Trucking industry holds first summit on natural gas usage

ARLINGTON, VA. — The second day of the Natural Gas and Trucking summit here began with a presentation on the politics of natural gas from U.S. Rep. Lee Terry, R-Neb., and U.S. Rep. John Sullivan, R-Okla.

Terry plans to introduce an updated version of the Natural Gas Act that failed to pass during the last Congress despite strong bipartisan support. The new bill will focus on removing government barriers to the private sector's expansion of its natural gas use.

More than 550 people gathered in Arlington – just outside of Washington, D.C. – for the two day conference on the future of natural gas usage by America’s trucking industry. The messages may have an impact on Arkansas’ economy and trucking and fleet operations based in the state.

SEEKING ENERGY INDEPENDENCE
The trucking world is investigating the possibility of broader CNG (compressed natural gas) use. The American Trucking Associations’ held this first ever ATA Summit on Natural Gas in Trucking.

The forum, according to ATA officials, was “dedicated to exploring the full range of issues related to the use of natural gas in the trucking industry.” Topics included recent fleet experiences with natural gas, existing and potential technology from truck and engine manufacturers, and the status and timeline for expanding the nation’s fueling infrastructure.

Boone Pickens, the Texas oil exec who has become a crusader for use of natural gas as a means for the U.S. to become energy independent, has said the trucking industry must convert to natural gas to achieve that independence. The major hurdles in the conversion is that natural gas trucks are more expensive than those using diesel, and not enough natural gas fueling infrastructure along the nation’s interstates and highways.

MORE SUPPORT REQUIRED
Fleet owners running natural gas trucks noted that the industry still has much to accomplish.

Jim Bruce, vice resident for corporate public Affairs at UPS, was confident his alternative fuel vehicles had led directly to new contracts with environmentally conscious customers, but noted that every one of their fleet of natural trucks was purchased with government subsidies.

His point was echoed by Swift Transportation CEO Jerry Moyes, who has not been able to achieve a return on investment in less than four years for Swift Transportation’s natural gas-powered fleet. Despite these financial challenges, the fleet owners noted the advantages of natural gas trucking, such as being able to hedge fuel prices.

Energy economists from the U.S. Energy Information Administration and other organizations affirmed their confidence in the nation's lasting supply of natural gas. They also called upon stakeholders to continue fueling the natural gas trucking industry's growth by continuing to minimize methane leaks and lower the cost of new trucks.

MOVING FORWARD
The message of the first day was that the market for vehicle-powered natural gas is moving forward at a rapid pace. It is no longer a “chicken and egg” question, according to some presenters.

Rather, the message was that expansion of CNG and LNG (liquified natural gas) fueled vehicles would definitely occur – the only limiting factor would be how soon each user could apply it in an economically-smart manner for their company.

Jim Arthurs, president of Cummins Westport, predicted that America is at the beginning of the inflection point for where natural gas engine usage will increase. The market penetration for Class 8 trucks (above 33,000 pounds) is now around 2%. Arthurs predicted that in the next 4 years the market penetration would be somewhere between 4% and 15% of all large trucks. By 2050 natural gas engines were expected to exceed 50% of the total market.

ENERGY COST SAVINGS
Driving the rapid growth in conversion is the cost savings of the fuel. At today’s prices there is a difference of between $1.50 and $2 per gallon in the cost of diesel fuel and the natural gas diesel gallon equivalent (DGE).

The difference in savings is due to the type of truck fleet being operated. UPS is realizing a savings of $1.50 per DGE on its fleet of nearly 50 LNG tractors while truck line C.R. England said it is only experiencing savings of 70 cents per DGE on its test vehicles.

Speaker after speaker said this arbitrage difference was more than enough to justify switching to natural gas. Even counting the cost of engine conversion from diesel to natural gas, the return on investment could be counted in months instead of years.

Truck manufacturers like Navistar, Volvo and Kenworth have greater displacement natural gas engines which will be rolled-out in 2014 and 2015, thereby permitting natural gas carriers to carry heavier and longer loads than is now available. Service and maintenance facilities are also being upgraded to handle natural gas engine operation and repair.

INFRASTRUCTURE GAINS
Speakers attempted to debunk the “myth” that there are not enough CNG or LNG fueling facilities to support large, long-distance truckers.

In the past two years, natural gas providers have developed partnerships with companies like Pilot Flying J, Travel Centers of America and Love’s Travel Stops resulting in 20-25 CNG stations per month coming online.

LNG fueling stations are also expanding at a rapid pace. Pilot Flying J’s Chairman Jimmy Haslam said his company planned to have 150 LNG stations operational by the end of 2013.

LNG was mentioned as a preferred fuel for long-distance truckers who need a rapid-fill capability. CNG, which can take a longer period of time to fill, is preferred by sanitation, transit bus, and short-route pickup and delivery operators, speakers said.