Salt Lake City-based Questar Corp. has launched a business unit to take advantage of potential growth in the natural gas transportation fueling business, especially trucking fleets, senior executives said Wednesday during a 1Q2012 earnings conference call.
Questar management acknowledged that it faces stiff competition in the natural gas vehicle (NGV) fueling infrastructure space, but CEO Ron Jibson and Senior Vice President Craig Wagstaff touted Questar Fueling, which would provide consulting, design, packaging and installation of stations nationally. The new unit’s operations are separate from the company’s utility statewide NGV fueling outlets, which are operated under Questar Gas.
“The price differential between natural gas and diesel is attracting the attention of the trucking industry,” said Jibson. “There is an increasing urgency to use natural gas as a transportation fuel and to accelerate the development of natural gas-powered engines.” Questar has a strong position in the NGV sector, he said, and the company is “well positioned” to assist fleet operators in building fueling infrastructure. He reiterated that the new fueling unit would not impact Questar Gas operations.
“It is not often that you jump into a new venture as the result of customers requesting that service, so it is a very good opportunity for us,” Jibson said. Wagstaff cautioned that he didn’t expect “a lot of action” with the new business unit this year, but 12-18 months from now that should be a different story. “Our budget near term is not substantial, but we are working with a fair number of customers nationally, ” Wagstaff said.
Wagstaff said “several major companies” provide fuel and infrastructure for NGVs, and “competition certainly exists, however, the upside on this market is fairly significant. We really don’t feel that there can be too many players at this point. Actually, the more players we have to move this market forward is going to help the entire sector longer term.”
Questar reported 1Q2012 profits of $75.2 million (42 cents/share), compared with $69.9 million (39 cents) in the year-ago period. The average consolidated return on equity for its business lines was 19.6%.
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