Future of Natural Gas Markets: LNG & CNG

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  • Now to the economics. \n\nNatural gas costs, on average, one-third less than conventional gasoline at the pump. \n\nNGVs are proving to have lower operating and maintenance costs, generating significant vehicle life-cycle savings. Because natural gas burns so cleanly, it results in less wear and tear on the engine and extends the time between tune-ups and oil changes. Many fleets report 15-28% savings compared to diesel fleets.\n\nAnd right now with gasoline prices climbing again, the lower price of CNG becomes even more appealing. \n\nThese prices are from late-March at stations around the country.\n
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  • Future of Natural Gas Markets: LNG & CNG

    1. 1. The Future of Natural Gas:Expanding Markets - LNG, CNG Gifford Briggs Louisiana Oil & Gas Association
    2. 2. NORTH AMERICAN NATURAL GAS LANDSCAPE Years of Supply 125 3,000 Resource 110 102 RLI @ 65 Bcf/d (years) Reserves 92 2,500 100 85 75 2,000 75 1,500 50 1,000 25 500 0 0 07 09 06 09 11 20 20 20 20 20 EB EB EB EB EB N N /N /N /N A/ A/ C C C EI EI PG PG PG 2,600 Tcf of Total Resource 100+ Year Supply at 70 Bcf/d 70+ Year Supply at 100 Bcf/d
    3. 3. US & LOUISIANA TRANSPORTATION FUEL 0.2% 0.1% 24.0% Gasoline 34.4% Diesel Alternative Fuel 65.6% 75.8% U.S. Louisiana Gasoline – 140.6 Billion GGE Gasoline – 2.1 Billion GGE (65.6%) Diesel – 44.5 Billion GGE Diesel – 1.1 Billion GGE (27.9%) Alt. Fuels – .4 Billion GGE Alt. Fuels – .002 Billion GGE (0.1%) Equivalent to 376.7 Bcf or 1.03 BcfdEquivalent to 21.5 Tcf or 58.9 Bcfd
    4. 4. US TRANSPORTATION SECTOR Fuel Consumption by Market Segment45 69% Largest Opportunity40 42.4 Bcf/ d3530 Most Commercially Industry’s Early25 Ready Opportunity2015 18%10 10.8 Bcf/ d 5 5% 5% 2% (1.3 Bcf/d) 1% (0.7 Bcf/d) 3.2 Bcf/d 3.2 Bcf/d 0 Light Duty Heavy Duty Medium Duty Marine Rail Upstream
    5. 5. Natural Gas Value PropositionFour Core Value Proposition AreasEnvironmental Benefits Social BenefitsReduced GHG emissions (20-30%) Natural gas production related revenuesReduced associative emissions Royalties, taxes, job creation CO, SO2, NOX Natural gas fueling infrastructure revenuesLower engine noise Job creation, taxes, economic spin-offEconomic Benefits Energy Security BenefitsLower fuel price than diesel / gasoline Domestic energy sourceReduced maintenance costs Economic benefits through value chainTechnology is proven and improved Displaces foreign oilJurisdiction dependent grants / credits 49% US petroleum is imported 40% CDN petroleum is imported
    6. 6. Cost$per$GGE $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 4/1/00 7/1/0010/1/00 1/1/01 4/1/01 7/1/0110/1/01 1/1/02 4/1/02 7/1/0210/1/02 1/1/03 4/1/03 7/1/0310/1/03 1/1/04 4/1/04 7/1/0410/1/04 1/1/05 4/1/05 7/1/0510/1/05 1/1/06 4/1/06 7/1/0610/1/06 1/1/07 4/1/07 7/1/0710/1/07 1/1/08 4/1/08 7/1/0810/1/08 U.S.$Average$Retail$Fuel$Prices 1/1/09 4/1/09 7/1/0910/1/09 1/1/10 4/1/10 7/1/10 US AVERAGE RETAIL10/1/10 1/1/11 4/1/11 7/1/11 E85 B20 CNG Diesel Propane Gasoline B99/B100
    7. 7. On average, CNG costs 44% less than gasoline Seattle CNG - $1.72 Gas - $3.93 Bismarck CNG - $1.95 Gas - $3.84 Detroit CNG - $1.94San Francisco Gas - $4.04 CNG - $2.45 Gas - $4.19 New York Salt Lake City CNG - $2.60 CNG - $1.27 Gas - $3.99 Gas - $3.63 Los Angeles Wash., DC Denver CNG - $2.70 Nashville CNG - $2.40 CNG - $2.50 Gas - $4.31 CNG - $1.63 Gas - $3.88 Gas - $3.67 Little Rock Gas - $3.74 CNG - $1.60 Gas - $3.59 San Diego CNG - $2.90 Atlanta Gas - $3.97 CNG - $2.60 Gas - $3.89 Dallas CNG - $2.40 Gas - $3.59 Baton Rouge, LA Ft. Lauderdale CNG - $1.69 CNG - $2.19 Gas - $3.53 Gas - $3.83 Source: CNG prices captured in June 2011 by CNGPrices.comGas prices reflect city average on June 2, 2011 from GasBuddy.com
    8. 8. MARKET SEGMENTATION GREEN CITIESCNG •  Municipal government fleets, light duty and medium duty vehicles •  Commercial fleets and personal light and medium duty vehicles •  Airport and port authorities GREEN CORRIDORS •  Heavy duty vehicle freight and goods transportation •  Home base and mid-point fueling patterns •  Transient and varied fueling patternsLNG GREEN GAS OPERATIONS •  Drilling rigs and frac equipment •  Service company light duty vehicle fleets •  Field storage and fuel deployment solutions required GREEN COMMERCIAL •  Extra heavy duty “off-road” vehicles •  Rail, mining, marine, military, and construction services •  Heavy duty engine solutions required
    9. 9. VEHICLE EXAMPLES  Light Duty CNG   Medium to Heavy Duty CNG   Heavy Duty On Road LNG
    10. 10. WHY LOUISIANA• Leading natural gas producing state • Largest natural gas producing state in the U.S. • Fourth largest natural gas reserves in U.S. • Henry Hub which provides access to major markets throughout the country• Interstate corridors (I-10, I-20, I-49)• Expanding natural gas infrastructure along corridors
    11. 11. NATURAL GAS  I-75 – Interstate 75 Corridor  TT – Texas Triangle  RMC – Rocky Mountain Corridor  ICTC – Interstate Clean Transportation Corridor
    12. 12. 2011 Natural Gas Infrastructure Growth3.60% overall growth in U.S. year to date 200% 200% 14% 13% 20% 200% 16% 12% 50% 31% 26% 50% 80% 27% 50% 12%
    13. 13. Natural Gas Fueling in Louisiana 10 Existing CNG Stations 6 Public (Baton Rouge (3), Bossier City (2), Coushatta 4 Private (Baton Rouge (2), Chatham, Shreveport) 11 Planned CNG Stations Alexandria, Frierson, Haughton, Kenner, Lafayette (2), Mansfield, Shreveport (4)
    14. 14. SAMPLE PAYBACK Pickup Truck School Bus Refuse Truck Transit BusIncremental Cost $10,000 $36,000 $52,000 $50,000Incentives $5,000 $18,000 $26,000 $25,000Net Incremental $5,000 $18,000 $26,000 $25,000CostAnnual Mileage 25,000 20,000 20,000 40,000Annual Mileage Fuel 14 7.7 3.1 3.6Efficiency (mpg)Gallons of Fuel / 1,786 2,597 6,452 11,111YearPetroleum Fuel Cost $3.60 $3.99 $3.99 $3.99per GallonNatural Gas Cost per $2.11 $2.11 $2.11 $2.11GGEAnnual Fuel 2,611 4,883 12,129 20,889SavingsSimple Payback 1.88 3.69 1.20 1.04(years)
    15. 15. Light Duty Vehicles Honda Civic Natural Gas (NG) Chevrolet – Impala, Silverado, Tahoe, Malibu, Tahoe Ford – Focus, Fusion, F150, Milan, Transit Connect Dodge – RamMedium Duty Vehicles Chevrolet –W4500, C4500 / 5500, Express, Savana Ford – F250, F350, E450, F450, F550, F53 / F59 Transit Bus – Blue Bird, Thomas Built, El Dorado, Foton America, NABI, New Flyer, Orion, Motor Coach Industries Work Trucks – Workhorse, Sterling, International, MaxxForce Refuse – American LaFrance, Mack, AutoCar, Crane Carrier, Freightliner, Kenworth, McNeilus Street Sweeper – Elgin, Freightliner, SchwarzeHeavy Duty Vehicles Short-Haul – Freightliner, Kenworth, Peterbilt, Volvo Trucks N.A. Long-Haul – Kenworth, Peterbilt, Volvo Trucks N.A., International TranstarHeavy Duty Engine Manufacturers Cummins Westport 8.9L ISL G Westport 15L
    16. 16. Chevy Silverado GM Sierra April 2012 WestportWiNG-Powered Ford Truck March 2012 Dodge Ram 2500 2012
    17. 17. FUELMAKER 1 GGE/Hour $.67 / GGE $10,000
    18. 18. Louisiana’s First L/CNG Fueling Station Relay Station - Shreveport

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