Augmented by more aggressive marketing from oil/gas producers, automakers, retailers and states, natural gas for transportation is beginning to get some real traction despite a defeat last week in the U.S. Senate of a national stimulus package for natural gas vehicles (NGV).

The U.S. Senate delivered the bad news last Tuesday, defeating an amendment to its two-year, $109 billion transportation bill that would have subsidized purchasers of NGVs and manufacturers of both NGVs and their supportive fueling stations.

But in state forums and in the marketplace it was a different story. A Pennsylvania state legislator has introduced a bill designed to encourage the use of NGVs and the construction of fueling stations to support them.

Rep. Stan Saylor (R-York) said his bill (HB 2251) would allocate a portion of the state’s Clean Air Fund for grants to industry as an incentive for them to convert commercial fleet vehicles to natural gas. He predicted that the state’s network of compressed natural gas (CNG) filling stations would expand to keep pace with the additional NGVs on the road.

“This legislation will move us away from our dependency on foreign oil, stimulate the economy, and clean up our environment,” Saylor said. “The need for a national energy policy has never been so prevalent, and this legislation will enable Pennsylvania to show America how to do it.”

Separately last week the California Energy Commission doled out $8.5 million in grants to help bring more natural gas and propane-powered vehicles to the state. The funding is part of the state energy commission’s Alternative and Renewable Fuel and Vehicle Technology Program, helping make up the difference between a conventional gasoline- or diesel-powered vehicle and ones powered by natural gas.

In the marketplace, Chesapeake Energy Corp. last week followed up on its collaboration with General Electric to expand fueling capability nationally (see NGI, March 12), saying CNG soon would be available at retailers such as 7-Eleven, Kroger, Murphy USA and Sheetz.

“The market is moving even if the federal government is not,” according to Chesapeake officials who cited new bifuel CNG trucks, improved fueling infrastructure, improved natural gas engines and retailers willing to step up and offer CNG as examples. Among its top 10 reasons why gas can compete in the transportation sector are “cost, convenience and enhanced customer experience.”

As one element in a four-part strategy for increasing gas demand along with industrial, power generation and LNG exports, Chesapeake said that it sees transportation growth as coming from a “50% savings on fuel bills” for American consumers buffeted by the prospect of $5/gallon gasoline.

GM and Chrysler both recently introduced new natural-gas powered pickup trucks and American Honda Motor Co., which claims to be the only automaker selling natural-gas powered passenger cars in the U.S., also announced it would begin installing CNG fuel pumps at some of its dealerships. And President Obama earlier this month announced the National Community Deployment Challenge, a $1 billion effort to jumpstart the deployment of vehicles powered by alternative fuels.

While it is currently straining its balance sheet to accelerate infrastructure buildout, Clean Energy Fuels Corp. likes its strategic positioning to take advantage of what it considers now widespread acceptance of natural gas as the alternative fuel of choice for large trucks and a new national network of fueling stations it expects to be in place by next year, CEO Andrew Littlefair told financial analysts on an earnings call reporting more red ink for the Seal Beach, CA-based firm.

Littlefair said he was still bullish despite losses for 4Q2011 ($20.9 million) and the full calendar year ($47.6 million), compared with $13.7 million in net income in the 4Q2010 and a much smaller loss ($2.5 million) for all of that year. He cited as positives the growth in core markets, sales, engineering and construction staffs, starting the America’s Natural Gas Highway for medium- and heavy-duty trucks, and raising $350 million last year.

Despite pressure on its cash flow, Littlefair said the company made “absolutely the right business decision” to pour extra capital in at the highway network of LNG and CNG fueling stations along major trucking corridors throughout the United States. “The more stations we build, the more entrenched and farther ahead we become, and the more valuable we are,” he said.

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