The GAIN Clean Fuel Experience
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Presented by Bryan Nudelbacher, U.S. Venture, and Joe Veriha, Veriha Trucking, on October 18, 2012 at the Wisconsin Clean Cities Odyssey Day event hosted by GAIN Clean Fuel.
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The GAIN Clean Fuel Experience
- 1. The Journey to CNG 1
- 2. AGENDA • Introductions and Background •CNG From the Eyes of a Fleet Owner • CNG Economics from a Fleet Owner • The Importance of Partnering with GAIN/U.S. Oil • Next Steps for GAIN/U.S. Oil Marinette, WI – Opened August, 2012 2
- 3. Why Natural Gas? Large American manufacturing companies are already pursuing natural gas for their transportation needs… Why? Secure Economic Benefit: 30% - 60% fuel cost savings on a DGE basis Achieve Sustainability Goals: Significant reductions in Greenhouse Gas Emissions and noise levels Take Advantage of North American Fuel: Plentiful domestic supply Reduced price volatility 3
- 4. CNG From the Eyes of a Fleet Owner Current Landscape of the Trucking Industry Why Veriha Trucking Pursued CNG? Economics: The Spread between ULSD & CNG MPG is Crucial High Utilization of Trucks is Key 4
- 5. Cost of a Diesel Gallon Equivalent (DGE) CNG DIESEL NYMEX Commodity $0.48 $3.19 Delivery/Refining $0.20 $0.21 Taxes – Fed & State $0.43 $0.57 Station – Cost & Margin $0.15 $0.15 Station – O&M $0.40 $0.00 Station – Capital $0.46 $0.00 TOTAL DGE PRICE $2.12 $4.12 % of Base Commodity 23% 77% 5
- 6. Financial Perspective CNG DIESEL Cost of New Truck $150,000 $110,000 Annual Miles 120,000 120,000 Miles Per Gallon 5.0 6.5 Fuel Cost/Gallon $2.12 $4.12 Annual Fuel Expense $51,000 $76,000 NET FUEL SAVINGS $25,000 6
- 7. The Partnership: GAIN Clean Fuel & Veriha Trucking “People who work together will win, whether it be against complex football defenses, or the problems of modern society.” – Vince Lombardi Large Infrastructure Expense Over $1MM per site – The economics allow everyone to win, we must make it happen. The Change is Significant: Shippers & Haulers Mechanics & Drivers Accountants & Lawyers 7
- 8. The GAIN Advantage Program We will install turn-key CNG fueling sites, strategically located for your business, covering 100% of the expense, allowing you to save risk-free from day 1. • 30% – 60% reduction in fuel expense • Labor savings with strategic location of fueling sites • Domestic fuel source creates less volatility • Pricing options – Fixed or Diesel-Minus • Redundant design • 24/7support • Continuous support to ensure results 8
- 9. The GAIN Clean Fuel Network
- 10. Thank You! Bryan Nudelbacher Business Development Manager GAIN Clean Fuel [P] 920.243.5856 [E] bnudelbacher@usoil.com Joe Veriha Owner Veriha Trucking, Inc. [P] 715.732.4431 [E] jveriha@veriha.com 10
- 11. Those who are on the forefront will win! The Transition is Easy; With the Right Partner 11
Editor's Notes
- Most everyone knows about these 3 top reasonsWhy NG now? The 3rd point is the game-changer – domestic supply has created an environment where there’s no going backbut to understand better, let’s look at the details of 1 gallon…next slide
- CNG Practicality from a Fleet Owner:Briefly explain the current landscape of the trucking industry…How has your business handled the recessionary economy? Why JVT pursued CNG?Needed to do something as fuel is the number one operating expense. The savings was immense!Talk about the spread between diesel fuel and CNG and where you think the Break Even Point is.Fleet Experience Drivers have easily adapted to the new trucks and fuelNo possibility for diesel spills Fill Time was crucialUS Oil/GAIN dispenses at 8 – 10 gallons/minute US Oil/GAIN handles all fuel transactions in house
- Far less volatility given commodity is small % of total.
- Economics from the Fleet Owner:Give a high level explanation on the economics used in making your decision.At 6.5mpg on diesel and 5mpg on CNG and a $2.00/gallon spread, the fuel savings alone is $0.22/mileAssumed 2,500 miles/week or 125,000 miles/year Cost Difference of Truck: Diesel = $110,000 CNG = $150,000 ($165,000 with Extra Tank)
- This is a significant project, with many stakeholders – you need solid partners…Having a Strategic Partner is KeyWhy did JVT choose to partner with US Oil? Trading and fuel supply expertiseUnderstanding of market structure of ULSD and Natural GasAbility to lock in fuel cost – Guaranteed savings per mileProject Management experience with US Petroleum Equipment Division
- Next steps – continue to offer more of the same.
- 3 year strategic plan – minimum of 30 sites
- Next Steps: Understand your business to provide a formal quote detailing savings. Fleet details (trucks, gallons, logistics/timing), current infrastructure, ideal pricing methods, other businesses nearby.In General: We’re looking for 400k gallons/yr + to offer $2.00/gal
- Huge savings available - either tremendous competitive advantage, or you’ll wonder why you’re losing…