Future of Natural Gas for Truckstops
May 1, 2012
Motor carriers nationwide are beginning to run natural gas vehicles in small quantities, and many say the fuel holds promise for over-the-road trucking. However, for truckstop and travel plaza operators, knowing when or if to invest in natural gas infrastructure can be difficult.
"It is the chicken-and-the-egg theory. You have to get the infrastructure in there so you can get the trucking company,” said Bill Mulligan, vice president of development, facilities and environmental, Pilot-Flying J.
Jennifer de Tapia, director of market services for compressed natural gas infrastructure provider Trillium USA, said truckstop operators who make an early investment in natural gas can set themselves apart. “There aren’t natural gas fueling stations everywhere, and it is a way for a truckstop to differentiate itself along a corridor,” she said.
Some travel plaza operators, including Pilot-Flying J and Love’s Travel Stops & Country Stores, are already beginning to invest in natural gas fueling capabilities even though demand is small.
Norman Herrera, director of market development for Chesapeake Energy, a large natural gas producer based in Oklahoma City, Okla., said, “The first few years in this market may be lean, but demand is going to develop.”
Earlier this year Clean Energy unveiled the route plan for the first phase of 150 new liquefied natural gas (LNG) fueling stations for America’s Natural Gas Highway. Many of the fueling stations will be co-located at Pilot-Flying J locations. The company anticipates having 70 stations open by the end of 2012 in 33 states and has strategically placed them along major interstate shipping lanes every 250-350 miles.
Mulligan said having LNG available could give Pilot’s sales team an advantage in some cases. “We’re selling energy. Whether it is diesel, gas, natural gas or a different type of energy sometime in the future, that is what we’re interested in doing,” he said.
Rich Kolodziej, president of Natural Gas Vehicles for America, said Clean Energy’s rollout “is totally going to change the LNG availability for interstate trucking.”
Kent Wilkinson, vice president of natural gas ventures, Chesapeake Energy, said he thinks the “chicken-and-the-egg” discussions are becoming a moot point. “You can get the vehicles and you can get the fueling infrastructure,” he said. “We’re pushing very hard to gain momentum, and it feels like that is happening.”
Love’s Travel Stops & Country Stores is focusing on compressed natural gas (CNG) fueling stations for light-duty vehicles in Oklahoma. Love’s operates one CNG facility and is adding 10 more in the state. The stations will be built and operated in cooperation with Chesapeake Energy.
In March, Trillium opened its first CNG fueling location at the De Pere Superstore in De Pere, Wis. The company plans to open two additional locations soon. De Tapia said the locations appeal to trash haulers, refuse trucks, school buses and local fleets that run Class 3-6 trucks.
As part of the CNG project, Matt Olson, owner of the De Pere Superstore, expanded the location’s facilities for heavy-duty trucking with 40 additional parking stalls, a CAT scale, overnight parking and room for CNG equipment.
Industry experts told Stop Watch they expect the growth to continue.
“The thing we’re seeing right now is not only the dynamic growth with Clean Energy, but also local and regional players that are coming into that space,” said Andy Douglas, national sales manager for specialty markets, Kenworth. “I think it will take a few years, but the build-out is pretty rampant.”
By the Numbers
While the number of natural gas powered trucks on the road is increasing, it is still relatively small.
“Less than 1/10th of 1 percent of vehicles on the road are powered by natural gas,” said Steve Tam, vice president of the commercial vehicle sector at ACT Research.
He did note that in late 2011, Daimler Trucks North America announced the delivery of its 1000th natural gas truck and is the first commercial vehicle manufacturer to achieve such a milestone.
In its 2011 report Alternatives to Traditional Transportation Fuels, the Department of Energy reported that there were 2,851 heavy-duty vehicles running on LNG on the road in 2009, the latest date for which figures are available. DOE also reported that in 2009 there were 91,165 light- and medium-duty vehicles running on CNG on the road.
CNG vs. LNG
Natural gas is just that — a gas. “Gasses are difficult to package because they take up a lot of volume. The challenge is getting it into a space that works on a vehicle,” said Roe East, leader of Cummins Westport Inc.
When used as a fuel, natural gas must either be compressed at 3,600 PSI to make compressed natural gas (CNG) or cooled to minus 260 degrees Fahrenheit to make liquefied natural gas (LNG).
Major engine and equipment manufacturers produce vehicles that can run on both fuels, and fleets can determine which works best for them based on their operations. That means operators have one more decision to make if they decide to install natural gas infrastructure — going with LNG, CNG or both.
Manufacturers agree that CNG is best suited for vehicles that return to their base each night, while LNG is best suited for vehicles that travel over the road. However, in order for LNG to be a viable solution for fleets, they have to know fuel will be available along their route.
Clean Energy has focused its initial rollout on LNG fueling, but will provide CNG as “the world of natural gas light-duty vehicles moves forward,” said Greg Roche, vice president of national accounts and infrastructure for Clean Energy.
One challenge for carriers looking to use natural gas is the amount of space it takes up. “It takes 1.7 gallons of LNG to equal the same energy equivalent of a gallon of diesel,” said David Hill, vice president of natural gas economy operations for Encana Natural Gas.
For CNG, a vehicle needs four times the tank size to get the same energy equivalent as a gallon of diesel.
To help create the most effective infrastructure, natural gas providers, travel plazas and local governments are working together to create networks either along major routes or regionally. Texas has created the “Clean Transportation Triangle” that has natural gas fueling stations between Austin, Dallas, Fort Worth, Houston and San Antonio. Motor carriers, utilities, fuel suppliers, natural gas producers and universities have worked together to make the triangle possible. The South Coast Air Quality Management District is partnering with UPS and Clean Energy to develop a 700-mile, natural gas corridor between Las Vegas, Nev., and Ontario, Calif.
Nationwide, the number of stations available today is low. The Department of Energy lists 46 LNG and 975 CNG stations in the U.S., but less than half of each are open to the public, and the majority of the existing CNG stations don’t meet the quick-fueling needs of heavy-duty trucking.
Kyla Turner, spokesperson for Love’s, said the company will continue to focus on CNG within Oklahoma. “Right now our focus is on Oklahoma. We will monitor the demand and see how it is resonating with our customers and then grow from there,“ she said.
A Hefty Price Tag
Natural gas fueling infrastructure is expensive, and there are limited incentives for travel plazas looking to install it. LNG stations can cost anywhere from $1.5 million to $4.5 million. LNG mobile fueling stations, which can be installed by those looking to build their customer base prior to building permanent infrastructure, cost around $500,000. Burke said drivers can fill up an LNG truck in the same amount of time it takes to fill up a truck with diesel.
Building an LNG facility typically takes about three months once permitting is complete, Roche said.
While Clean Energy is handling the permitting process for the LNG stations, Mulligan said there haven’t been any problems. “Most communities are receptive to it,” he explained.
The price for a CNG station where vehicles can fuel overnight can range from $300,000 to $700,000. One challenge with CNG is that it takes up more space on the vehicle than LNG, so it takes longer to fill the tanks. Fast-fill stations that emulate diesel fill rates start at $750,000 and go to $3 million, Hill said.
Mulligan said, “It is very expensive to fuel trucks at a diesel equivalent rate on CNG because of the size of the compressor needed to fuel a tank that size.”
Trillium can fuel a standard, 75-gallon CNG tank in about 10 minutes. Operators who want to install Trillium’s equipment can either purchase it or partner with the company.
“If a truckstop operator is interested we can do a site assessment for them, which involves taking a look at the power, real estate where the equipment would sit and natural gas lines in their area to see if it is feasible,” de Tapia said, noting that often there are high-pressure gas lines that run along the interstate.
If Trillium and the operator turn out to be a good fit for each other, Trillium will install the equipment at no cost and pay the operator to lease the ground where the equipment sits. “Then we pay a per-gallon revenue to them on the gallons that are sold. We also have a marketing team that goes out and works with fleets to secure their business at the location,” de Tapia said.
If an operator were to purchase Trillium’s equipment up front, de Tapia said it can cost around $1.5 million.
In March, Chesapeake Energy and GE announced a partnership to produce 250 modular and standardized CNG compression stations that will add to the nation’s natural gas vehicle infrastructure. The units are part of Chesapeake Energy’s Peake Energy Solutions venture. The companies have not released a price range for the units but said they will be distributed through 2015.
Wilkinson referred to the units as “CNG in a box.” They will be available in the fall and the company will spend the next few months determining where they will go.
“That ‘in a box’ part means it is highly shippable. It can go wherever there is demand for it,” Wilkinson said.
Given the steep price of infrastructure, incentives can be helpful. However, a federal incentive for natural gas vehicles expired two years ago, Herrera said, adding that most incentives that currently exist are at the state level.
“They’re dependent on the location. You have a great incentive in Oklahoma — 75 percent of your station is discounted through a tax credit. The same is true with similar incentives in West Virginia and Louisiana, Colorado and Wyoming,” Herrera said.
Taking Delivery of the Fuel
One of the main differences between CNG and LNG locations is how the fuel is transported to the truckstop or travel plaza. CNG requires a high-pressure system somewhere near a natural gas line. LNG storage tanks can be placed on any location with the only physical limitation being where to place the tank. Fuel lines run from the tank either underground or on top of the canopy to the fuel island.
LNG is trucked into a location from natural gas plants scattered across the U.S. “These LNG transports are big Thermos bottles. You load the fuel in at minus 260 degrees. It gets loaded in at 10 to 40 pounds of pressure on the fuel. Then you transport it in 10,000 gallon increments and load it into the above-ground storage tank,” Hill said.
Typically, LNG is stored in above-ground storage tanks, but the tanks can be placed underground. “The benefit of doing it above ground is you can inspect it easier,” Burke said.
If an LNG tank leaks, the fuel evaporates into natural gas in the atmosphere. “It is a much safer fuel than diesel or gasoline,” Hill said.
For operators carrying LNG, inventory management becomes a critical issue. “You want to keep bringing cold fuel to your storage site to bring the temperature down,” Hill said.
Servicing Natural Gas Trucks
Even if operators choose not to carry natural gas, they should be aware of additional steps necessary to service those trucks, plus technicians need additional training on natural gas engines. For safety reasons, locations servicing natural gas vehicles need to make sure they have the proper ventilation, and methane detection systems are a must.
The companies that make the vehicles and engines provide necessary maintenance training. For example, the Cummins Westport LNG engine is spark ignited and runs on a different grade of oil. It also uses a catalyst after treatment that requires no maintenance and looks and behaves like a muffler.
While it’s important to stay on top of what this next fuel will mean to truckstops and travel plazas, Tam estimates it will take “a long time” for there to be a significant penetration of natural gas vehicles in the marketplace. “Will it ever be a majority fuel in the commercial vehicle space? I won’t discount the possibility, but it is several decades away,” he said.
For more information:
Trillium: (800) 920-1166 www.trilliumheavyduty.com
Clean Energy: (562) 493-2804 www.cleanenergyfuels.com