High gasoline and diesel prices, coupled with an abundant supply of low cost natural gas from shale, are boosting the interest in natural gas fueled vehicles (NGVs). NGVs run on compressed natural gas (CNG) or liquid natural gas (LNG) instead of gasoline or diesel fuel. Around for decades, there are more than 14.8 million NGVs in use, worldwide, but only about 265,000 in the U.S, where historically cheap oil and years of declining domestic natural gas reserves left the U.S. behind other countries.
Fueling infrastructure is now the biggest barrier to NGV growth. Of the 150,000 gasoline stations in the U.S., 42% offer diesel, but only about 7% (1100) have NGV fueling lanes. Given that situation, vehicles that return-to-base, or that travel regularly from point-to-point, are the good NGV options, able to refuel at strategically located stations. NGV fueling stations are increasing rapidly in many parts of the country. Clean Energy Fuels Corp. is building 150 new LNG fueling stations on a Natural Gas Highway for over-the-road trucks in 33 states. LNG, or natural gas in a refrigerated liquid state, provides more stored energy per gallon than CNG, an important consideration for long-haul trucks. Shell planned to add LNG fueling lanes at 100 stations this year. General Electric and Chesapeake Energy are introducing mass-produced “CNG in a Box” fueling stations. And last month, the U.S. Department of Energy (DOE) announced a program to develop low cost home CNG fueling stations.
Where available, CNG costs 30 to 60% less than gasoline, and today’s price differential is greater than ever. Interest in NGVs is growing at a record pace for regional truck fleets, busses, over-the-road trucks, and even private vehicles. NGVs cost more than comparable gasoline or diesel vehicles, but technological improvements, mass production, and competition are reducing the first cost premium. The more miles NGVs are driven, the faster the payback from fuel cost savings. A 2 to 3 year payback is typical for CNG vehicle fleets
In June 2012, the CNG pump price was $1.50 to $2 less per gallon equivalent than gasoline or diesel. There is a significant CNG price advantage even if the currently low natural gas wellhead prices double or even quadruple. This is because most of the pump price is the cost of processing, transportation, fueling stations and taxes. There are 8 gasoline gallons equivalent (GGE) to 1,000 cubic feet (Mcf) of natural gas. In June the wellhead price was $2/Mcf, which equates to $0.25/GGE, but the pump price was $1.75/GGE due to processing, transportation and taxes. Doubling the wellhead price to $4/Mcf equates to $0.50/GGE and a $2/GGE pump price. Quadrupling the raw gas price to $8/Mcf equates to a pump price of $2.50/GGE, still well below gasoline and diesel prices. Natural gas wellhead prices are currently about $3.50/Mcf, with CNG pump prices averaging about $2.18/GGE.
The selection of NGV trucks and buses continues to grow. 40% of all trash trucks purchased in the U.S. in 2011 were NGVs, with the rate nearly 50% in 2012. New NGV delivery vans are also coming on the market. NGV automobiles are far less available in the U.S., with only Honda making a CNG auto in the U.S. today. General Motors produces 18 different NGV models under various global brands, but none are sold in the U.S. yet. Fortunately, there are many companies that offer NGV conversions and even dual fuel offerings.
The potential for NGVs is huge. Nearly 20% of every barrel of oil in the U.S. is used by 18-wheelers moving goods around and across the country. Today, most of that oil is imported. In 2010 NGVs consumed only 0.045 trillion cubic feet (Tcf) of natural gas in the U.S. DOE projects this will grow to 1.25 Tcf by 2025, accounting for about 5% of the total vehicle fuel market. If the price advantage stays anywhere near current levels, NGV use will likely exceed those estimates.