Chesapeake Energy Corp. and General Electric (GE) last week unveiled “CNG In A Box,” a natural gas fueling system, which they claim will lower fleet vehicle fueling costs by 40% and emissions by 24%. The announcement came the same week that some of the biggest vehicle manufacturers unveiled new natural gas-powered pickup trucks — and as President Obama proposed tax incentives to buy advanced fuel vehicles, including for natural gas vehicles (NGV).

Chesapeake and GE’s collaboration is actually a three-part venture over several years that is designed to speed up adoption of natural gas as a transportation fuel — not only for fleets but for consumers, said Chesapeake’s Kent Wilkinson, vice president of Natural Gas Ventures. He told NGI that the duo plan first to work on fleet vehicle solutions, with GE rolling out its proprietary CNG In A Box later this year at around 250 modular and standardized CNG compression stations for NGV infrastructure.

To put that in perspective: there are around 400 public CNG fueling stations in operation today. (By comparison, there are around 159,000 retail gasoline fuel outlets in the United States.)

“Yes, it is remarkable,” Wilkinson said, of the number of CNG stations to be added by Chesapeake and GE. The companies already have selected some “preliminary locations” and even though no location is firm, a few might not be difficult to discern on Google.

Chesapeake now has about 1,400 NGV vehicles and another 3,000-4,000 vehicles to convert that could be serviced by the GE units, said Wilkinson. “It’s certainly reasonable to conclude [that the GE units] will be in some operating areas. The nice thing about this product is that it’s prepackaged…I can put it on a truck…and I can ship it anywhere you need it…” He said it wouldn’t be too difficult to conclude that Chesapeake’s production areas would be a logical location. Chesapeake has a leasehold in almost every major unconventional natural gas basin in the United States.

In addition, “those states that have worked hard to incentivize natural gas fueling will certainly be a place where an individual deploying this equipment would be foolish not to look at,” he added. “It’s a nice product to complement legislators’ efforts.”

The boxed units would provide the core infrastructure to enable expanded access to CNG at fueling stations and other designated installations. According to the partners, a vehicle using CNG could reduce annual fuel costs up to 40%, assuming 25,700 miles/year driven, gasoline priced at $3.50/gallon (gal) and CNG at $2.09/gasoline gal equivalent.

“This represents savings totaling as much as $1,500 per fleet vehicle per year,” said the companies. “In total, for each fleet vehicle using fuel provided by CNG In A Box instead of gasoline, a fleet operator can reduce carbon dioxide equivalent emissions from fuel combustion by about 24%, or 2.2 metric tons/vehicle annually, assuming an average fleet vehicle travels approximately 25,700 miles/year.”

Solving the NGV infrastructure puzzle is a big item that is being taken off the table by gas producers one by one — with Chesapeake appearing now to take the lead. Other gas producers, including Encana Corp., Southwestern Energy Co. and Questar Corp., also have made big investments in North American infrastructure and fleet conversions.

In addition, other avenues are opening. President Obama on Wednesday unveiled tax incentives that could lower the cost of alternative fuel vehicles, including NGVs (see related story). And the showroom could have more NGV models, with the announcements last week by General Motors, Chrysler and Honda (see related story).

“One measure of success is when these announcements are no longer news,” Wilkinson said. “The second is when you look at some of the names you just mentioned…Chrysler, General Motors, GE…Ford’s building NGVs. Honda…That’s a pretty ringing endorsement of natural gas for vehicles.”

GE and Chesapeake plan to work on the “complete value chain” for natural gas, he said. In addition to the CNG In A Box, the pair will team up to design a system for the shipping fleet, which entails aftermarket services for natural gas fueling infrastructure, as well as GE’s LNG fueling plants, which adapt the company’s large-scale liquefaction technologies to smaller-scale operations.

Within a few years an appliance system for consumers to dispense natural gas for the home-fueling market is planned.

“We are committing to a collaboration on developing an appliance that would be revolutionary,” Wilkinson said. “It would be more along the lines of purchasing an appliance…instead of a niche luxury.”

To formalize the agreement the companies signed a memorandum of understanding on a product and services development partnership.

By improving access to CNG, most commonly used in light- to medium-duty vehicles, along with LNG, which is generally used for heavy-duty industrial purposes, dependence on foreign energy sources could be reduced while simultaneously lowering fueling costs and vehicle emissions, the partners noted.

The CNG technology would be brought to market by Chesapeake affiliate Peake Fuel Solutions, which has experience with NGV, emission controls and natural gas market dynamics. Chesapeake also brings considerable in-house expertise in CNG market development to the GE collaboration, including retail station relationships, fleet outreach, as well as and education programs and policy engagement.

CNG In A Box is designed to take natural gas from a pipeline and compress it on-site at an industrial location or at a traditional automotive refilling station, and then turn it into CNG. A CNG vehicle, such as a taxi, bus or small truck, then could refill its tank using a traditional fuel dispenser, much like those used for diesel or gasoline refueling.

Chesapeake CEO Aubrey McClendon said the partnership would rely on GE’s “extensive global manufacturing capabilities” and oil and gas technology portfolio to help develop innovative fueling solutions and transformative products to lower the ownership and operational costs of NGV fueling stations.

GE Energy CEO John Krenicki noted that GE was “fundamentally committed to natural gas — our technologies help extract it, move it and turn it into power, whether it’s highly efficient gas turbines delivering electricity at the utility scale or, in the near future, a vehicle at a refueling station.

“What makes this project particularly exciting is that it paves the way to taking the immense reserves of natural gas being discovered in the U.S. and using them right here in the U.S. That paves the way for faster economic growth, energy security, more jobs and reduced environmental impact.”

CNG In A Box would come in two configurations, depending on the site’s need: an eight foot by 20 foot container, or an eight foot by 40 foot container. The modular and intuitive design would make it “plug and play” on site, said the companies. The fuel would dispense at a rate of about 7 gasoline gallon equivalent/minute.

“Today we are taking away the argument of the chicken or the egg,” said Wilkinson. “It’s an old argument and it’s no longer valid. We have both the vehicles and the infrastructure. From what we’ve experienced, our average savings, it’s almost $2,800 a year in our light duty vehicle fleet, and it doesn’t take much in terms of payout in that regard…One of the biggest impacts we can have in our economy is to lower the transportation costs…We will see it in our wallets as we begin to build infrastructure…As it impacts those buys, as we build infrastructure, other vehicles will come…”

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