NGVs Are Getting Ready To Roll

Demand for natural gas as a transportation fuel in the United States is seen as growing as is fueling infrastructure to deliver it, and why not? The price of natural gas is low, the fuel is plentiful, and the pollution impact is minimal. On the surface it appears to be the brewing of a perfect storm for consumers and natural gas industry stakeholders.

But look a little closer, however, and there are a couple of essential missing ingredients – a steady stream of new vehicles able to use compressed natural gas (CNG) or liquefied natural gas (LNG), and a fully built national delivery system for fueling those vehicles to run on CNG or LNG.

While industry trade groups don't necessarily keep score, many of their larger natural gas-providing members are individually and collaboratively attempting to hammer out the beginning of a natural gas fueling system for vehicles, focusing a lot on trucking fleets. But it is slow going with the constant “chicken-egg” question arising as to what comes first – more vehicles or more fueling stations?

There is a potential 1 Bcf/d added demand from natural gas vehicles (NGV) in the future U.S. gas markets, according to an industry brief published in mid-May by Raymond James & Associates, a Florida-based financial research firm. Its third annual assessment of the gas transportation fuel sector concludes that even without subsidies from a national energy bill, NGVs are destined to grow. How quickly, depends on several factors, including the ever-present chicken-egg issue, the assessment notes.

“To get to 1 Bcf/d going for transportation fuel, there would need to be a roughly ten-fold increase in the number of U.S. NGVs,” James said. “Is it realistic? Sure, just not anytime soon.”

Industry insiders like Kevin McCrackin, AGL Resources’ vice president for utility markets in its multi-state utility operations, says the NGV market “has never been stronger; the pricing differential (oil-to-gas) is driving a lot of interest in the market, and the market needs to respond with both more efficient conversion costs and more vehicles, along with additional fueling infrastructure.”

The NGV infrastructure is being boosted by Sempra Energy's California utilities; AGL’s seven utilities now spread across numerous southern, midwest and eastern states; Questar Gas; Encana Corp. in Canada; and Pacific Northwest utilities and pipeline companies. Encana is facilitating NGV use in the oil/gas production fields; AGL in interstate commerce, and Sempra on a regional basis in Southern California.

In the first five months this year, these major gas industry players launched some aggressive efforts in moving toward an infrastructure that can provide CNG and LNG for transportation. In mid-May, a panel of experts, including a Wall Street investment banker, told the Alternative Clean Transportation (ACT) Expo 2012 conference in Long Beach, CA that NGVs have become a full-fledged commercial sector, it is "no longer a science project."

Earlier on the same program, Wesley Clark, a four-star Army general, former NATO Supreme Allied Commander in Europe and a 2008 Democratic Party presidential candidate who now has global financial interests in energy, urged the competing alternative fuels to work more cooperatively arguing that there is about a 7 million b/d equivalent (market) in alternative fuels that could be split among about seven different options ranging from natural gas, propane and biofuels to electric vehicles, plug-in hybrids and fuel cell-powered transportation.