CNG conversion creates cost savings, more jobs for Fort Smith business

by The City Wire staff ( 19 views 

A Fort Smith-based company has added 30 employees this year and compressed natural gas could be part of the reason.

Billy Turner, fleet supervisor at Tri-State Enterprises, said the company has increased its staff from 100 employees last year to 130 this year thanks in part to sales growth and cost savings associated with the conversion of fleet vehicles now running off of CNG.

"We can show that just with the fuel savings alone, that we are starting up new routes," he said. "And everytime we start a route, that's one person driving and one person in the warehouse. We've been able to get several routes started.”

Turner said that was possible due to conversion of each vehicle the company was purchasing, which now consists of 10 "box trucks" with CNG conversion kits installed and plans for a tractor trailer outfitted with CNG.

With vehicles getting between seven and nine miles per gallon and being driven as much as 100,000 miles in a year, he said the savings add up quickly.

At the time the company started doing conversions of its fleet vehicles last year, he said compressed natural gas was running about $1 per gallon while traditional gasoline and diesel were running higher, as much as $4 per gallon. At those rates, it could cost $50,000 at eight miles per gallon to fuel 100,000 miles of travel on diesel, while CNG would only cost $12,500.

From last year to present, costs have fluctuated, with fuel hanging around $2.80 to $3.00 per gallon for diesel. CNG has risen to about $1.70. But even with the gas drop and the CNG increase, the company is still looking at fuel savings of $13,750 per vehicle.

Dean Pendergrass, who handles fleet sales at Breeden Dodge in Fort Smith, said a typical CNG conversion can run as low as $6,500 to as high as $12,000 for the largest tanks, similar to those used at Tri-State, which he said illustrates how companies and even government fleets can have real savings in as little as a single year by converting to CNG.

And the use of CNG is being noted by the Fuel Institute as reducing the demand for diesel fuel in the United States as soon as 2016. A study for the Fuel Institute said diesel fuel demand could drop as much 12.5%.

Mitchell Simpson, deputy director of the Arkansas Economic Development Commission's Energy Office and the Arkansas Clean Cities Coordinator, said rebates were available this year to help individuals and businesses convert vehicles to CNG power to see those savings over the use of traditional fuels. To convert vehicles that traditionally run on gasoline, he said a rebate of $4,500 or 50% of the cost – whichever was lower – had been available earlier this year. The program had $150,000 available, but those funds have all been used for this year, Simpson noted, adding that the state hopes to bring the program back next year.

But even with the conversion rebates available last year and earlier this year, Turner said his company had not taken advantage of the rebates due to requirements by the AEDC energy office.

"The biggest challenge is the rebate," he said. "If they would do it like other states and take the EPA stipulation off of it, then other fleets could save as much money as we are. It ties into more jobs for the state of Arkansas," Turner said.

The EPA stipulation Turner mentioned is in place, Simpson said, to make sure the CNG conversion kits meet quality standards as well as emission standards and said the regulations are in place to protect Arkansans.

"It just means that they've gone through a pretty stringent evaluation process to make sure those kits are safe and appropriate for the conversion vehicle and that the emissions are low," Simpson said.

Turner said even without the rebates, his company could point to the savings it has already seen and continues to see as a reason to continue its CNG efforts.

"We have 30 new jobs this year. As far as natural gas is concerned, I can fully say four of those jobs are because of natural gas savings. The other 26, it had a little bit of a hand in it. … We're putting money back into the company and that's why we're growing like we have."