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Apache to Double CNG Fleet, Offer Employee Incentives

Apache Corp. said Friday it expects to have a compressed natural gas (CNG) refueling station in service in two to three months to serve a fleet of 30 buses that carry passengers to and from Houston's Bush Intercontinental Airport.

The announcement came just two days after President Obama called for increased use of domestic natural gas, as well as publication of the U.S. Environmental Protection Agency's final rule that eases the way to convert vehicles to alternative fuels, including CNG (see Daily GPI, March 31a; March 31b). Ford Motor Co. also reported Wednesday that CNG vehicle demand is rising (see Daily GPI, April 1).

"At Apache, we are convinced that clean-burning natural gas must be a bigger part of the solution to America's ever increasing reliance on imported crude oil, while reducing pollution caused by other, more carbon-intensive fuels used in transportation and power generation," said CEO G. Steven Farris.

In North America Apache is a top natural gas producer, with a balanced portfolio of oil and gas assets concentrated in the Permian Basin, Canada and the Gulf of Mexico (GOM). At the end of 2010 Apache's estimated proved reserves were 56% natural gas and 44% crude oil and liquids.

Farris called the new CNG station at Houston's biggest airport a "win-win solution" that would lead to a better environment in Houston and more jobs. Apache's role is to build the station, which would be turned over to the city once construction is completed, Apache spokesman Bill Mintz told NGI. Clean Energy Fuels would be the station operator.

"CNG is a better way to move people and goods than our traditional petroleum fuels," Farris said. "In fact, at Apache we're doubling down on our use of CNG. This year we're going to double the size of our CNG-powered vehicle fleet and double the number of CNG stations we operate. To encourage further CNG use, we're also implementing an incentive program to encourage our employees to acquire CNG vehicles."

Apache's refueling station plans had been in the works for two years under a partnership with the Houston Airport System, New South Parking and Clean Energy Fuels, Mintz said.

"Apache approached the city about ways we could help expand the use of natural gas as a transportation fuel," Mintz said. The city-owned airport system "was exploring ways to increase its use of alternative fuels.

"This was a natural partnership because of all of the advantages of natural gas as a transportation fuel: gas is cleaner than gasoline or diesel, and it's domestic, abundant and about $2/gallon equivalent less expensive than diesel."

The airport refueling station, which is expected to cost Apache about $1.5 million to construct, would be used by the city's bus system to shuttle people to and from the city-owned economy parking lot, which is being relaunched as an "ecopark," Mintz said. "This shuttle fleet travels about 1.4 million miles per year. Fueling will take about the same amount of time it takes to fill the older buses with diesel.

"The station has enough capacity to meet additional demand if other shuttle operations adopt CNG as their alternative fuel of choice; there is also space to expand the facility if warranted."

At then end of 2010 Apache had converted 111 of its U.S. fleet vehicles to bi-fuel (CNG or gasoline) operation, Mintz said. "By year-end 2011 we plan to have a total of 231 fleet vehicles converted, about 26% of our U.S. fleet. Our target by year-end 2015 is to have over 80% of our U.S fleet vehicles powered by CNG."

According to Mintz, Apache pays about $10,000 to convert each of its fleet vehicles. "Our refueling stations have cost about $600,000 to $1.2 million, depending upon station design capacity and whether we needed to acquire land for the facility."

Apache's CNG stations today are used only to refuel its fleet vehicles. However, the company is planning to open "public-access stations in Houston, Lafayette [LA], Midland [TX] and Tulsa -- cities where Apache has a significant employee presence," he said.

To encourage its workforce to switch to alternative fuel vehicles, the Houston-based producer will offer an incentive program to its employees "in the near future," Mintz told NGI. "We plan to offer Apache-provided fuel and reimbursement of 50% of the incremental cost of the CNG-dedicated or converted vehicle, from either Apache or state tax incentives."

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