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Chesapeake's CNG Conversion on Track, Says CEO

Chesapeake Energy Corp. expects to reach a 2014 goal to convert its entire corporate fleet of 4,200 vehicles to compressed natural gas (CNG), officials said Tuesday.

Plans to convert Chesapeake's fleet to CNG were announced last year, but the news coincides with a batch of announcements from across the nation just in the past week about natural gas vehicles (NGV) (see Daily GPI, April 6a; April 6b; April 4; April 1).

Phase One of the company's initiative, which involved converting the vehicle fleet in Oklahoma, Chesapeake's home state, was completed in late March. The NGV fleet now numbers 800 and is to be used by field operations teams that oversee drilling programs in the Anadarko Basin of western Oklahoma.

"As President Obama stated last week, our country can no longer afford to lurch from energy crisis to energy crisis so we must take aggressive actions immediately to begin reducing OPEC oil imports," said CEO Aubrey McClendon (see Daily GPI, March 31). "With fuel prices expected to exceed $4.00/gal nationwide as unrest continues in the Middle East, if ever it was time for American-produced natural gas to begin replacing expensive OPEC oil, it is now."

All of Chesapeake's top 15 senior executives now drive NGVs, McClendon noted.

Gasoline and diesel prices are approaching $4.00/gal in Oklahoma, he noted, and with fuel prices higher in many parts of the country, the company expects to realize annual savings of "at least" $11 million once the entire fleet has been converted. The price of CNG in Oklahoma currently is "steady" at $1.39/gal of gasoline equivalent.

To prepare for the fleet conversion in Oklahoma Chesapeake worked with several fuel retailers to add NGV fueling stations to existing public facilities on major streets and highways. Last year the company and its retail partners opened 14 public CNG stations throughout the state, which brought the available public CNG stations to 42. The company expects to have "hundreds more stations" open across the country in the next few years to support the transition to CNG by large fleet operators.

Phase Two of the NGV plan is to convert fleets that serve Chesapeake's Barnett and Haynesville shale operations. The company plans to replicate the Oklahoma model by partnering with local fuel retailers in these areas to build public CNG fueling stations. Phases Three and Four of the initiative call for converting company fleets in its Marcellus Shale operations in Pennsylvania and West Virginia, as well as oil and gas operations in Colorado, Wyoming and South Texas.

"Public CNG stations make it convenient for school districts, businesses, government and citizens to drive natural gas-powered vehicles and benefit from lower fuel prices," said Chesapeake's Tom Price, senior vice president of Corporate Development and Government Relations.

"As our nation's economy rebounds, we must retain American wealth by replacing OPEC oil with American natural gas, so investments can continue to be made to create quality jobs right here, not elsewhere around the world. Many local, state and federal leaders are recognizing the benefits of natural gas, and through close coordination with original equipment manufacturers, fuel retailers and heavy fuel consumers, we can assist American consumers and enable them to also realize the many benefits of CNG."

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