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NGVs Accelerate in Three More States

Three states last week stepped on the (natural) gas to accelerate efforts to increase the use of the alternative fuel in vehicles. New Jersey regulators approved a $10 million pilot program; West Virginia's governor established a statewide task force; and hydrocarbon-rich Oklahoma's regulators approved a rebate program for natural gas vehicle (NGV) customers.

The New Jersey pilot program authorizes New Jersey Natural Gas (NJNG) to add up to seven compressed natural gas (CNG) fueling stations in the next 12 months, which would give the state a total of 10 public fueling stations. NJNG received approval from the Board of Public Utilities (BPU) to implement the pilot program at host third-party facilities throughout its service territory.

New Jersey Natural CEO Laurence Downes said the need for greater transportation fuel diversity was "never greater," and the pilot program supports the state's energy master plan. State regulators and the gas utility see increased NGV deployment, particularly in commercial fleets, as a way to lower motor vehicle emissions and provide "viable and economically valuable alternatives" to traditional petroleum-based transportation. CNG-powered vehicles may reduce fuel costs 30-50% in the state compared with gasoline-fueled vehicles, said a NJNG spokesman.

The pilot by NJNG is expected to expand the market by identifying companies in certain parts of New Jersey, including Monmouth, Ocean and Morris, that are using or plan to use natural gas to operate fleet vehicles. Examples would be waste hauling vehicles, buses and delivery trucks as potential hosts for the fueling infrastructure. The facilities could be private companies or public and municipal entities, according to NJNG. The utility would install, own and maintain the infrastructure, and the host company would be required to make the station available to the public and initially use at least 20% of the fueling capacity in its fleet.

West Virginia Gov. Earl Ray Tomblin last Tuesday signed an executive order creating a statewide task force to explore the option of creating a state fleet of NGVs. Part of the task force's work will be to identify what is needed to create a CNG infrastructure. The objective, said a spokesman, is "to expand natural gas fueling infrastructure and investments in natural gas fuel solutions, along with a number of other duties."

The 20-member working group includes six state officials and 14 citizens appointed by the governor, including Tomblin's general counsel, public policy director, commerce secretary, transportation secretary, state fleet management office executive director and the education department's transportation executive director. Tomblin's order calls for the citizen appointees to have education, experience and/or specialized knowledge in the natural gas industry; alternative fuels; coal and petroleum marketing; transportation; and safety. The governor is to select the chairperson.

According to Tomblin's order, there are 6,500 vehicles in West Virginia's fleets that primarily use gasoline or diesel fuels "blended from foreign oil." It contemplates that state vehicles and the separate bus systems operating in various school districts could realize "substantial savings" by switching to natural gas, given its current average price equivalent to a gallon of gasoline at under $2. The order also called for the state to maximize the use of natural gas in transportation by "collaborating with private industry to encourage construction of fueling stations and related infrastructure."

In Oklahoma regulators moved to create rebates of up to $2,500 for NGVs and home fueling equipment providing CNG. Rebates will be offered by ONEOK's Oklahoma Natural Gas Co. (ONG) utility, and all residents of the state are eligible for the program. Dedicated NGVs are eligible for $2,500 rebates, vehicles converted to run on CNG and dual fuel vehicles can get rebates of $1,500, and residential CNG fueling systems can garner $2,500 under a program approved unanimously by the three-member Oklahoma Corporation Commission (OCC). The regulators indicated they want the program to give Oklahomans more choices for their motor vehicle fuels while also helping boost the state's economy.

Oklahoma regulators stressed that their rebate program is not being funded by gas utility retail customers, but rather by current and future operators of CNG-powered vehicles. The OCC approved a 25-cent/gallon-equivalent surcharge at the 25 Oklahoma gas utility-owned CNG fueling stations open to the general public. "Because ONG cannot sell CNG at a profit, with the surcharge the cost of CNG at ONG's utility pumps will still be lower than at commercial CNG stations," an OCC spokesperson said.

Meanwhile, CNG is not the only game in town. A report by IHS Cambridge Energy Research Associates said liquefied natural gas (LNG) is poised to penetrate long-haul heavy-duty trucking fleets as a result of current low natural gas prices resulting from the U.S. shale boom. LNG heavy-duty trucks would recoup the initial additional investment required to use the fuel in three years without any government incentives, but the report also found that there are hurdles to the transition and it will take time.

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