, and plug-in hybrids-- that meet specified state and federal emissions standards are given special stickers. Vehicles are also exempted from certain toll charges, unless prohibited by federal law. On September 28 Governor Jerry Brown signed into law a bill that will extend various other clean vehicle incentive programs until 2023. He also signed another piece of legislation that will extend for HOV lane access for certain alternative fuels vehicles until January 1, 2019. 2.3 Procurement policy Both federal and state governments can advance the use of NGVs via the procurement policies they enact. Federal policy President Obama issued a Presidential Memorandum in May 2011 directing all federal agencies to purchase or lease only alternative fuel passenger vehicles or LD trucks by 2015. This policy required no congressional action to be implemented and took immediate effect upon announcement. Mandating the use of alternative fuel vehicles for federal fleets was expected to have the direct effect of stimulating demand for such vehicles and, by creating economies of scale, reducing the upfront costs of such vehicles, thus increasing their attractiveness to a wider market. Further, in the case of NGVs, placing more of them on the road was also intended to increase utilization of existing NG infrastructure, and promote demand for additional fuelling stations. The policy was also expected to have indirect effects, as drivers of these vehicles will increase their familiarity with these vehicles and, in the case of NGVs, become aware of their far lower fuelling cost compared to petroleumfuelled vehicles. State policy States have followed the federal lead in developing their own NGV procurement policies. The governors of Colorado, Wyoming, Pennsylvania, and Oklahoma NGV INDUSTRY OVERVIEW | 23
  • 24. INDUSTRY OVERVIEW announced a Memorandum of Understanding (MOU) in November 2011 to work together to convert their state vehicle fleets to NG. The MOU calls for a joint, multistate request for proposal for purchasing NGs for state fleets, and commits each state to purchase a specific number of NGVs. Many state fleets standing alone are not large enough convince OEMs that the vehicle needs of individual states represent a viable, stable, long-term market upon which to base product launch decisions. By developing a common proposal for NGV purchases and pooling their resources, the states hope to encourage OEMs to offer a wider range of NGVs. More than 20 states are now committed to follow this NGV sourcing approach. These procurement policies have already influenced product offerings. The three major U.S.-headquartered OEMs – Chrysler, Ford, and GM (Chevrolet) – have all launched bi-fuel pickup trucks, and GM and Ford offer a bi-fuel van for commercial and fleet customers. Honda is the first OEM to offer a NG-fuelled automobile, the Civic NG, nationwide to non-fleet customers, and Chevrolet intends to offer its Impala model in a bi-fuel option for model year 2015. Various other companies offer competitive NG-conversion options. Private initiatives greenhouse gas emissions by over 20 million metric tons annually. Moreover, the foundation emphasizes that by leveraging its influence with freight carriers and other suppliers, such a programme would allow the federal government an opportunity to create very large multiplier effects, and thus effectively reduce the dependence of the trucking industry and other private sector transportation providers on petroleum imports. 2.4 CAFÉ standards The United States in 1975 first implemented Corporate Average Fuel Economy (CAFÉ standards) to encourage manufacturers to produce more fuelefficient cars. The Obama administration and thirteen OEMs on August 28, 2012 announced new standards for automobiles, and light and medium duty trucks, levelling the playing field between NG and other alternative fuels for these categories of vehicles. These standards cover model years 2017-2025. The standards are ambitious ones, which by setting an average fuel economy standard of 54.5 miles per gallon (MPG) by 2025—double the 27.3 MPG 2011 average-- are intended to push OEMs toward technological innovation. The standards include tax incentives for purchase of certain types of alternative fuel vehicles, and an incentive multiplier to encourage adoption of fuel. The highest multiplier, 2.0, applies to electric vehicles; NGVs and hybrids enjoy a multiplier of 1.6—a significant improvement on the previous standard. These public procurement initiatives have inspired the American Clean Skies Foundation to develop a wider procurement plan for the third-party transportation services used by the federal government. Every year, federal agencies spend roughly $150 billion on such transportation services. The Obama administration was the first to launch emissions standards for heavy-duty vehicles in 2011. The foundation has proposed requiring federal These are due to be revised and extended soon, with agencies to apply to third-party transportation a proposed rule expected imminently, which will be providers the same kinds of alternative fuel targets, finalized sometime in 2015. efficiency standards and reporting practices they currently apply to their own vehicle fleets. Such a policy would reduce overall oil consumption—and its associated economic and environmental costs. The foundation estimates that the programme it outlined in an August 2012 report could deliver approximately $7 billion in annual cost savings; cut petroleum consumption by billions of gallons each year; stimulate the introduction of tens of thousands of new alternatively fuelled vehicles; and reduce For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 24
  • 25. INDUSTRY OVERVIEW 2.5 Environmental regulation: potential risk? One potential risk factor for broader NGV development is whether additional environmental restrictions will be imposed on fracking operations. At the federal level, the Bureau of Land Management sets drilling standards for federal lands, and the Environmental Protection Agency (EPA) has broad influence over fracking due to its authority to set air and water quality standards. The EPA in 2012 set air quality standards for fracking operations, requiring companies to capture gases released in the process—but these measures only codified best industry practices. The EPA is expected to announce fracking-related water quality standards in 2014, and is expected to take a similar approach. The fracking industry remains vulnerable to the risk of lawsuits, which are largely brought under state law. Landowners have targeted energy companies in many states where fracking is widespread, in some cases, via class action lawsuits. But the United States Supreme Court has in recent years made it much more difficult for private plaintiffs to succeed in such lawsuits, especially, in class actions. So far, no company has lost a fracking suit, and the barriers to prevailing in such litigation for alleged harms including groundwater contamination, triggering of earthquakes, or environmental degradation, are formidable. The possibility exists that lawsuits or state-level policy changes could slow the spread of fracking in certain states. Yet absent a major shift in the composition of either Congress or the Supreme Court, it is unlikely that fracking lawsuits will impose major constraints on energy producers nationwide. 2.6 Export policy: potential risk? United States NG export policy could also have a significant impact on the development of NG as a transportation fuel. Until recently, NG from domestic sources was not traded widely outside North America, and the United States did not export significant quantities of NG. In fact, before the shale gas revolution began, plans were underway to allow importation of substantial quantities of NG, and these For more information visit www.ngvevent.com included proposals to develop the infrastructure to achieve this goal. Some of the NG export terminals discussed below were originally intended to be import facilities. Now, as domestic NG reserves continue to be developed, and the spread between NG and world oil prices continues to be so wide, this situation has reversed itself. Yet U.S. NG exports are subject to a complex export regime, which requires federal government approval of NG export facilities and involves separate permitting processes undertaken by the DoE and the Federal Energy Regulatory Commission (FERC). To date, the DoE has approved four applications to permit export of U.S.-produced LNG have been approved, and more than twenty are pending. In 2011, the DoE approved Cheniere Energy’s Sabine Pass project, located on the Sabine River in the Louisiana/Texas border, thus clearing the way for the first new LNG construction in forty years (this project had originally been planned as an import terminal). Final clearance for this project led to a pause in consideration of other export applications. During this period, two studies were undertaken that examined the expected impact of NG exports on domestic prices, and in this interim period, NG exports were authorized to countries with which the US has free trade agreements, such as Canada and Mexico -- both members of the North American Free Trade Agreement (NAFTA). In 2013, the DoE has approved three projects for export to non free-trade agreement destinations: Freeport LNG’s in Quintana Island, Texas, in May; Lake Charles LLC’s in Lake Charles, Louisiana, in August; and Dominion Resources’s Cove Point facility on Maryland’s Chesapeake Bay, in September. The DoE has seemingly accelerated its review process in response to political and company complaints about previous delays, and is currently reviewing expansion of Freeport LNG’s terminal in Freeport, Texas; Sempra Energy’s proposed project in Cameron, Louisiana; and Veresen’s Jordan Cove project in Coos Bay, Oregon. NGV INDUSTRY OVERVIEW | 25
  • 26. INDUSTRY OVERVIEW Table 4 LNG Export facilities approved Company Location State Date Cheniere Energy Sabine Pass Louisiana/ Texas border Apr 2012 Freeport LNG Quintana Island Texas May 2013 Lake Charles Louisiana In September 2013, AEA filed a formal motion to intervene in the DOE’s proceeding evaluating Freeport LNG’s export application for its Freeport, Texas terminal. This application, if authorized would raise the cumulative volume of authorized LNG exports to 8.31 Bcf/d. AEA seeks to encourage the DoE to develop a more formal rulemaking process based on current data and assessments of the current supply and demand Dominion Cove Point Maryland Sep 2013 environment. AEA asserts that current LNG export Resources (Chesapeake applications are being granted based on guidelines Bay) developed for NG imports in the 1980s. AEA’s motion NG producers view exports as a way to earn higher also alleges that the legal standards the DOE used to prices than are available for NG in either the domestic analyse the public interest in two previous permitting U.S. or wider North American market. Yet significant applications were not “adequate, appropriate, or LNG exports could distort the domestic supply/ sustainable.” demand relationship, and thereby raise domestic NG prices. As long as NG is largely traded within North APGA and the Industrial Energy Consumers of America, prices remain insulated from the volatility America (IECA) are working toward developing a (and outright manipulation) that occurs in the world responsible production policy, arguing that while oil market. exporting NG might maximize the price domestic producers receive for their product, it will reduce the The acceleration of export procedures is already price advantage NG currently enjoys relative to refined provoking a backlash. Cove Point’s conditional diesel or gasoline, and thus reduce the attractiveness approval to export up to 0.77 Bcf/d of NG raises of NG as a transportation fuel. If that occurs, these the overall amount of permitted NG exports, organizations emphasize, NG’s full potential to reduce breaching the export levels of 6 Bcf/d — the “low America’s energy dependency will not be achieved. export scenario” — set forth in an earlier report commissioned by the DoE that examined the impact The DOE may choose to undertake another pause in of NG exports on domestic prices and on which the its permitting procedures, but this is unlikely to occur agency relied in approving three previous LNG export before year-end 2013, when new data should be applications. available from the Energy Information Administration’s preliminary annual energy outlook for 2014. America’s Energy Advantage (AEA), a coalition of manufacturers and consumers, is working to A lively debate is raging on how America’s NG reserve US NG to promote a US manufacturing reserves should be deployed—to maximize producer renaissance. AEA members include domesticrevenues, or to support domestic manufacturing headquartered companies such as Alcoa, Celanese, and encourage energy self-sufficiency. Opponents of Dow Chemical, Eastman, Huntsman, and Nucor, and increased NG exports emphasise that if all pending trade associations, such as the American Public Gas export applications were to be approved, half of Association (APGA). Its membership also includes current NG supply would be exported. Instead, firms such as Incitec Pivot, a global explosives and they advocate building necessary infrastructure to fertilizer manufacturer based in Australia, that recently consume NG domestically, not only for transportation began construction of an $850 million ammonia plant uses, but for power generation as well. in Waggaman, Louisiana. Lake Charles LLC For more information visit www.ngvevent.com Aug 2013 NGV INDUSTRY OVERVIEW | 26
  • 27. INDUSTRY OVERVIEW 2.8 Conclusion Government policies, both federal and state, have played a major role in promoting the development of NG as a transportation fuel, and will continue to do so both in the near-term ad over the coming decades. California has been a leader in developing alternative fuels, and currently has the most comprehensive NG fuelling infrastructure. While the state continues to lead the way in policy innovation, many other states are also on the NG bandwagon, and are providing various incentives as well as setting their own procurement policies, to promote NG use. For more information visit www.ngvevent.com Although it at this point appears unlikely that environmental regulations or public or private lawsuits, may significantly slow U.S. shale gas production, the long-term shape of U.S. NG export policy is a cause for some concern, as it has the potential to equalise somewhat domestic and world NG prices, and thereby, reduce the economic case for fleets to switch to NG. A lively debate is brewing over whether NG should be reserved for domestic uses, pitting conflicting interests of NG producers against other among NG stakeholders. Since the setting of export policy requires federal government action, this debate will require political resolution at the highest level. NGV INDUSTRY OVERVIEW | 27
  • 28. INDUSTRY OVERVIEW Chapter 3: Converting to Natural Gas, Vehicle issues 3.0 Introduction Despite the relative cost advantage for fuelling NGVs compared to traditional diesel or gasoline-fuelled models, the higher relative costs of NGVs compared to traditionally-fuelled vehicles has presented a major obstacle to wider use of NG as a transportation fuel. This chapter focuses on costs and other issues that should be considered when contemplating switching to NGVs, while the next discusses the equally important issue of ensuring access to adequate fuelling infrastructure. OEMs have started to offer a wider range of NG options, from automobiles, to vans—both passenger and cargo—and light and medium-duty truck options. Total sales have been modest but growing, and each OEM has announced plans for expansion of NG product offerings in forthcoming model years. At least twenty-one states provide some form of incentive for fleets to convert to light-duty CNG vehicles, in the form of grants or rebates, loans, state tax credits, or combinations of these policies. With OEMs now offering a wider range of NGVs, the impact of these incentive policies may now be more pronounced. Chevrolet announced in October 2013 that it will launch a bi-fuel Impala, beginning with the 2015 model year, to both passenger and fleet customers. The vehicle will include both a CNG tank in the trunk, and a gasoline tank, allowing for a total range of up to 500 miles by switching between the two fuels-- 150 miles on CNG and 350 miles on gasoline. GM has neither announced an expected price, nor projected fuel economy figures, and expects to sell as many as 1000 vehicles, largely to fleets, during its first model year. Despite a lack of strong consumer demand, OEMs recognize that shifting to NG provides immediate emissions benefits, without any need for further technological innovation, and thus help fulfil their obligations to meet emissions standards for their product offerings. Two major obstacles have prevented wider consumer adoption of NGVs. Although the costs of operating CNG vehicles are much lower, consumers must first pay the higher incremental cost of buying a CNG vehicle. The actual break-even point depends on the higher incremental cost for the CNG vehicle, and All major heavy-duty truck manufacturers offer NG average number of miles driven. Moreover, passenger options, either in CNG or LNG formats. cars face greater infrastructural obstacles, for unlike fleets, they do not necessarily drive in consistent and familiar patterns, and they lack access to dedicated 3.1 Passenger automobiles fuelling arrangements—either company-owned, or The US market lags significantly behind the European third-party— that are available to fleets. market in the number of NG options offered as Use of NG is impractical, at present, for non-fleet passenger vehicles. Currently, only Honda offers passenger vehicles, outside of states that have wella CNG option, the Civic NG, nationwide in the US, developed CNG infrastructure, such as California, New compared to Europe, where many automakers, York, Oklahoma, Texas, and Utah. In the near-term, including Fiat, GM, Mercedes, Peugeot, Toyota and there are other pockets where use of such vehicles Volkswagen, offer CNG options. Honda is strongly might catch on, especially in bi-fuel options, which committed to develop the US NGV market and has can reduce fuelling and range anxiety. offered a CNG automobile option since 1998 in the US. For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 28
  • 29. INDUSTRY OVERVIEW One looming technological innovation might promote popularity of NG as a transportation fuel for passenger vehicles: the development of a cheap, widely available home refuelling option. At present, consumers are making a switch in how they view fuelling options. Outside of remote rural areas, drivers are not accustomed to considering refuelling possibilities when they drive passenger cars. But this is changing, with the hybrids such as Toyota’s Prius and Chevrolet’s Volt. of the NGV passenger automobile market, one which the federal government has devoted part of $30 million in research funds to finance proposals to create such appliances. The Drive Natural Gas Initiative (DNGI), a major industry trade association launched its Home Fueling Appliance Task Force determine specifications for such a product. The appliance should be able to provide a fuelling rate of 1 GGE per hour, should provide for 6,000 hours of service, and should cost less than $1,500. This translates to a fuelling cost per GGE of CNG of $0.25 (in addition with Wider use of such vehicles may promote a shift in the cost of the fuel itself and the cost of the electricity how drivers think about fuelling their cars. to run the compressor). The task force decided that Electric vehicles have limited range, and are generally the cost of the appliance, plus the premium paid for most useful for commuting short distances. the CNG vehicle (compared to the same non-CNG Drivers are able to charge their batteries when the model), must payout in 3 years or less, in order to vehicle returns home. support a sustainable market. Several utilities, and manufacturers, are joining to develop products that The lack of a cost-effective home fuelling appliance meet these specifications. The timeframe for launch is seen as a major impediment to the development remains at least eighteen months away. Table 5 Home fuelling specifications TCO Base Case Miles % CNG NGV Cost HFA Cost Actual miles 13,476 26,583 18,719 Daily miles 37 73 51 CNG percent 55% NGV Premium $4,000 HFA (installed) $2,000 Simple Payout (yrs) 8.0 106% 80% 723 3.0 3.0 High-Miles / High CNG % -$1,277 3.0 3.0 3.0 Market of 10 million commuters Source: America’s Natural Gas Alliance 3.2 Light and medium duty trucking vehicle options The major OEMs have responded to demand for CNG-fuelled vehicles, and either now offer, or plan to offer for model year 2014, a mix of vans, and light and heavy duty pick-up trucks. of similar vehicles. Beginning with model year 2014, Ford intends to extend its product range and offer its F-150 truck with a gaseous-fuel prep option on the 3.7-liter V6 engine, enabling the vehicle to run on CNG or LPG. This prep package includes hardened valves, valve seats, pistons and rings so it can operate Ford Ford expects to sell 15,000 CNG/LPG-prepped vehicles on either CNG/LPG or gasoline through separate fuel in 2013, representing a 25% increase on its 2012 sales systems, and from the factory costs approximately For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 29
  • 30. INDUSTRY OVERVIEW $315 before the customer chooses a Ford Qualified Vehicle Modifier to supply fuel tanks, fuel lines and unique fuel injectors. Upfits run approximately $7,500 to $9,500, depending on fuel tank capacity. So equipped, F-150s would be able to run more than 750 miles on one tank of gas, depending on the tank size selected. The Ford F-150 averages 23 mpg on the highway. Ford expects that CNG versions of the F-150 will qualify for California HOV lane status certification, thus providing its commercial customers with a significant time advantage, in addition to the cost savings they can expect to achieve on fuel. With the addition of the F-150, Ford will have eight commercial vehicles available to run on CNG/LPG. Table 6 Ford CNG model options (as of model year 2014) Model Type F-150 Light-duty pick up Transit Connect van and wagon Transit van, wagon, cutaway, and stripped chassis E-Series van, wagon, cutaway, and stripped chassis F-Series Super Duty pick-up F350 chassis cab F-Series Super Duty (F-450, F-550) chassis cab F-650 medium-duty truck F53 and F59 stripped chassis Source: Ford September 19, 2013 press release Chrysler Chrysler launched the Ram 2500 CNG pick-up in 2012 and sold its first vehicles in 2013. This is a bifuel vehicle that uses CNG as its primary fuel source, but automatically switches to gasoline when the CNG tanks are emptied. Using its two CNG tanks, the vehicle’s range exceeds 250 miles, and its back-up gasoline tank extends this range to nearly 370 miles. The Ram 2500 is available to fleet and retail customers, and is powered by a Hemi 5.7 liter V8 engine. Of the three major US OEMs, Chrysler offers the smallest range of CNG products, offering a pick-up only for model year 2014. For more information visit www.ngvevent.com Table 7 Chrysler CNG model options (as of model year 2014) Model Type Dodge Ram 2500 Bi-fuel pick up Source: Chrysler March 6, 2013 press release GM In 2013, GMC introduced its bi-fuel CNG Silverado 2500 HD extended cab pick-up truck (the equivalent Chevrolet model is called the Sierra 2500 HD), and expects to sell 1300 of these vehicles during the 2013 model year. The vehicle incorporates factory-installed hardened exhaust valves and intake/exhaust valve seats, both of which are engineered to GM durability standards for gaseous fuel use. The bi-fuel CNG option is available on long- or standard-bed models in either 2WD or 4WD. The fuel system automatically switches to gasoline when the CNG tank is empty, or the driver may manually switch between fuel sources while driving. The combined 17 GGE CNG tank and 36-gallon gasoline tank allow for a total range of about 650 miles. GMC and Chevrolet expect to offer a range of several truck and cargo van options for the 2014 model year. Chevrolet has also announced plans to offer its Impala automobile in a CNG configuration (see section 3.1 above.) Table 8 GMC and Chevrolet CNG model options (as of model year 2014) Model Type Bi-Fuel CNG Chevrolet Silverado 2500HD extended cab pick-up Bi-Fuel CNG GMC Sierra 2500HD extended cab pick-up Chevrolet Express 3500 cut-away GMC Savana 3500 cut-away Chevrolet Express Cargo 2500 cargo van GMC Savana Cargo 2500 cargo van Chevrolet Express Cutaway 4500 cut-away Chevrolet Express Cargo 2500 cargo van Source: GM website http://www.gmfleet.com/vehicle-overviews/ fuel-efficiency/bi-fuel.html NGV INDUSTRY OVERVIEW | 30
  • 31. INDUSTRY OVERVIEW Payback: Bottom line Assessing the conditions under which switching to NG may be a commercially viable strategy for light and medium-duty LGVs relies on a careful assessment of over what timespan the additional premium for purchasing differential vehicle can be recouped by the cost savings for CNG fuel—which currently average between $1.50 and $2 per DGE or GGE (as discussed more fully in section 1.1 above). Leaving aside access to fuelling infrastructure—which will be discussed more fully in chapter 4 below—a fleet operator must consider how many miles can be driven fuelled by CNG alone, since most OEM bifuel options actually are currently configured with a much higher gasoline capacity compared to CNG. In general, payback calculations are a less certain value proposition, since vehicles in these classes already have higher fuel economy, and travel fewer models. Many states offer significant incentives in switching to CNG, but these vary widely among states, and many of them are time-bound. These factors may tip the balance toward CNG significantly beyond what market factors alone would dictate. 3.3 State subsidies for lightduty NGVS As of September 2013, 27 states offer some form of incentives for converting fleets to light-duty NGVs, according to VNG.CO, a company that offers a nationwide CNG retail-centric fuelling facility program to owners and operators of light-duty NGVs. Thirteen states offer grants or rebates, eight states offer tax credits, and six offer loan financing at concessionary rates. Several states offer various combinations of these incentives. Table 9 Summary of state incentives for lightFigure 16 Calculation of light-duty truck payback, duty CNG vehicles based on various fuel price and truck premium Type of Incentive Number of Description assumptions states $10.00 Grants or rebates 13 $2500 to $25,000 per vehicle $8.00 Loans 6 Rates from 0% to 5% $7.00 State tax credits 8 $500 to $7500 per vehicle $9.00 $6.00 $5.00 Source: VNG.CO website $4.00 $3.00 $2.00 $1.00 $0.00 $16,000 $8,000 $0 12,000 miles per yr - 3 yr Payback 12,000 miles per yr - 5 yr Payback 20,000 miles per yr - 3 yr Payback 20,000 miles per yr - 5 yr Payback Source: Paul Armstrong, GTI Director of Business Development, to Guild of Gas Managers, April 3, 2012. For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 31
  • 32. INDUSTRY OVERVIEW Figure 17 Map of states offering various incentives for light-duty CNG vehicles Tax Credit Rebate/Grant Loan ■Arkansas Up to $5,000 (<8,501 lbs) ■ or up to $8,000 (8,501-14,000 lbs) ■California $3,000 (<8,501 lbs) or ■ $8,000 (8,501-14,000 lbs) ■Colorado 10.5% of total vehicle ■ costs, up to $6,000 per vehicle ■Connecticut Unspecified funding ■ for public fleet NGVs only ■Florida 50% of incremental costs, ■ up to $25,000 ■Georgia 10% of total vehicle costs, ■ up to $2,500 ■Illinois 80% of incremental costs, ■ up to $4,000 ■Indiana Up to $150,000 per fleet ■ conversion project (max for all vehicles purchased) ■Louisiana 50% of incremental costs ■ ■Maryland $3,000 (<8,501 lbs) or ■ $5,000 (8,501-14,000 lbs) ■Mississippi Zero-interest loans for ■ municipal vehicle NGV fleets only ■Montana 50% of conversion costs, ■ up to $500 ■Nebraska 5% interest loans, up to ■ $750,000 per borrower ■North Carolina Up to 80% of incre■ mental costs Oklahoma Tax credits of 50% ■■ of incremental costs, 3% interest loans ■Oregon Low-interest loans (terms ■ not specified) ■Pennsylvania 50% of incremental ■ costs, up to $25,000 ■Texas $2,500 rebates (up to 9,600 ■ lbs), grants up to 90% of total costs (8,501+ lbs) Utah Tax credits of 35% of total ■■ cost up to $2,500, grants of 50% incremental costs ■■ Virginia Unspecified grants and loans for public fleets only ■Washington Exemption from 6.8% ■ state sales tax on vehicle purchase ■West Virginia 35% of new vehicle ■ purchase price or 50% of conversion costs, up to $7,500 VNG.go provides details on these state programmes, as of September 2013, at the following link: http://vng.co/wp-content/uploads/2013/09/VNG-State-Incentive-Summary-September-2013.pdf This information is presented in a more user-friendly summary form than the more comprehensive information available at the DoE’s AFDC site, which includes links to relevant state statutory and regulatory information. http://www.afdc.energy.gov/laws/matrix/tech. For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 32
  • 33. INDUSTRY OVERVIEW 3.4 Heavy duty trucking Fleets operating heavy-duty trucks now have the option to consider both CNG or LNG options. All major truck manufacturers currently offer NG engine options, including Freightliner, Isuzu, Kenworth, Navistar, Peterbilt, and Volvo/Mack. These are based around engines offered & manufactured by Westport Innovations, in a 15 liter LNG option only, and in a joint venture between Westport and Cummins, in both CNG and LNG versions, and 8.9 liter and 11.9 liter sizes. Volvo has announced plans to launch its own 13 liter LNG engine sometime in 2015. Figure 18 Natural gas engine comparison-- power (hp) CWI ISL G 250 CWI ISX12 G 375 400 Westport 15L 475 500 Source: http://www.westport.com/products/engines/15 Figure 19 Natural gas engine comparison – torque (ft-lb) CWI ISX12 G CWI ISL G Westport 15L Technological innovation should over the longer term reduce these premiums. Manufacturers are currently 600 1,000 1,200 1,400 1,600 1,800 developing new tank designs for both CNG and LNG. Additionally, innovations in the fuel system space-Source: http://www.westport.com/products/engines/15 which accounts for the majority of the premium, should reduce overall truck premiums as well. CNG to LNG compared For heavy-duty trucks, both CNG and LNG options are available, and fleets looking to switch must carefully consider which option better suits their needs. CNG trucks are heavier—due largely to tank design, and LNG has fuel-economy advantages in long-haul situations. The additional weight required for its tanks disadvantages CNG, but since 75% of heavy-duty trucks cube out before they weigh out, this is not necessarily dispositive, particularly given the currently more extensive CNG filling station network. (See section 4.2 below, and especially Table 12, for more LNG engine discussion of these considerations.) Some idea of the current premium for heavy duty CNG or LNG rigs can be derived from Table 10, which compares a CNG truck equipped with saddle tanks with 90 DGE of storage capacity to a single tank LNG truck with 75 DGE of storage capacity. All of these figures are provisional, and are highly dependent on the relationships between suppliers and fleet managers. Table 10 Heavy-Duty engine options Manufacturer Model CNG engine price premium price premium Cummins/ Westport ISL G 8.9 L $32,000$40,000 $35,000$58,000 Cummins/ Westport ISX G 11.9 L $47,000$80,000 $60,000$98,000 Westport Innovations HPDI 15 L LNG option only $75,000$120,000 Source: Love’s Travel Stops, August 3, 2013 presentation For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 33
  • 34. INDUSTRY OVERVIEW 3.5 Factors to consider in HD fleet conversions Assuming access to adequate fuelling infrastructure, without the need to construct or secure access to a private fuelling network, many calculations of expected payback on conversion from diesel to either CNG or LNG rely only on the average differential in fuel price—currently about $2 for CNG, and $1 for LNG. Yet there are other inefficiencies necessary to consider when running heavy-duty trucks, and these should be quantified on a per unit basis and deducting the sum of inefficiencies from the gross discount. LNG Filling issues Figure 20 Sample calculation of expected payback for HD fleet conversion CNG vs. LNG Comparison CNG LNG Diesel Price $4.000 $4.000 Natural Gas Retail Price $2.000 $3.000 Gross Discount to Diesel $2.000 $1.000 Fuel Economy Loss (12%) -0.240 -0.360 Out of Route Miles -0.025 -0.025 Payload Loss -0.050 -0.020 Additional Maintenance -0.030 -0.030 Fuel Loss from Venting - -0.015 Salvage Value Deduction -0.060 -0.060 Total Inefficiencies -0.405 -0.510 Net Discount to Diesel $1.595 $0.490 Truck Inefficiencies LNG may vent fuel into the atmosphere to avoid explosion in a vacuum tank, and it may have a shelf Truck Comparison CNG LNG life as short as four days. Filling completely empty Miles Driven (Annual) 125,000 125,000 methane tanks can be problematic, as methane Fuel Economy 6.20 6.20 may expand rapidly as LNG enters a tank at ambient Fuel Consumption 20,161 20,161 temperature, sometimes delaying operations by up to Truck Premium (CW 11.9L) 60,000 60,000 one day until a complete fill can be achieved. $1.60 $0.49 Dealing with low temperature LNG raises some safety Net Discount to Diesel $32,157 $9,879 concerns; dealing with these imposes certain training Fuel Savings (Annual) costs and also raises possible workers’ compensation Payback (Years) 1.87 6.07 concerns. Source: Love’s Travel Stops, August 3, 2013 presentation Range considerations Onboard fuel capacity dictates the range for both CNG and LNG trucks. Standard CNG fuel systems come equipped with the option of either 90 DGE saddle tanks or 120 DGE behind-the-cab tanks. Only about 90% of this capacity is considered usable, since a CNG truck also experiences a shortfall when filling at rates higher than ten DGEs per minute. Although fuel is not lost, the rapid fuelling produces heat which expands the hydrocarbons, thus taking up more space, and resulting in a capacity loss of approximately 5%, leaving total range for a CNG vehicle with saddle tanks at about 450 miles of range. For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 34
  • 35. INDUSTRY OVERVIEW Figure 21 Sample CNG range calculation 90 DGE Storage Capacity – (9 DGE Unusable + 4.5 DGE Heat Expansion) = 76.5 DGE Useable Capacity Table 11 Weight diesel truck compared to CNG truck and LNG truck (full tanks in lbs) CNG 80 DGE LNG 75 DGE NG tank weight 1600 1200 Diesel tank weight (75 gallon) 665 665 SCR System and DEF weight 458 458 Net additional NG weight 477 77 Less 76.5 DGE Useable Capacity * 6 Miles Per Gallon Fuel Economy = 459 Miles of Range Source: Love’s Travel Stops, August 3, 2013 presentation Source: Love’s Travel Stops, August 3, 2013 presentation CNG fuel systems are currently available with up to 150 DGE capacity that yield over 750 miles of range. * Note, however, that trucks that use HPDI technology, such as the Westport 15 Liter Engine, are compression ignited and require an SCR system under current emissions standards. LNG has a fuel system design which allows a truck to use one hundred 100% of all fuel capacity, usually 75 DGE for a single tank or one 150 DGE for dual saddle tanks. Using the same fuel economy calculations as for CNG above, LNG vehicles can achieve a range of up to 900 miles. Payback: Bottom Line When all these factors are carefully considered-and once again, emphasising that all necessary costs for any infrastructural construction are left to chapter 4 to discuss, payback for fleet conversion, assuming 125,000 miles driven annually, can be fewer Truck Weight The additional weight differential for an NGV truck is than 2 years for CNG vehicles using a Cummins/ often overstated since it considers only the additional Westport 11.9 liter engine, and just over 6 years for an equivalent LNG rig. These calculations do weight of needed storage tanks and mounting not consider possible state subsidies, which are brackets, without subtracting the weight of parallel components required by diesel trucks, or the weight summarised in the next section. advantage of CNG itself compared to an equivalent The preceding analysis is based on calculations done energy output of diesel. An aluminium diesel tank by Love’s Travel Stores, but others have made similar with mounting kit can weigh between 100 and 200 calculations—on slightly different assumptions. pounds. Also, depending on API gravity, diesel fuel can weigh between 6.95 and 7.05 pounds per gallon versus a natural gas DGE at 6.50 pounds per gallon, giving NG a weight advantage of .50 pounds per gallon. Neither do spark ignited NG engines require SCR systems or a DEF tank. For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 35
  • 36. INDUSTRY OVERVIEW Diesel to NG Price Spread For Economic Payback Figure 22 Calculation of Heavy-duty truck payback, based on various fuel price and truck premium assumptions $2.50 High fuel price differential $2.00 Lower cost NGV options (as volume grows) $1.50 $1.00 $0.50 $0.00 $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 NG Truck Price Premium 2 yr Payback 4 yr Payback Source: Paul Armstrong, GTI Director of Business Development, to Guild of Gas Managers, April 3, 2012. http://www.northeastgas.org/ pdf/p_armstrong_gti_040412.pdf Gemini, Love’s private truck fleet that hauls fuel to its 300 retail locations in 39 states has opted to purchase 50 Freightliner 400 HP trucks equipped with the Cummins Westport ISX G 11.9 liter engine. Robert Transport, a Canadian long-distance trucking firm has opted to begin converting to LNG, using Westport 15 Liter HPDI engines in Peterbilt and Kenworth Trucks, driven by price, energy security, and emissions concerns. 3.6 State subsidies for heavy-duty fleet conversion The DoE’s AFDC is the best source for current subsidies for heavy-duty fleets. http://www.afdc. energy.gov/laws/matrix/tech. For more information visit www.ngvevent.com As of September 2013, Cummins-Westport has summarized some of the principal incentives available for heavy-duty vehicles in Canada and the US in a more user-friendly framework. NGV INDUSTRY OVERVIEW | 36
  • 37. INDUSTRY OVERVIEW Figure 23 Heavy-duty incentives, Canada and US (as of August 2013) QUEBEC BRITISH COLUMBIA FORTIS Natural Gas for Transport (NGT) Incentive Program for LNG • Covers up to 70% of incremental • LNG only:HD Class 8 (11,793kg +) MD Vocational (incl. waste, transit, marine) COLORADO Alternative Fuel Income Tax Credit Accelerated Capital Cost Allowance • 35% tax creditcapped at $6,000 for vehicles under 26,000lbs • 60% depreciation for LNG trucks • CNG and bi-fuel WEST VIRGINIA • Until 2016 • AFV Tax credit of 35% FORTIS Light Duty Vehicle Incentive Program • $7500 < 26,000lbs • Bi-fuel WiNG 250-550 eligible up to $10,000 per vehicle • Dedicated or bi fuel CNG/LNG • $25,000 > 26,000lbs • No close date OKLAHOMA • One-time income tax credit for 50% of the incremental costs CALIFORNIA • Until Sept. 10, 2013 SJVAD Drive Clean Rebate Program NORTH CAROLINA • Rebate up to $3,000 • Reimbursement program, up to 80% of incremental costs • BAF products on eligibility list • Ongoing • Until Sept. 10, 2013 TEXAS H-GAC Clean Vehicles Grant Program ARKANSAS • $20 - $40,000 for HD • CNG/ LNG/ bi-fuel • Open until funds exhaust New Existing LOUISIANA • 50% rebates for CNG and LNG conversions, up to $4500 • Income tax credit up to 50% of the incremental cost up to $3,000 • Dedicated CNG/LNG only Source: http://www.cumminswestport.com/pdfs/general/Aug%20-%20Sept%202013%20NA%20On-Road%20Incentives.pdf 3.7 Conclusion Manufacturers have stepped up their offerings of NGVs, across vehicle classes, especially in the heavyduty truck sector, where customers are responding to the potential significant fuel costs savings. The value proposition for passenger cars is less certain, outside certain regions already well-served by adequate fuelling infrastructure, in the absence of a home refuelling option. In the light-duty sector, the value proposition is also at present somewhat For more information visit www.ngvevent.com ambiguous, but should improve, once technological improvements and economies of scale drive the premiums for NGVs downward. At the moment, many of the NGVs on offer are not fully configured by the OEM, but involce conversion elements. Costs should fall when OEMs commit to fully configuring NGVS themselves, rather than relying on outsourcing and conversions. NGV INDUSTRY OVERVIEW | 37
  • 38. INDUSTRY OVERVIEW Chapter 4: Building Dedicated Fuelling Infrastructure, CNG and LNG 4.1 Introduction Infrastructural considerations continue to loom large in decisions to convert all or part of a fleet’s vehicles to NGV, and with the increasing availability of various types of NGVs, are the largest consideration in fleet conversion decisions. Although more infrastructure, both CNG and LNG, is continually coming on-line, as described in (sections 1.3 and 1.4 above), at present, fleets located in most regions — with the exception of California, New York, Oklahoma, Texas, and Utah — still need to construct or secure access to independent fuelling infrastructure, as existing public access infrastructure alone cannot support fleet range needs. Companies have sometimes found that they may enter into access arrangements with other companies or utilities that have already constructed their own NG infrastructure. Yet the time is coming when more fleets will be able to rely on either public networks, or arrangements negotiated with other private stations, for either CNG or LNG refuelling needs. Development of CNG infrastructure to date has been largely locally or regionally concentrated— although major initiatives announced by Trillium and Love’s Travel Stops are somewhat shifting this pattern. Separate initiatives are also underway, announced by Clean Energy, ENN/ Blu LNG, and Shell, to connect up these regional CNG hubs, via long-distance orientated LNG or LCNG fuelling networks. a much more complex liquefaction process, involving compression and a multistage heat exchanger either using liquid nitrogen or newer methods involving methane, at significantly greater cost than applies to CNG. Pipeline compared to trucking CNG is transported to a retail location via an existing NG pipeline. Although significant variations exist in delivered costs— due to existing load on the pipeline, and distance from NG sources of supply-- delivery via a NG pipeline remains the cheapest available method of NG transportation. LNG, by contrast, is delivered via a tanker truck, and the length of such hauls is typically two to five times that of a traditional diesel haul. To be sure, the construction of additional liquefaction plants can reduce the average length of such hauls, but this construction comes at a cost, as the average capital costs of new liquefaction facilities currently exceeds a minimum of 150,000,000 dollars (although development of simpler and modular solutions, such as GE’s LNG in A Box system, and Micro LNG facilities, are reducing such capital and operational costs). Differential tax treatment CNG currently enjoys three significant cost benefits compared to LNG. CNG and LNG are taxed differently, and CNG is currently taxed more favourably, based on energy content sold, per DGE. LNG is taxed on the basis of an LNG gallon (as discussed more fully in section 2.2 above). The net result is a $0.15-$0.25 cost advantage for CNG. This cost differential should be taken into account when choosing between CNG and LNG, yet since this cost difference is caused by government policy, it could more easily be erased than the previous two cost differentials. Compression compared to liquefaction Total cost differential 4.2 Basic cost considerations, CNG compared to LNG CNG uses multistage compressors, which take NG at pipeline pressure and condense it to volumes. LNG also takes NG off a pipeline at line pressure, but uses For more information visit www.ngvevent.com The net result of these cost differences is that CNG is roughly $2.00 cheaper than diesel, for energy equivalent amounts, while LNG is $1.00 cheaper. NGV INDUSTRY OVERVIEW | 38
  • 39. INDUSTRY OVERVIEW For some applications—passenger vehicles, cargo 4.3 Design, planning, and siting vans, and light-duty trucks— CNG is the only option of CNG fuelling stations available. Fuel cost differentials, however, are only one consideration in deciding whether to opt for CNG or Many considerations go into design, planning, and LNG in applications where both are viable, such as siting of CNG stations. These considerations differ heavy-duty trucks and marine applications. for different types of companies that are considering building a CNG station. There is no such thing as a Table 12 CNG to LNG compared one-size-fits-all, standard CNG station model. The cost of such stations can vary greatly, and needs to be CNG LNG carefully designed to suit its intended purposes. Stored in high-pressure Stored in vacuum tanks, at cylinders, typically at 30003600 psi stations and on vehicles Same methane as in NG pipelines; emerging sources in landfills Methane cryogenically frozen, to temperatures lower than -200 F Lowest price (wheel to well), but require access to NG pipeline; increased NG demands may lead to pipeline expansion to eliminate bottlenecks Price higher due to cost of freezing, need to transport via truck, and differential tax treatment CNG will always be cheaper LNG can be turned into than LCNG LCNG, but not vice versa Not tied to a manufacturing Fewer supply options can lead to attempted price facility or on-road manipulation logistics, so multiple suppliers should maximize competition Heaviest fuel Heavier than diesel, lighter than CNG Multiple tanks required to carry fuel supply Better range and fuel economy About a 5% efficiency loss results when filling at rates greater than 10 GGE per minute, since the rapid fuelling produces heat which expands the hydrocarbons taking up more space (although no fuel is lost) LNG vents to atmosphere as it warms in storage tanks, creating an efficiency loss CNG is non-toxic, requires no personal protective equipment, does not require spill containment, and has no evaporative issues LNG raises safety concerns, and zoning regulations restrict where facilities can be sited, particularly in urban areas Currently more popular for vehicles following local and regional ranges, and is reflected in structure of CNG fuelling network Build-out of better fuelling infrastructure may increase attractiveness for long-haul trucking For more information visit www.ngvevent.com Generally speaking, three types of companies have either constructed or have on the drawing board planned CNG fuelling networks: • producers or utilities, including Sempra Utilities, Apache Corporation, and Trillium (which have also often adopted CNG for their own fleets); • fleets, comprising a wide range of users, which have different siting considerations, depending on the patterns of truck usage, and how often they return to base; some representative companies include waste management firms (Waste Management, Emterra) and trucking companies (Dillon Transport and Ryder); and delivery companies (UPS, FedEx). • convenience stores and truck stops, which are generally adding CNG (or as described below LNG or LCNG) to existing product offerings; companies include Kwik Trip, Love’s Travel Stops; these companies are also opting for CNG vehicles for their own fleets. Filling times Using current technologies, neither CNG nor LNG fills at the speed of diesel. Typically, CNG fill times have averaged no more than five DGEs per minute, with NG flowing from on-site storage tanks to the dispenser. Yet Trillium’s technology, for example, can fill at speeds of up to 12 GGE per minute. Faster fuelling, however, increases costs: in general, the faster the fill, the more expensive the cost. Slowfill posts cost less, and in general, do not require large, expensive compressors to configure adequately. Many fleets that cover a limited range — such as California’s Sempra Utilities—find the most costeffective way to construct stations is to rely slow NGV INDUSTRY OVERVIEW | 39
  • 40. INDUSTRY OVERVIEW fill posts, which can fill a vehicle overnight when it returns to base; Canada’s waste hauler Emterra has adopted a similar strategy. Another advantage of slow-fill overnight is that an operator does not need to take time out of the day to refill a vehicle. Relying on the slow-fill option does not mean eschewing some fast-fill capacity in station design, as some such capacity is usually necessary, especially for larger fleets. Truck stops and some convenience stores are designing systems around such high-speed fuelling capacity to create a filling experience that resembles that of conventional petroleum-based fuels. Love’s Travel Stops, for example, which is constructing CNG fuelling facilities to serve commercial markets, aims to make it possible for a truck to perform all necessary functions and exit within ten minutes, regardless of whether it enters a diesel or CNG lane. Love’s employs newer technologies specifically designed for trucks with larger tank capacities that require faster fill times. Direct fill applications have been engineered for heavy-duty fill application without having to use on site CNG storage tanks, and can achieve fill rates of 12 DGEs. Public or private access, or hybrids In designing stations, companies need to consider the expected load on a station. Some companies such as Waste Management and many of the utilities are generally committed to constructing public access stations. ikewise (and somewhat obviously), that is L also the model for convenience stores and truck stops. Whichever model is followed, companies often seek to sign up an anchor tenant before committing to station construction, as this provides a way to recoup their upfront capital expenditures. Sizing Stations take time to come on-board, whereas purchasing vehicles can be done quickly and at relatively lower cost. Companies should therefore err on the side of initially overbuilding fuelling infrastructure, particularly if they service remote locations, so there is sufficient capacity to accommodate expanded CNG fleets. If, for example, a company purchases ten CNG vehicles upfront, but expects to have 50 CNG vehicles in service within 5 years, it should construct facilities with that higher target number in mind. CNG source compared to demand Site design Optimal equipment configuration is only one component of site design. Companies must also consider the size of vehicles that will use its station, their turning radius, typical vehicle capacity, and location of exits and entrances. System redundancy The degree of necessary system redundancy is a major cost consideration. Utah state utility Questar—a pioneer in CNG infrastructure, due to the state’s ownership of its own natural gas supplies— has followed a simple standardization model, building facilities at minimal cost. Questar eschews installing a back-up compressor on-site for each of its stations, preferring to rely on a mobile compressor that can be moved into place if a station’s compressor is not working. Emterra, which recently constructed the largest CNG fuelling facility in Canada, opted to include two compressors in its site design. Even more important than having two compressors is setting up alternative fuelling sites. For more information visit www.ngvevent.com In designing its projected long-distance CNG fuelling network, Trillium has carefully compared potential source—e.g., location on existing pipeline networks— to projected demand—e.g., current trucking volumes (see the discussion in section 1.4 and the associated figures therein). Emterra, Canada’s largest waste hauler with operations that also extend to Michigan and a fleet of 400 vehicles, has launched the largest CNG filling station in Canada, to serve about 60 vehicles—making it the largest user of CNG trucks for waste haulage applications globally. The station is configured to include 65 time fill posts, which it expects to expand to 80 posts. The entire CNG fleet can be filled via slow fill posts in 7 hours, and the station also includes fast-fill capacity to fill a truck in 10 minutes. The station has two compressors on site. NGV INDUSTRY OVERVIEW | 40
  • 41. INDUSTRY OVERVIEW In constructing its planned network of stations, Trillium considers three factors: good customer thoroughfare, secured by a base or anchor tenant; good accessibility to high traffic corridors that will eventually draw more customers; and pipeline access. Working with pipeline transmission systems and utilities, Trillium identifies where the pipelines are, and cross-references this information by customer demand points, to decide where to site stations. Trillium avoids building stations on speculation because that locks up capital, and instead looks to lock up a base or anchor tenant before it commits capital to a station, and to commit the tenant to a take or pay contract over a specific term. In performing a pro forma cost estimate, the company looks carefully at the load promised by the anchor tenant, prospective public demand (which is assumed will grow from a baseline, rather than shrink), and if it meets certain thresholds, Trillium proceeds with the station. Although no company is in the business of building stations it thinks will lose money, sometimes, it is necessary to build stations so as to avoid a CNG desert. Modular solutions: CNG in a Box™ In partnership with Chesapeake Energy Corporation, GE developed and is marketing a proprietary CNG In A Box™ technology, a plug and play unit that NG from the existing pipeline network and compresses it onsite. The fuel dispensers are similar to those currently used for diesel or gasoline fuelling, and provide the end user with fuelling times of about 7 GGEs per minute. The CNG In A Box™ units provide a quicker path to a more robust NG infrastructural market, and other companies may elect to market similar products. ne advantage of modular systems O is that they are mobile, making initial siting decisions less crucial than they might be for fixed infrastructure. They may be maintained remotely, and breakage is not a major issue. Some other manufacturers are developing similar systems, but the lowest initial bid is not necessarily the cheapest comprehensive longterm solution. Figure 24 GE CNG in a Box The CNG The CNG In A Box™ design Box™ design allows for easier easier allows gas compression, gas compression, storage, cooling, storage, cooling, drying, and drying, and cooling; the cooling; the system’s controls system’s controls are easy to ship are easy to ship and maintain. and maintain. Units come Units come in two in two configurations: configurations: an 8 foot x 20 x 20 an 8 foot container foot container or an 8 foot x 40 or an foot x 40 foot container. foot container. For more information visit www.ngvevent.com The system is The systemis designed to be designed to be modular and modular and intuitive,and intuitive, and plug and play plug and play on-site. on-site. The system system can include GE include GE Wayne branded Wayne branded dispensers dispensers with credit card credit card capabilityand capability and provisionfor provision for point of sale point of sale interface. interface Fuel is dispensed Fuel is dispensed at a rate of rate of approximately 7 approximately 7 GGEs per minute. GGEs per minute. NGV INDUSTRY OVERVIEW | 41
  • 42. INDUSTRY OVERVIEW Overall cost estimates for CNG stations Cost estimates for CNG stations vary widely, depending on station’s configuration. Excluding land, costs can range from $100,000 to $1.5 million. A small station with only a few slow-fill posts can cost as little as $100,000 to configure, excluding land and site preparation, and could support a fleet of a dozen pickup trucks, for example. Fast-fill stations pumping 1000 GGE could cost upwards of 1 million. The trade-off is usually between compression and storage. Storage is less expensive, but requires more space, whereas compression is noisy, but takes less space. Optimal configurations may therefore vary, depending on land costs, and noise restrictions. There is no one-sizefits all model for CNG stations, and companies need to consider carefully their fuelling needs, as well as existing and projected fuelling network development in the areas their fleets cover, in deciding what, if any, infrastructural investments are necessary. 4.4 Design, planning, and siting of LNG fuelling stations The process of designing, planning, and siting LNG facilities differs from CNG siting, in that LNG facilities need to be located with an eye to existing or planned liquefaction facilities. CNG thus far has had an advantage, because it is easier to select a site, and the existing pipeline distribution system is already built. Traditional large LNG liquefaction facilities are custom facilities, and are project based. They require huge upfront capital outlays, and can take up to 72 months to be operational. As discussed in section 1.5 above, crucial to LNG rollout is increasing geographic access For more information visit www.ngvevent.com to its supply, which is occurring in part developing small and midscale LNG liquefaction infrastructure. Gas producers, suppliers, utilities, and public companies are planning and building new facilities (see figure 15 above). The aggressive timetables set for nationwide LNG networks, by Clean Energy, Shell, and Blu LNG/ENN, do not allow for such extensive lead times. Instead, led by GE, LNG for many transportation applications is moving toward smaller facilities, with 6-24 month lead times, and reduced capital and operational expenditure requirements. These solutions are modular and simplified, and focus on product rather than project. Modular solutions: GE’s LNG in a Box™ As with CNG, GE has worked to develop modular and streamlined solutions that can reduce the potential costs of planned LNG facilities. With a capacity of 10,000-50,00 gallons per day of fuelling capacity, this system is deigned to be used for fuelling stations that cater to heavy-duty trucks, and can include waste haulers, long-distance trucking applications, and remote industrial applications. The inlet gas for this system comes from a pipeline—so that this LNG solution gets the benefits associated with pulling gas off a pipeline, and reducing trucking costs. Being pipeline-dependent imposes costs as well. As with the parallel CNG in a Box™ system the modular nature of LNG in a Box™ reduces the importance of initial siting decisions. The lead-time for such a facility is 6-12 months. NGV INDUSTRY OVERVIEW | 42
  • 43. INDUSTRY OVERVIEW Figure 25 GE LNG in a Box™ Performance: • 10,000-50,000 gallons per day LNG production • Inlet gas: Pipeline • Gas recovery: 80-82% • Specific power 1.4 kWh/gal (1.3MJ/liter) Features • Modular, rapidly (re)deployable design • Simple methane cycle • Minimal pad prep & quick installation • 6-12 month lead time • Highly automated operation • Gas engine option available • Equipment financing available Source: http://www.gastechnology.org/Training/Documents/LNG17-proceedings/Transport-18-Ujjwal-Kumar-Presentation.pdf Micro LNG Micro LNG facilities, also pioneered by GE, are capable the systems is designed for use in heavy-duty trucking of producing 100,000-300,000 gallons per day. They hubs, and they require a 12-15 month lead-time to be too source inlet gas from a pipeline. The capacity of operational. Figure 26 Micro LNG Performance: • 100,000-300,000 gallons per day LNG production • Inlet gas: Pipeline Features • Methane based system with boil off recovery • 8% improved power efficiency • 40% reduced wasted methane • Scalable design w/ multiple standard packages for rapid deployment • • Factory tested skids • Plug & play, light civil work • Targeting 12-15 month lead time • • • • • Source: http://www.gastechnology.org/Training/Documents/LNG17-proceedings/Transport-18-Ujjwal-Kumar-Presentation.pdf For more information visit www.ngvevent.com NGV INDUSTRY OVERVIEW | 43
  • 44. INDUSTRY OVERVIEW Overall cost estimates for LNG stations Costs of LNG stations currently range from $500,000$750,000 for private stations, to public facilities that may cost between $1.5 - $2 million. For more information visit www.ngvevent.com 4.5 Conclusion The future of NG infrastructure in the United States will combine a network of CNG, LNG, and LCNG stations. n deciding whether to opt for CNG of LNG, I managers need to consider what is better for their fleets. This depends on where the fleet will operate, and what its range needs are. This chapter has discussed various considerations that determine whether CNG or LNG makes most sense for a fleet, as well as what considerations should go into a company’s decision to construct fuelling stations— whether CNG, or LNG. NGV INDUSTRY OVERVIEW | 44