Natural gas proponents not giving up on CNG push

Oklahoma City-based Chesapeake Energy Corp. and Fort Smith-based Arkansas Oklahoma Gas Corp. refuse to give up on the effort to convince governments, businesses and individuals of the benefits of compressed natural gas (CNG) vehicles.

Danny Games, director of corporate development for Chesapeake’s Little Rock office, was recently in Fort Smith for a stop at the AOG natural gas fueling station. The trip between Little Rock and Oklahoma City included a marketing angle, with Games driving an SUV (Chevy Tahoe) fueled by compressed natural gas.

Games will spend between $1.25 and $1.30 per gallon of CNG to make the trip, compared to gasoline prices hovering between $2.40 and $2.50. Natural gas prices are roughly half that of regular gasoline, which is the primary advantage to using CNG. Natural gas exploration companies like Chesapeake and distributors like AOG also say natural gas vehicles burn cleaner (less emissions) and require less maintenance. They say these things because they are, technically speaking, true.

But broader CNG use in the next few years is doubtful for a few big reasons. First, the cost to convert vehicles is steep. The upfront cost to convert an SUV can range from $8,000 to $10,000. Depending on annual mileage, it could take five to 10 years for an individual to recover the cost.

Another obstacle is fueling infrastructure. Residents in the Fort Smith region, for example, have only the fueling station at AOG. And for long trips, an individual would have to carefully plan where and when to refuel.

The other obstacle is the relative price of energy. When gas prices hit $4 a gallon, talk of CNG use was prevalent. The volume of talk became almost silent when gas dipped back to between $2 and $2.50 per gallon.

Games, and John Swint, assistant vice president of transportation at AOG, understand the obstacles. They say the large fleet operators will eventually push the costs down and increase CNG access.

“The fleets will lead the way, we know that, and we know that we (Chesapeake) have to encourage that,” Games said, adding that Chesapeake is working on a plan to make CNG more accessible. Part of that accessibility, Games said, could encourage public fleets — police departments, city and county government vehicles, public school fleets, etc. —to convert to CNG. Indeed, UPS and AT&T have announced significant fleet conversions — the AT&T plan is valued at $350 million — to CNG and other alternative fuels.

Swint said AOG has plans to convert a sedan (Chevy Impala) and other trucks. AOG operates around 25 vehicles with CNG capabilities. AOG also was the first natural gas utility in Arkansas — and one of the few in the country — to seek and gain approval to sell CNG to the public for the purpose of fueling gas-powered vehicles.

One certain advantage to CNG is its availability. Possibly more important is that the availability is domestic.

The Potential Gas Committee — a Golden, Colo., nonprofit considered the ultimate source for natural gas info — reported June 18 a total U.S. resource base of 1,836 trillion cubic feet (Tcf) of natural gas. The figure, the highest in the committee’s 44-year history increases the natural gas reserve base by 39% and is a result of the reevaluation of new U.S. shale plays, including the Fayetteville Shale Play in Arkansas.

When factoring in figures from the U.S. Department of Energy, the U.S. has a total available future supply of 2,074 Tcf, up 542 Tcf over the previous report. Also, the 2,074 Tcf of U.S. natural gas is the equivalent of nearly 350 billion barrels of oil, or about the same as Saudi Arabia’s oil reserves. What’s more, the DOE estimates the reserves give the U.S. a more than 100-year supply of natural gas.

Link here for a complete story on the opportunities and obstacles of CNG usage.