AOG opens second CNG fueling station in Fort Smith, 8th in Arkansas

by The City Wire staff ([email protected]) 693 views 

Arkansas now has eight public compressed natural gas fueling stations with the opening Thursday (Aug. 7) of Fort Smith's second compressed natural gas fueling station at 4315 Savannah Road. The Fort Smith stations are owned by Arkansas Oklahoma Gas Corp.

Two public CNG stations are under construction in Springdale, and one is planned for West Memphis. The first CNG station in Fort Smith opened in April 2011 and was the first public facility in Arkansas.

The new Fort Smith fueling station houses one pump that can be used by two vehicles at one time, with a second pump scheduled for installation before year's end, according to Fred Kirkwood, senior vice president of customer development at Arkansas Oklahoma Gas (AOG).

"(This station) has three times the capacity of our existing station (just off Rogers Avenue)," he said, adding that plumbing and electric are already in place for the additional pump.

AOG President Mike Callan said the opening of the new fueling station is an investment – roughly $1 million – in what the company believes is the future of American fuel.

"We really believe at AOG that this is the wave of the future. As you can see from the sign, we're selling compressed natural gas for $1.63 per gasoline gallon equivalent," he said.

Compressed natural gas is a cleaner burning fuel than gasoline or diesel and is inexpensive enough, that AOG has invested in conversion of many vehicles in its fleet to run on the fuel, he said.

"What we do is we amortize, we look at our fuel savings," he said. "We're going to save around $1.50 to $2 per gallon on our fuel, so the more gallon equivalent of CNG that we burn, we're calculating that savings into covering the cost of the vehicle conversion and then everything after that is just pure savings on our operating cost each month."

When AOG was originally doing their own conversions, he said conversion kits would cost about $8,500 per vehicle. Now the company is able to purchase vehicles directly from Ford, General Motors and Ram with CNG already pre-installed at the factory.

Barry Rowton, owner of Falcon CNG — a Fort Smith-based CNG conversion business — has said the factory conversions typically run between $9,000 and $10,000, but added his company could convert a half-ton pickup truck with a 16.5 gallon CNG tank for about $6,800 "when it's fully said and done and out the door."

Using the factory installs, Callan said AOG is able to recoup the nearly $10,000 investments in a short amount of time.

"It is different for each vehicle. It is very dependent on how many miles that vehicle drives. Most of our vehicles, we're looking at at an amortization of less than three years. We're able to pay for the conversion and then everything after that is pure operations cost savings," he said, adding that a typical vehicle stays in AOG's fleet for a minimum of 175,000 miles.

One of the largest purchasers of fleet vehicles on an annual basis are local governments. The Springdale Water and Sewer Commission announced July 16 it would buy two CNG trucks. With the purchase of two compressed natural gas vehicles, Springdale Water Utilities will become the first public entity in Northwest Arkansas to use CNG. The two vehicles are a pilot program to determine whether cost savings can be accomplished by converting more of the utility's more than 70 vehicle to reliance on the alternative fuel.

In the most recent budget year, the Fort Smith Board of Directors set a priority to incorporate more CNG conversions into the city's fleet to realize the cost savings touted by Rowton, Callan and others at the Thursday grand opening of the CNG station.

But according to Deputy City Administrator Jeff Dingman, the costs outweighed any fuel savings and do not justify the expenditure for vehicles with CNG conversion kits, though he said many of the city's bids this year for new vehicles have also included price quotes for conversions.

"I think it would be, just because there's a Board directive to try to be more proactive, if the margin gets close enough then I think we'd go for it. But I don't know what close enough means, really, whether it's $500 or $2,000. I think if it got in that ballpark, we'd certainly try to make it happen. But when we're talking about vehicles, I mean, a lot of times when you pencil out the fuel costs with the conversion on a vehicle… how long do you keep a vehicle for its intended purpose? Is 10 years too much? Will it take 10 years for it to break even? Does it come within $1,000 or $2,000 of breaking even? Are you even going to keep that vehicle for 10 years or do they rotate out every seven years?"

Dingman said the city has yet to purchase a new CNG vehicle this year beyond some transit vehicles and other vehicles that were converted using grant monies to test whether it would be a benefit for the city. Vice Mayor Kevin Settle said even though no vehicles were purchased with CNG this year, it would not change the desire of the Board to see additional CNG vehicles added to the city fleet.

"The costs will come down and the technology will get better," he said. "We'll see those prohibitive costs come down. This is not a one year action, it is a long-term action through the years. Other cities are doing this in transit. That is one of the major areas. And I think the Board has said it is a long-term goal, not just a one or two year goal."

Dean Pendergrass, commercial fleet sales manager at Breeden Dodge Chrysler Jeep Ram in Fort Smith — who has been involved in some of the city's bids for new vehicles this year, including CNG conversions — said many businesses see the fuel costs reduce by about 60% per year once CNG vehicles are introduced into fleets. So he said while the up front costs may be higher to the city, it makes sense to go ahead and purchase a conversion in the long run.

"For this year, they are trying to go green, but at the end of the day costs is kind of prohibitive. But the fuel savings (are) there. But it's the initial cost that really kind of scares people, but they do eventually recoup that out, especially on a municipal level because they do drive a lot of miles. So they would recoup it, but it's just getting your administration to recognize that initial cost upfront is there, but you're going to recoup it later in the life of the vehicle."

Rowton of Falcon CNG said more and more companies are seeing the benefits.

"We have some companies here in town that drive very high miles and get very low miles to the gallon, they're saving thousands per month per truck. It's staggering the kind of money (saved)."

And it is because of those savings that AOG has decided to invest in the second fueling station and Rowton is expanding his business, as well, which just opened earlier this year.

"It's been going great. Fixing to have to bring on some more staff to keep up with it. I'm just not able to keep up."