Given the projected demand in the heavy-duty, long-haul trucking sector, U.S. capacity for producing liquefied natural gas (LNG) for transportation will need to accelerate rapidly to build up to 90 new small-scale LNG production facilities with a collective capital investment of up to $3.6 billion, a Pace Global consultant said last week.

Pace Vice President Todd Thurlow said he is “bullish” on LNG as a transportation fuel in trucking, but he outlined some of the infrastructure, financial and logistical challenges the sector faces during an hour-long presentation, “LNG for Heavy Duty Trucking,” on a webinar sponsored by Pace, a Siemens energy consulting business unit.

While long-haul, heavy duty trucking represents a huge potential overall transportation fueling market that would exceed 4 Tcf of natural gas, there are a mere 4,000 LNG tractor-trailers currently in the United States. Estimates suggest that there will be an added 4,000 to 10,000 LNG trucks built in the next year, Thurlow said.

Projections call for up to 400,000 LNG trucks on the road by 2025, and the implications are significant. “This suggests that the LNG demand will grow between 1 and 4 billion gallons/year,” Thurlow said.

Pace Global has concluded that an “end-to-end” business model will emerge as the dominant one in the natural gas transportation fueling sector. Only Clean Energy Fuels Corp. and the U.S. operations of Royal Dutch Shell have that sort of vertically integrated business structure now, but more organizations are coming, Thurlow said.

“Outside of the leasing companies [such as Ryder Systems], the closest thing to an ‘end-to-end’ solution are what we see with Clean Energy and Shell,” Thurlow said. “They are both integrated from LNG production through transportation and distribution. We’re bullish on LNG as a transportation fuel for heavy duty trucks, and we think we are going to see material penetration [of the trucking space] over the next few years.”

Ford Motor Co. last week said it would offer a compressed natural gas (CNG) version for its most popular vehicle, the F-150 pickup truck, for the 2014 model year, which would add about $10,000 to the price. Fleet operators and individual owners could make up for the additional cost with cheaper fuel and operating savings, compared with the traditional gasoline version. Ford executives see “big savings” for fleet operators, driven by “huge growth” in unconventional drilling.

Earlier this year, Ford was touting a 350% growth in its natural gas vehicle offerings since 2009, and other U.S. automakers have been talking up CNG for pickups (see NGI, March 12, 2012). Ford expects to sell 15,000 CNG-prepped vehicles this year, a 25% increase over 2012 sales. Ford said CNG fuel averages about $2.11/gallon of gasoline equivalent (gge) and as low as $1.00/gge in some parts of the nation. That compares to a national average of about $3.66/gallon for gasoline. CNG F-150 pickups would be able to get up to a 750-mile range on one tank, depending on the size, and the trucks average about 23 miles/gallon on the highway, Ford said.

In another development, the provider of more than half of the NGV trucks operating nationally, Freightliner, and a major national transporter, Saddle Creek Transportation, are combining with fuel system maker Agility Fuel Systems to put a back-of-the-cab system on the market that promises ranges of 700 miles and lower costs because the system requires fewer CNG tanks.

Saddle Creek has committed to buying 10 Freightliner Cascadia 113 tractor trucks with Agility’s shorter, fatter CNG fuel cylinders, allowing for up to 700 miles of range with three cylinders, not the five on older models. The company has more than 100 CNG-fueled trucks among a 430-vehicle fleet, and it has installed a fueling station at its Lakeland, FL, headquarters. Mike DelBovo, Saddle Creek president, said he prefers CNG to LNG because he thinks it is cheaper, safer and he likes the fact that it can be delivered via pipeline.

Freightliner officials said the company has sold 2,700 natural gas trucks since 2008 and its future NGV customers include many of the major fleet operators, such as Central Freight Lines, Gemini, J.J. Taylor, M&M Cartage, Paper Transport Inc., Penske, Ryder Systems, Swift, Sysco and Waste Management.

Given Pace’s bullish projections, Thurlow acknowledged that the small-scale production capacity for LNG is lagging. He said there are up to 100 small production locations, but only about half can manufacture the fuel; the rest are LNG storage complexes.

“Even among the 50 that can make LNG, many do not have truck-loading facilities, so they are unable to distribute LNG,” he said. “Many of the facilities are owned by regulated entities as they are used as peaking facilities — many are in the Northeast and the Southeast regions. In total, these facilities have insufficient capacity to meet the emerging demand expected in the LNG trucking fuel market.”