In confirming that Wall Street is embracing natural gas in the transportation fueling sector, an investment banker and major energy and automotive stakeholders agreed that for the most part natural gas vehicles (NGV) aren't a "science project" anymore, the bulk of their research and development work has been completed, the experts said as part of a wide-ranging panel discussion Thursday at the ACT Expo 2012 conference in Long Beach, CA.
Craig Decker, managing director of WR Securities, said that after almost two decades of handling major transactions in the trucking space it is clear to him that using compressed natural gas (CNG) or liquefied natural gas (LNG) in transportation is now a "viable, proven technology." Decker said he has seen the alternative clean fuel space become bigger, led by the now robust interest in natural gas for trucking fleets.
As panel moderator, Decker prodded panel members to talk about the successes and challenges so far from the perspectives of two engine manufacturers (Westport and Daimler Trucks North America), gas suppliers (Chesapeake Energy Corp. and Shell LNG) and an equipment manufacturer (Chart Industries). They basically agreed the new long-haul truck 12-liter model engines need to get into the marketplace as soon as possible and new fueling capacity needs to get added in "the right places."
"We feel our role is to put together strategic investments to support [the growing] natural gas markets," said Taylor Shinn, senior director for corporate development at Chesapeake. "For about a year now we have had a plan to put aside 1% of the operating budget during the next 10 years and use that to make strategic investments that support and enable [the gas transportation fuels]."
As the company that provided the bulk of the technology for the first ever [circa 1964] LNG liquefaction plant in Alaska, Shell LNG's James Burns, general manager, said his company has a lot of expertise globally to help expand the use of LNG in transportation.
Decker asked the panelists how the United States best can supply the infrastructure, the gas and the investment dollars?
CEO Samuel Thomas, with Chart Industries, a mostly cryogenics equipment supplier that has always participated in LNG, particularly on the processing and liquefaction side, said equipment tied to the NGV market grew to comprise 25% of Chart's new business last year.
"We anticipate the natural gas side of our business doubling in size and becoming half of our total business during the next three to five years," Thomas said. "A large part of that [up to 80%] will come from LNG and natural gas-related transportation.
"We actually need a lot more LNG liquefaction capacity for transportation available in the right places."
David Hames, general manager for marketing and strategy at Daimler Trucks North America, said with its current version of expanded models of CNG trucks for the first time the company's engineers designed a dedicated NGV from the very first design meetings. "The models coming onboard were always intended to be run on natural gas, so natural gas as a power train is designed in from the outset," Hames said.
"We see the same thing happening as we go forward, we don't look any longer at it as something we need to adapt to or have to think about. As Craig [Decker] said, this is no longer a science project, it is a viable technology that has been proved. It works, and that is no longer a question," said Hames, although he also acknowledged that customers still have lots of questions and "there are a lot of skeptics out there whose questions need to be answered."
Shell LNG's Burns said it is important that suppliers, infrastructure builders and truck manufacturers partner or at least participate in alliances so no matter what size the NGV market grows to, each key segment will be able to provide the resources needed. "We want to be in the position down the road where there are no concerns about where the infrastructure is going to be, no concerns about reliability, and also no concerns about the long-term value of the trucks and related equipment," he said.
"We have the fuel question pretty much handled now," Decker said. "How do we get past the 'chicken-egg' dilemma regarding infrastructure and trucks?"
Westport founder CEO David Demers said he disagreed somewhat about the "science project" part of NGVs being over, noting that his company has put $300 million of R&D into the new CumminsWestport 12-liter engine that will come out next year, and Westport intends to continue spending a lot of R&D in the future. "It's a continuous process," he said.
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