There’s little debate that switching from fuel oil to natural gas, with its lower emissions, domestic abundance and low and stable price point, represents an opportunity for fuel-intensive businesses in North America. There’s also no argument that pipelines are the best method for delivering gas. But for businesses located off a pipeline route, the tumble in natural gas prices hasn’t benefited them nearly as much as it has their competition. For some, pipeline projects may come eventually; for others, there is no construction even being discussed.
For those companies, Vermont-based NG Advantage offers a work-around: compressed natural gas delivered by truck, in large quantities, based on need. Its clients sign multi-year contracts and agree to terms based on usage. SCADA equipment at the site lets NG Advantage monitor when the next truck should be sent out. Each load carries 355,000,000 Btus. Some customers receive five loads per day.
The company fills the role of a pipeline—just without a pipe.
CEO Neale Lunderville discussed how NG Advantage fits into the rest of the natural gas sector in this interview.
P&GJ: How does your business model intersect with the pipeline industry?
Lunderville: NG Advantage was built on the innovative idea that if companies could not take advantage of cleaner, cheaper natural gas, because they were nowhere near a pipeline, we would bring the gas to them. It is only within the last few years that improved geological identification of potential gas pockets, horizontal drilling and pressure fracturing have created such a huge supply of North American gas that the price differential between natural gas and fuel oil enabled the cost-effective transportation of significant quantities of CNG by truck over long distances.
With our compression and delivery technology, we see no reason that natural gas should not be available to every large fuel user in North America—whether on a pipeline or not. We are a big consumer of gas, relying on pipelines for our physical supply, and we extend the reach of pipelines. Further, in places that will eventually receive pipeline service, we are facilitating the conversion to natural gas, in effect “pre-building” the market for pipelines.
P&GJ: Who are your clients?
Lunderville: NG Advantage’s clients are primarily large, industrial fuel users such as paper mills, chemical plants, electrical component manufacturers, food processors and other manufacturers that do not have pipeline access and are in industries that really need to worry about their bottom line. We are also seeing a new type of customer with institutions that are more stable but under political pressure to contain costs: large hospitals and educational institutions. Most of our customers were burning #6 or #2 oil before they converted to natural gas. To get a contract with us, they need to burn at least a half million dollars’ worth of fuel oil per year. Seasonal businesses like ski resorts and asphalt plants should use about half that much.
P&GJ: How did NG Advantage get started?
Lunderville: At first, we saw the challenge as uniquely local. In Vermont, only the northwest corner of the state has pipeline service; companies not on the pipeline were at a significant competitive disadvantage to those that were connected. As we expanded our view, we realized that there are many factories and institutions across the region—and, in fact, across North America—still burning oil or propane because they are not connected to the pipeline infrastructure.
We broke ground on our first compressor station in Milton, VT last fall and were serving gas to customers in March. We recently signed an innovative deal with Clean Energy Fuels for a second compressor facility in New Hampshire with plans well underway for additional facilities branching out around the region.
P&GJ: What is your background and education? What made you decide to enter the energy industry?
Lunderville: The energy industry is driving growth in the U.S. and the natural gas sector is at the forefront of that charge. It’s an exciting place for an entrepreneur.
After nearly a decade in leadership roles in public service, I jumped at the opportunity to work in the energy industry. My first foray was as the leader of Enterprise Innovation at Vermont’s largest utility, Green Mountain Power, working on the state’s smart grid implementation. While I was at GMP I was asked to lead the state’s recovery efforts after Tropical Storm Irene, which had caused millions of dollars of destruction.
Before GMP, I served Vermont Gov. Jim Douglas in a variety of capacities during his four terms, including secretary of Transportation and secretary of Administration. I obtained my undergraduate degree from American University.
P&GJ: What interests do you have outside of work?
Lunderville: Of course, there’s not much time outside of work these days. But when I can get away, I love every season of Vermont’s incredible natural beauty. I am an avid outdoorsman and love to hike, run, ski and bike.
P&GJ: What kinds of technology does NG Advantage use?
Lunderville: The critical pieces of technology for our business are the TITAN modules from Hexagon Lincoln, which allow us to transport large quantities of CNG to our customers, and the off-loading stations at our customer sites. After being hauled to the customer site, the modules are attached to the off-loading stations which adjust the pressure and temperature of the gas so that it’s usable for our customers’ burners.
On the communications side, we use various SCADA technologies to monitor customer fuel usage and control our equipment remotely and in real time. Because we can monitor usage remotely, we know when we should prep and deploy the customer’s next load of CNG so there is never a gap in supply.
P&GJ: What kinds of safety precautions do you take? What regulations or oversight bodies do you operate under?
Lunderville: “Safety First” is our mantra at NG Advantage. We have strict safety protocols and procedures at our compressor station and our customer sites, including remote monitoring of the decompression, heating and emission detection systems. We follow regulations promulgated by PHMSA. We also abide by all applicable federal and state environmental laws and our safety officer works closely with fire safety officials across the region to ensure that local responders are trained and educated on both our equipment and the fundamentals of natural gas.
P&GJ: Do you foresee the business expanding in the near future?
Lunderville: Our plan is rapid expansion in the region and into other regions. When I talk about our business, many folks are surprised that there is not more comprehensive pipeline coverage, specifically in the Northeast, but also in pockets throughout the country. There is a real identified need for our service, particularly while off-pipeline companies feel the pinch of high oil prices—and their competitor’s low natural gas prices.
P&GJ: Might the movement toward more CNG vehicles affect your business?
Lunderville: Yes. We are currently working with Clean Energy Fuels. They are building one of their CNG filling stations near Concord, NH. When they build a new station they usually have to wait for fleets to convert to CNG and start filling up. Because of our contract with them, on the first day of operation, in early Q1, NG Advantage will begin filling trailers at their site. That new station will immediately be selling the largest amount of CNG of any of their stations. It gives them time to build their original business. We are also building compression stations. There is no reason why they or companies like them could not use our stations for filling CNG vehicles and NG Advantage use theirs.
P&GJ: What changes do you foresee in the energy industry in the next ten years?
Lunderville: There will certainly be a move toward alternative, renewable sources of energy, which is a good thing for the nation. But I don’t see solar and wind replacing oil and gas for large fuel users in the next decade; the economics of those solutions are not workable for many companies or communities. Natural gas is perfectly positioned as a cleaner bridge between fossil fuel dependence and alternative sources of energy. That natural gas has a domestic supply unhitched from global instability is an added benefit. The greatest challenge will be finding an economically feasible means of utilizing renewable energy on a large scale.
P&GJ: What role do you expect natural gas to have in the coming years? Are there decision points that could alter this drastically?
Lunderville: Natural gas will provide a real solution for companies that are looking to both save money on fuel costs and improve their environmental footprint. Certainly if the price of natural gas were to suddenly soar, or the price of oil dramatically drop, that would affect customer decisions to convert from oil to natural gas. We do encourage our customers to keep their original oil or propane burners intact when they add their CNG burners to protect them against sudden changes. But, based on industry research, customer signups and new inquires for our service, it’s clear that the market sees a stable outlook for natural gas into at least the next decade.