The shale-revitalized North American natural gas industry is coming together with the automobile/transportation industries in an effort to forge a robust natural gas vehicle (NGV) sector that will prosper long term, according to Kevin McCrackin, vice president for utility markets at AGL Resources' seven-utility group.
While the market has never been stronger in McCrackin's years of experience, he told NGI Wednesday that the NGV market needs to respond to this stepped-up interest by providing "more efficient conversion costs, more vehicles and additional fueling infrastructure."
He said eventually advances in home refueling devices that will make them more economic carry the potential to be "game-changers." AGL is conducting a pilot program providing 500 home fueling devices on a $60/month lease basis to customers with NGVs. "To get the light-duty NGV market going, there has to be something to make it easier for the homeowner to fuel their vehicle to reduce range anxiety," he said. "There is a significant research and development effort to develop this home fueling device at a lower cost price point [under $2,000, compared to current costs above $6,000]."
The growing NGV interest is a "national phenomenon," but it is really robust in states that have high-growth shale gas plays, McCrackin said. "We're more of a concentration of interest in those states that have shale gas where the producers are effectively putting in infrastructure in areas where there is a lot of gas supply so they can sell the gas right within those areas," he said.
McCrackin points out that the industry has increased its transportation fuel collaboration as evidenced by the creation in 2011 of the "Drive Natural Gas Initiative," which includes 28 utility members in the American Gas Association (AGA) and 30 production and service companies in the American Natural Gas Alliance (ANGA). Representatives of major companies from AGA and ANGA met last spring with the CEO of Chrysler Corp. to share ideas on how to expand the NGV market.
He's optimistic about the current "significant number" of certified NGV conversion suppliers, and a "big move within the last 24 months" by original equipment manufacturers (OEM) who have stepped up to create "more and more" NGVs. "There is a lot of activity now on the OEM front to begin to get into this space, and what they are looking for [from the gas industry] to support them is infrastructure.
"Chrysler, in particular, held a meeting in early May at its headquarters with three major U.S. gas producers and four major utilities, including AGL, to discuss how we move this all forward in the marketplace. We shared ideas on both vehicles and infrastructure, identifying what needs to be done to make the market viable."
McCrackin said he is "seeing much more collaboration among the participants" in the NGV sector, and "it's increasing every day." He acknowledged that in the past when the pricing advantages were not around, there was not nearly as much collaboration. "I see it as increasing over the past 24 months."
Although he did not specifically rule them out, the need for more public policy-driven incentives as advocated by some stakeholders was not emphasized by McCrackin. Similarly, while some economic and public policy observers see distinct differences between compressed natural gas (CNG) and liquefied natural gas (LNG) applications in transportation, McCrackin sees long-term applications for both fuels.
He agreed that LNG tends to have more advantages in high-usage, heavy-duty applications, such as long-haul trucking fleets, and CNG is more frequently used in small fleets with light-duty vehicles. AGL is the biggest holder of LNG for transportation in the nation, and its companies are pursuing both LNG and CNG fueling programs.
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