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NGV Fleet Market Potential? Possibly 2 Tcf/Year

Long-haul trucking fleets are increasingly turning to liquefied natural gas (LNG) as a fuel, and with the upcoming availability of larger engines next year, the U.S. market could eventually reach more than 2 Tcf annually, according to one industry advocate. ExxonMobil Corp. and others, however, aren't so sure.

Noting that in the past four years the penetration of LNG among trash hauling trucks has jumped from fractions to more than 60% of new trucks being ordered, Clean Energy Fuels Corp. CEO Andrew Littlefair said he thinks there will be the same steep increase in the adoption rate for the larger-engine LNG tractor-trailer trucks expected to come into the market.

He has some coin in that proposition because it's what his business is all about.

"If we're really saving these people $1.50/gal, which we are, and the engines work the way we think they will, I think we're going to need 5-6 billion gallons of LNG [annually] in the next six or seven years," Littlefair said. "In that case we're going to need dozens and dozens of LNG production plants," he said of the natural gas vehicle (NGV) fueling space."

Last Tuesday a GE Corp. unit and Clean Energy partnered to develop two LNG production/storage facilities to help fuel a proposed national network for fueling long-haul trucking fleets with LNG. The companies plan to build two liquefaction facilities, one in the upper Midwest and another in the Northeast, to serve LNG fueling stations in those regions. The facilities are expected to be operational by 2015, said GE's Mike Hosford, who manages unconventional resources for the oil and natural gas business unit.

"The economic savings by switching to natural gas is very compelling," Hosford said.

In the GE pact, the first two LNG production facilities, each ultimately with 1 million gal/d capacity, are expected to lead to the development of others by the partners. Hosford said there could be as many as 10 facilities developed around the nation. GE's technology provides modular units designed to rapidly liquefy gas while minimizing a site's physical footprint.

Vehicle manufacturers are backing the long-haul truck market because its potential is 10-15 times greater than the public transit markets, Littlefair said.

"Each of those two markets are 2 billion gallon [annual] markets; this market [in long-haul trucks] is a 30 billion gallon annual market. Today every original equipment manufacturer [OEM] with a heavy duty product has either announced an NGV product or already has one. The OEMs have bought into this, and they understand it and see it, and one of the reasons is their customers are now asking for it."

Clean Energy has 150 nondisclosure agreements with shippers that move goods in interstate commerce but don't necessarily have trucks, Littlefair said. Clean Energy has a goal to have more than 70 LNG fueling stations in place by the end of this year and ultimately 150 stations as part of its "America's Natural Gas Highway" (see NGI, Aug. 29, 2011).

"I think we have so much natural gas in the country that I believe if we are going to be energy independent by 2035, as some predict, then we are going to have to use an awful lot of natural gas in transportation, and I think that will be the case. I go back to the refuse hauling trucks.

"Waste Management Co. has announced that 90% of its purchases next year will be NGVs and Republic [Services] is right behind them at 65%. That tells you it is working, and we're seeing this in every state in the union."

The same thing will happen in long-haul trucking with a 30 billion gallon market, he said. "If every truck went to natural gas -- which won't happen -- that would represent a load of 4.2 Tcf annually. But if just a big piece of it eventually goes that way, say half, it would be 2.1 Tcf."

"The United States has seen some industrial adoption of NGVs particularly for fleet vehicles that can run on a central fueling station," according to TD Group. "But the high cost of switching and installing compressed natural gas [CNG] fueling stations are a big hurdle for wide-scale adoption." Even with continued low natural gas prices, "unless major investments are made in refueling infrastructure, it is likely [NGVs] will be limited to niche markets."

An ExxonMobil executive made similar comments last week (see related story). The "math is marginal at best" for natural gas-fueled cars, said Bill Colton.

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