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Bring on the Natural Gas Vehicles

The House last Tuesday overwhelmingly approved legislation (HR 1622) that reauthorizes federal spending for research and development of natural gas vehicles (NGV) for five years, while across the U.S. the bandwagon is forming in support of transportation powered by a home-grown, plentiful and cheap fuel.

The bill, which cleared the House by 393-35, directs the secretary of the Department of Energy to conduct a five-year program of NGV research, development and demonstration (RD&D), and to coordinate with the NGV industry and the administrator of the Environmental Protection Agency (EPA) on streamlining the certification of natural gas conversion systems to satisfy federal certification requirements and in-use emission standards. It authorizes $30 million a year to be spent on NGV RD&D from fiscal years 2010 through 2014.

"I believe that natural gas must continue to play an important role in decreasing our dependence on foreign oil and leading America to greater energy security," said Rep. John Sullivan (R-OK), who sponsored the measure. The House action was just one of a series of events that have been piling on this year as word of the huge new supplies of natural gas available from shale begins to sink in.

Last week Sen. Lisa Murkowski of Alaska, the ranking Republican on the Senate Energy and Natural Resources Committee, added her name as co-sponsor to legislation that seeks to extend and expand federal tax credits for NGVs and refueling facilities (see NGI, July 13a). The Senate bill's other co-sponsors are Majority Leader Harry Reid (D-NV) and Sens. Robert Menendez (D-NJ) and Orrin Hatch (R-UT).

A resolution earlier this year by the Utah legislature urged the federal EPA to streamline its regulations for testing and certifying conversion kits, particularly for small-volume manufacturers. The conversion process itself is not difficult, but currently each vehicle converted must be individually tested and certified. EPA should allow small vehicle manufacturers to include vehicles and engines in a single engine category to improve the cost efficiency of emission testing of converted vehicles, the resolution stated.

Utah, one of the most advanced states in the use of NGVs, also has a law in place allowing the state public service commission to authorize a gas rate for NGVs that is below the actual cost of service, creating a subsidy by spreading the costs to other gas customers (see NGI, March 30). Gov. Jon Huntsman also is working on designating a major highway through the state as a natural gas corridor. In part because of the subsidized rate, Utah-based Questar Corp. currently operates 19 compressed natural gas (CNG) refueling stations in the state.

In Louisiana Gov. Bobby Jindal earlier this month signed into law legislation that will increase income tax credits and incentives for purchasers of CNG, liquefied natural gas (LNG) and other alternative fuel vehicles. The new law increases to as much as $3,000 an existing income tax credit for the purchase of qualified vehicles and increases from 20% to 50% an existing income tax credit for the purchase of equipment to convert gasoline-powered vehicles to CNG or other alternative fuels. The legislation also provides tax credits to companies that install equipment to fuel alternative fuel vehicles (see NGI, July 20).

A new law in Oklahoma extends for five years an existing tax credit to buyers of vehicles powered by CNG, LNG or electricity. The credit is equal to 50% of the cost of conversion of a vehicle to operate on a qualified fuel, as well as those originally equipped to do so. The legislation includes a tax credit for businesses seeking to build infrastructure to fuel the vehicles, along with a $2,500 tax credit for consumers installing home-fueling stations.

Another Oklahoma measure allows the state's Department of Central Services to provide alternative fuel vehicle fleet services to schools and county and municipal governments, and provide public access to alternative fueling infrastructure in underserved areas. Loans of up to $300,000 from a state fleet management fund will be available for construction of alternative fueling stations. The legislation also replaces the state's use of California Air Resources Board emission limits with emissions standards put in place by the federal EPA, a change designed to make conversions easier and less cost-prohibitive.

Earlier this month the state of Colorado said it was seeking $10 million in federal money to expand the use of NGVs in industries such as waste disposal and public transit, Gov. Bill Ritter said. The state's project would be linked with efforts in other states to promote natural gas as a vehicle fuel (see NGI, July 13b).

NGVs also have gained some ground in the marketplace. EnCana Corp. has said it is purchasing seven natural gas-fueled passenger cars, the Honda Civic GX, for employee use in its U.S. operations. The company also has started conversion of 14 fleet trucks, four F-250 Fords and 10 Chevy pickups, to bi-fuel, both natural gas and gasoline. The company hopes to complete the conversions over the next eight months. These would be used in the Rockies and Texas and Louisiana.

In Canada EnCana has plans to convert up to 50 trucks in southern Alberta shallow gas operations and 25 trucks in northern Alberta oil operating areas by mid-2010.

"In all these areas and in addition to the few public stations that already exist, we are looking to install refuelling facilities either for our own use or in partnership with other operators in the areas, including those that would have public access," said EnCana spokesman Alan Boras.

"Fundamentally this all stems from the development of a plentiful, abundant supply of natural gas from unconventional sources, the high-volume shale plays," Boras said. He reckons the cost at the equivalent of $50/bbl of oil, and while there also will be infrastructure costs, NGVs make "obvious good sense" as fleet vehicles that return to a central point for refueling. Add in the security and balance of payments savings from substituting a home-grown product for overseas imports, and what's not to like?

In June Mack Trucks, Inc. announced the availability of natural gas-powered engines for refuse applications. Mack officials said they have seen a growing number of municipalities mandate alternative fuel vehicles as a condition of contracts with refuse haulers. Mack will be using heavy-duty natural gas engines supplied by Cummins Westport. The nine-liter Cummins Westport ISL G is rated at 320 hp, can use CNG or LNG, and has a three-way catalytic converter to meet EPA 2010 emissions standards. Already 20 CNG-powered units are on order and are scheduled to go into service in the Chicago area by the end of the year.

Vancouver-based Cummins Westport Inc. also announced in June that Daimler Trucks North America will offer its ISL G natural gas engine in the Freightliner Business Class® M2 112 truck in a total of six LNG and CNG tractor/truck configurations. The first rollout was an LNG tractor for port and regional haul applications. Later this year, a CNG version of the tractor is expected to be offered, followed by CNG single-axle tractor, 4X2 and 6X2 truck, and vocational configurations. It is expected that the entire Daimler Freightliner natural gas offering with configuration options for more than 90% of truck applications in North America will be available by the end of 2010.

There currently are five million NGVs on the road worldwide. Argentina is the world's leader with more than 1.5 million NGVs (20% of all Argentine vehicles), and is followed by Brazil and Pakistan, each with more than one million NGVs on their roads. China, India, Iran and Germany are other fast-growing NGV markets, according to NGVAmerica, a Washington, DC-based group that represents companies interested in promoting natural gas and biomethane as transportation fuels.

The United States is far behind. It has only about 120,000 NGVs on the road, the Energy Information Administration said. NGVs in the United States currently are displacing the equivalent of 200 million gallons of petroleum annually -- the majority of which is consumed in high-fuel-use urban fleet vehicles, such as transit and school buses, trash trucks and urban delivery vehicles (shuttle and airport vehicles), NGVAmerica said. But with proper government support by 2017, it believes this could grow to 10 billion gallons per year.

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