Don’t look for ExxonMobil Corp. to place any big bets on using natural gas as a transportation fuel. “We think gas as a transportation fuel has a lot of limitations,” CEO Rex Tillerson told financial analysts Thursday.

Speaking at the company’s annual investor meeting, Tillerson was asked to comment about whether a viable market exists to use natural gas as a widespread transportation fuel. If the questioner was looking for a positive reply, he was wrong.

“We’ve done studies,” Tillerson said, and he noted that the Energy Information Administration also completed a study in 2009, “with which we concur, that natural gas as a transportation fuel has never been particularly attractive.”

The problem is physics, he explained.

“The density of fuel aboard a vehicle has limitations that can’t compete with gasoline or biofuels…Density is a problem…To get more compressed energy on board, you have to pump to higher pressures or add bigger storage tanks…And there are limitations there with respect to the range of the vehicle, opportunities in terms of size, limitations on fueling — not just the fact that there aren’t enough refueling stations — but to build a refueling station would cost about a million bucks.”

The high cost to add compressed natural gas (CNG) stations to “mom and pop stations” wouldn’t be feasible for many, Tillerson noted. “Then when you pull up, it takes a little longer than when you are putting on board a liquid fuel.”

Some in the industry want CNG to be more widely used by the trucking industry. “For all the reasons I just described, you can’t make the math work,” said Tillerson. “I don’t see why anybody would want to do that.”

The American Trucking Associations last year said natural gas currently was not a viable option for most long-haul operations (see Daily GPI, Nov. 19, 2009). However, oilman and natural gas promoter T. Boone Pickens is pushing for more CNG use, part of his “Pickens Plan” to reduce U.S. dependence on foreign oil (see Daily GPI, July 9, 2008).

“CNG vehicles have been around a long time, 30-40 years,” said Tillerson. “The technology itself is nothing new…There’s not much to do to the basic dynamics. Where there are fleet operations — municipal buses, taxicabs — where the vehicles all come back to one central location in the evening and you can afford the cost and the time for refueling stations, and then there’s enough fuel on board to make daily rounds, that could make sense for someone.”

But there’s still another hurdle, said the CEO. “The cost of converting vehicles is not insignificant…

“For all of those reasons, I don’t see natural gas as a viable transportation fuel. The consumer won’t be pleased with what they have to do, from an economic standpoint, there’s not enough of a gain there than what people think…In the best case…there might be a 20% reduction in CO2 [carbon dioxide] emissions versus an internal combustion engine. And there’s a lot of room for the internal combustion engine to get better.”

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