On one side of the country, ExxonMobil Corp. CEO Rex Tillerson Thursday cast doubts on whether natural gas stands much of a chance to penetrate the U.S. transportation market (see Daily GPI, March 12). Meanwhile, at the annual CERAWeek conference in Houston, auto and energy executives mostly expressed pessimism about how big the market might become.

Natural gas-fueled vehicles are popular in some small markets in Europe and Asia where the population is denser, but the United States has huge rural areas, said a group of energy and auto executives at the annual meeting sponsored by IHS Cambridge Energy Research Associates. Creating a market is just not as doable here, they said, despite an expensive public relations push by some U.S. gas producers and erstwhile wildcatter T. Boone Pickens (see Daily GPI, Aug. 6, 2008).

Jeffrey Jacobs, vice president of Chevron Technology Ventures, said gas-powered transportation works where there is a lot of infrastructure in place. The United States is diverse, he said, and unless infrastructure was mandated and built across the country, using natural gas as a transport fuel beyond commercial fleets would not work.

“Natural gas is not a good fit,” said Jacobs. “We don’t see a significant penetration beyond that we have now.”

“We see natural gas vehicles remaining a niche market,” said John Viera, who directs Ford Motor Co.’s Sustainability & Environmental Policy unit. Efficiency gains from using gas in stationary sources, such as displacing coal at power plants, are a better bet, he said.

Automakers instead are focusing on new vehicles built with more efficient internal combustion engines and lighter-but-stronger chassis. Also gaining in popularity are low-emission and hydrogen vehicles.

“Let’s take advantage of fuel cells,” said General Motors’ Britta Gross, who heads global energy systems and infrastructure commercialization.

IHS CERA analyst Julius Pretterebner acknowledged that there are enough domestic supplies to make a case for more natural gas-fueled vehicles. However, he too pointed to the infrastructure problems.

“It would be a huge financial burden,” said Pretterebner. CNG stations are four times as expensive as gasoline and diesel stations, he noted.

Dow Chemical CEO Andrew Liveris, in a speech at CERAWeek on Thursday, told the audience that the United States shouldn’t waste natural gas on transportation fuel.

Dow Chemical uses around 1 million boe/d, and of that, 85% is feedstock to create plastics and chemicals, Liveris said. The rest of the oil and gas is used to power Dow’s plants around the world. On an annual basis, Dow spends an estimated $30 billion for fossil fuel; the entire U.S. chemicals industry buys about $85 billion.

To sustain and grow the $690 billion U.S. chemicals industry, Liveris said new sources of natural gas should not be directed to inefficient and inelastic uses — such as CNG. Compared with other fuels like diesel, “CNG is the worst use of gas,” said the Dow CEO.

Still, Apache Corp. CEO Steven Farris is optimistic that using natural gas as a transportation fuel could benefit the country. He told an audience at CERAWeek that his company is converting its entire fleet to natural gas. If 25% of all the U.S. vehicle fleets converted to natural gas, 8% of U.S. greenhouse gas emissions would be eliminated, he said.

“I truly believe we’re going to use more natural gas,” said Farris. “I believe it as an American.”

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