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Encana to Fuel Largest LNG Transport Fleet in North America

A subsidiary of natural gas giant Encana Corp. agreed Tuesday to be the sole fuel supplier to a California-based water company that will use trucks powered with liquefied natural gas (LNG) initially to service Haynesville Shale producers.

Encana Natural Gas Inc.'s new mobile LNG fueling stations would be used to fuel a heavy-duty truck fleet owned by Heckmann Water Resources (HWR), a Heckmann Corp. subsidiary. With the transaction Heckmann would become the largest LNG fleet operator in North America, said Encana.

"This initiative is a major step toward encouraging many companies servicing the energy industry to convert vehicles to run on affordable, environmentally responsible LNG or compressed natural gas (CNG)," said Encana Corp.'s Eric Marsh, senior vice president of the USA Division.

"Due to sweeping technological breakthroughs, North American natural gas provides an abundant, affordable fuel alternative at a cost that is 20-40% lower than gasoline or diesel in many regions," he said. "As part of the emerging transportation switch to natural gas, we are converting a large number of the more than 1,300 trucks and passenger vehicles in our own fleet to run on CNG."

On Tuesday the gas industry-led Marcellus Shale Coalition proposed to expand the natural gas infrastructure across Pennsylvania, which it said could increase gas demand by as much as 5.4 Bcf over the next 10 years (see related story). The proposal follows several recent moves by industry players, including gas giant Apache Corp., that want to use North America's ample gas resources in the transportation industry (see Daily GPI, April 4). Chesapeake Energy Corp. also said Tuesday it planned to convert its entire corporate fleet of 4,200 vehicles to CNG by 2014.

The announcements come just a week after President Obama called for increased use of domestic natural gas, as well as a final rule by the U.S. Environmental Protection Agency that would ease the way to convert vehicles to alternative fuels, including CNG (see Daily GPI, March 31a; March 31b).

Under the agreement with HWR, Encana initially would dispense LNG to the truck fleet using mobile fueling stations, which consist of an insulated LNG tank and dispensing equipment built on a trailer that could be parked at operating locations across the Haynesville Shale.

Encana said it would build its first "permanent and public" LNG fueling station in the Shreveport, LA, area later this year. Also this year the Calgary-based producer plans to open four additional CNG stations, one each in Wyoming and Colorado and two in Western Canada. Last November Encana opened its first CNG fueling station in Red River Parish, LA.

Heckmann recently ordered 200 LNG trucks for an undisclosed price from Peterbilt Motors Corp. of Denton, TX, which are powered by Westport HD Systems from Westport Innovations Inc. of Vancouver, BC. Although the purchase price of natural gas vehicles (NGV) initially is higher than that of diesel trucks, "the significantly reduced life cycle operating cost of NGVs typically delivers payback in less than two years in field applications," Heckmann officials said. "Additionally, because of cleaner combustion the average operating life of NGVs is considerably longer."

CEO Richard J. Heckmann said his company was created to buy and build companies in the water sector. Last year it partnered with midstream operator Energy Transfer Partners LP to treat produced water in the Marcellus and Haynesville shales (see Daily GPI, Feb. 10, 2010). Late last year Heckmann said it intended to expand the range of water and wastewater services available to producers in the Haynesville Shale with its acquisition of Carthage, TX-based Complete Vacuum and Rental Inc. (see Shale Daily, Nov. 11, 2010).

There are "abundant natural gas resources here in our own country, produced by our own citizens," said the CEO. "Programs like the one we have established with Encana are critical in bringing attention to the phenomenal opportunity available in the U.S. to rid our nation of the foreign oil tax. With Encana, we will do our part by converting our fleet to NGVs, and we encourage all companies to identify solutions that will eliminate our country's dependence on oil imported from the Middle East."

When LNG is deployed in upstream natural gas operations, he said "critical infrastructure is created and additional market demand for natural gas is stimulated in fleet transportation, including light-duty commercial fleets and other heavy-duty off-road operations, as well as natural gas drilling rigs, pressure pumping services and freight transportation. Beyond the natural gas sector, momentum also builds for increased natural gas use in other sectors, such as mining and construction, and the cumulative benefits of expanded natural gas use result in multiple economic and environmental benefits for society."

"This is the first LNG truck order by a natural gas industry service provider," said Westport Innovations CEO David Demers. "HWR and Encana are leading the way to leverage the clean, abundant and domestically available natural gas. The fuel is inexpensive relative to diesel and its availability for this application makes an economic win-win for both HWR and Encana, as well as the significant environmental benefits including up to 30% lower greenhouse gas emissions."

The Westport HD system, which is to be used in the fleet trucks, consists of a 15-liter engine that incorporates proprietary fuel injectors, LNG fuel tanks with integrated cryogenic fuel pumps and associated electronic components to facilitate robust performance and reliable operation. According to Westport, the engine is certified and compliant with 2010 U.S. Environmental Protection Agency and California Air Resources Board emission standards in North America.

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