Natural Gas Industry Full Throttle on Infrastructure Development
Fleet First Approach Will Ultimately Increase Consumer Availability
For nearly a century, the dominant fuel has been liquid hydrocarbons, in the form of gasoline and diesel fuel. In that time, the fueling infrastructure has become so commonplace that even in the most remote areas of the country, fears about running out of fuel and not finding a place to fill up close by are essentially nonexistent, nothing more than dramatic Hollywood vignettes and settings for beer commercials.
The current situation for natural gas, however, is quite different. Nationwide, the number of natural gas stations relative to gasoline stations is less than 1 to 100. The relative scarcity of natural gas refueling stations has been an ongoing challenge to the widespread adoption of natural gas-powered vehicles. But thanks to the record-low prices brought on by the use of new exploration techniques, there is a concerted and aggressive campaign by the producers and marketers of natural gas to grow the availability of the fuel as an option for drivers. We talked to representatives from the Drive Natural Gas Initiative, a collaborative effort between America's Natural Gas Alliance and the American Gas Association. The ANGA and AGA are two key trade groups involved in the production and marketing of natural gas. We also spoke with Clean Energy Fuels, one of the leading companies at the forefront of building the transportation fueling infrastructure.
One of the biggest issues currently facing the natural gas industry is the inconsistency of market coverage nationwide. In Southern California, where the Truck Trend editorial offices are located, more than two dozen CNG stations are open to the public within Los Angeles and Orange counties. While that may not seem like very many, when you compare it to other areas of the country, it's a lot. In the course of testing two bi-fuel trucks, we never had a major issue finding a place to refuel. It takes a little more searching than simply stumbling across a gasoline station at every corner, but we were able to drive hundreds of miles in the greater Los Angeles area, rarely having to switch to gasoline power, and when we did it was only for testing purposes.
If you currently live near a major metropolitan area, your chances of seeing a natural gas refueling station pop up is greater than for those of you in more remote, rural areas. This growth pattern is consistent with the largely market-driven approach the industry is pursuing. "We're focusing primarily on major metropolitan areas with population centers. We're able to generate more revenue from stations in larger population centers," Chad Lindholm, Clean Energy Fuels' Western Region Vice President said. But Clean Energy is not neglecting building out a more comprehensive national infrastructure. The company is at the forefront of America's Natural Gas Highway, a network of natural gas fueling stations stretching from coast to coast. The company is working closely with truck stop chain Pilot-Flying J to provide fueling for heavy trucks.
Lindholm takes a pragmatic view of the current role of natural gas as a transportation fuel. "Natural Gas is primarily, and always will be primarily a fleet fuel. There is a price premium with purchasing the vehicles. Fleets, because of their mileage and usage, can re-coup the cost relatively quickly. It takes longer for consumers."
Dr. Kathryn Clay, executive director of the Drive Natural Gas Initiative, had a broader view for natural gas as a vehicle fuel. "We see natural gas as a transportation fuel for all market segments. The fleets will certainly be the early wins. What we see as really key to growing the popularity of CNG vehicles is the availability of home refueling, much like has been the case with electric cars. The national average per gallon equivalent for CNG is about half that of gasoline. Home refuelers save even more."
FuelMaker's Phill, a home CNG refueling station, was initially co-marketed with Honda's natural-gas-powered Civic model. But on Honda's official homepage for the new 2012 Civic Natural Gas, the company discourages home refueling because of moisture and contaminants in some residential natural gas supplies. Clay sees this as nothing more than a short-term precautionary measure in the early stages of a growing industry. "The automakers and oil companies have had decades to work out formulas and quality requirements for gasoline. It leads me to believe that because CNG is so much simpler in comparison, the issue of fuel quality makes me confident that home refueling will get there. We're at such an early point, we haven't had that conversation yet."
This isn't the first time that natural gas vehicles have gotten attention, with a push in the 1990s among regulators to increase production of the vehicles. But the big difference this time around is market forces at work, which promise to have a much greater impact on the adoption of natural gas as a transportation fuel. "What's different today is the current abundance of natural gas we have, which has pushed prices lower, whereas oil is going up. Natural gas has become more attractive without subsidies," said Clay.
Clean Fuel's Lindholm agreed that ultimately, a market-driven model is more preferable than a government mandate, which can quickly change with administrations and political trends, but still sees the value in a limited amount of government involvement. "As an industry, we want the choice to be market-driven. We're not in favor of mandates, but maybe some incentive programs and consumer education."
In an acknowledgement of the relatively immature national infrastructure, the Detroit Three are introducing bi-fuel trucks that can run on either CNG or gasoline, eliminating potential 'range anxiety' from not being near a CNG fueling station. Both Clay and Lindholm see bi-fuel vehicles as a logical stepping-stone for both fleets and consumers to get more comfortable with owning a natural-gas vehicle. "I believe both bi-fuel and pure CNG vehicles will be important in the market for a long time to come. There will be areas of the country where CNG is less widely available where bi-fuel cars will be a necessity, and there are other areas of the country where drivers can drive quite comfortably on a pure CNG vehicle. Automakers will reserve the right to compete. Some will pursue bi-fuel, some will pursue dedicated," Clay said.
"Offering bi-fuel vehicles in markets where the infrastructure isn't readily available is a good option. That makes perfect sense to me," Lindholm said.
From a first-hand standpoint, the actual process of refueling is straightforward enough that after a few times, the procedure should become as second-nature as topping off with gasoline. Because it's a pressurized, gaseous fuel, the hose needs to be locked to the filler neck. Most pumps have step-by-step instructions, and some even have a brief instructional video, which then gives the user a code to use on future visits to acknowledge familiarity with the CNG refueling procedure. Other than loud whooshing and groaning sounds during the refueling process, there's nothing that scary or intimidating about it.
The biggest issue is availability, which definitely makes doing your homework on fueling availability worth it. The three best resources are the Department of Energy's Alternative Fuels Data Center site, the user-updated site CNGPrices.com, (similar to GasBuddy.com), and the Clean Energy Fuels site, one of the largest commercial natural gas chains.
The second big issue is the lack of available models on the market, although that is starting to change.
Each of the Detroit three either currently offers, or will offer a bi-fuel full-size truck within the next year. Chrysler CEO Sergio Marchionne has gone on record as being in favor of CNG as an alternative fuel, with Fiat being one of the market leaders in Europe in bi-fuel and CNG vehicles. In spite of having less than one-fifth the population of the United States, Italy has six times as many CNG vehicles on the road.
With the parallel development of the fueling infrastructure as well as a greater availability of factory-warrantied and engineered models, natural gas is poised to be a promising fuel option in the years ahead. Although not perfect, the relative transparency of the driving experience, as well as the abundance and affordability of the fuel are compelling factors setting the stage for broader consumer adoption.
Natural Gas Resources:
Department of Energy Alternative Fuels Data Center
CNGPrices.com (user-managed/updated site)
Clean Energy Fuels