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Report Sees Hurdles Ahead for Pennsylvania NGVs, Despite Strength of Marcellus

Even with the huge Marcellus Shale, the high cost of natural gas vehicles and a lack of infrastructure to fuel the vehicles may deter growth in the state, according to the Allegheny Conference on Community Development.

Even with the Marcellus Shale fueling new growth across the region, Pennsylvania still faces barriers to building natural gas vehicle (NGV) infrastructure, in part because of public fueling needs and high vehicle costs, according to a recent report by the Allegheny Conference on Community Development, a nonprofit organization focused on economic development in the state.

Noting that natural gas should remain lower priced than gasoline or diesel, "Encouraging Natural Gas Vehicles in Pennsylvania" concluded that gas as a transportation fuel is another opportunity for the state, driven by Marcellus growth. "At sufficient scale, natural gas vehicles could help reduce the nation's reliance on imported oil."

While there could be an economic payback for local communities, a lack of sufficient fueling infrastructure remains as key bottleneck. "There are vehicle fleets that could be economically viable candidates for compressed natural gas (CNG) conversion, but the fleets are too small to support having their own fueling facility," the report said.

Both public and private fleets are part of the ultimate solution, but the report also points to the need for a public access requirement being attached to any government financing assistance for building new NGV fueling stations in the future.

"It could accelerate the adoption of NGVs," said the authors, who weighed differences in public fleets due to widely varying driving patterns and fuel consumption. "Because of increased upfront investment, converting to NGVs can place a financial strain on a public agency, even when the conversion makes economic sense in the long run."

The examination cited Natural Gas Vehicles for America as estimating a current national total of about 1,000 NGV refueling stations. In contrast, there are more than 160,000 retail gasoline stations in the United States. A side issue is the lack of concentration of stations and suppliers, the Allegheny report noted.

According to data from Natural Gas Vehicles for America and the Department of Energy, there are in fact 992 NGV refueling stations in the U.S. that are currently in service. However, only 451 of those are available to the public, with 135 in California, leaving only 316 public stations spread throughout the rest of the county.

While California has the most publicly available NGV stations in absolute terms, the state ranks fourth when adjusting for the number of publicly available stations in terms of population. Utah ranks first on this metric, with one publicly available station per 74,700 residents. Oklahoma is close behind, at one station per 76,558, while Wyoming ranks third at one per 140,907. All three states also are large natural gas producers, but states that produce more gas do not necessarily have more NGV stations available to the public. Texas and Pennsylvania both sport a public NGV station per population ratio that is below the national median figure (see chart).

"A single convenient fueling station providing affordable natural gas will not be sufficient to persuade vehicle owners to make the switch," the Allegheny report noted. "They will need to be assured of adequate back-up facilities where they can be fueled if the primary facility is broken or otherwise unavailable and of sufficient flexibility of supply so they are not completely dependent on a monopoly provider."

The second major hurdle is the high upfront cost of the NGVs. The authors noted that NGVs are "significantly more expensive" than conventionally fueled vehicles. For large vehicles, such as transit buses and garbage trucks, the difference may be as much as $50,000, adding what the authors estimated is 20% to the cost of the vehicle. Medium-size trucks and other vehicles running on natural gas cost between $10,000 and $20,000.

Another catalyst in Pennsylvania is the recently enacted Act 13, the Marcellus Shale drilling law, that would provide $20 million over the next three years to state governments, companies and public transit agencies (see Shale Daily, May 4). The monies are set aside cover up to half of the incremental cost of the NGVs, capped at $25,000/vehicle. Half of the funding is to be set aside for public transportation providers, the report noted.

The new state law is aimed at having a three-part economic development impact: creating jobs, lessening the environmental impact from the transportation sector, and helping move toward energy independence and more price stability. "The benefits depend greatly upon the geographic area under consideration," said the authors, who noted that a buildup in Pennsylvania fueled by the Marcellus on a national basis may be offset by fewer jobs and energy supplies in other areas of the nation.

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