Questar Corp. subsidiary Questar Transportation Services Co. (QTS) and Applied LNG Technologies LLC (ALT) late Wednesday signed a memorandum of understanding (MOU) to jointly explore new market opportunities for liquefied natural gas (LNG) in the Rockies.

QTS now is a natural gas midstream field services operator, which includes gas gathering and processing services. ALT, a subsidiary of Applied Natural Gas Fuels Inc., produces and distributes transportation- and industrial-grade LNG on the West Coast and in the Southwest.

QTS and ALT intend to "accelerate market expansion of LNG products and services in the Rockies, primarily in the transportation and manufacturing sectors," according to the MOU. The business framework ostensibly would increase net-to-the-well prices for Rockies producers supplying gas to this new market.

"The MOU sets the stage for ALT and QTS to jointly work with Rockies gas producers to develop LNG projects to serve large fleet owners and industrial users with a domestically produced, more environmentally friendly fuel that costs less than gasoline or diesel fuels," said Questar Corp. Executive Vice President R. Allan Bradley. "We hope to build on the leading role our affiliate, Questar Gas, has developed expanding CNG refueling capability in Utah," where Questar is headquartered.

Utah is considered one of the most advanced states in the use of natural gas vehicles (NGV); a state law allows Utah regulators to authorize a gas rate for NGVs that is below the actual cost of service, creating a subsidy by spreading the costs to other gas customers (see Daily GPI, March 22, 2009). Questar last year was operating 19 CNG refueling stations in the state.

ALT CEO Cem Hacioglu said the agreement "establishes a promising collaboration between two long-time natural gas providers. It will help us meet the growing demand from our nation's large trucking fleets, industrial users of propane and oil, and intermodal transportation and rail companies for proven alternatives to traditional fuels that are also less expensive and produce fewer harmful emissions."

ALT owns a production facility in Topock, AZ, that currently produces more than 2 million gallons/month of vehicle-grade LNG. Its customer base includes municipal and transit fleets, various refuse companies, major ports and other commercial trucking fleets.

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