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The Car and Truck Fleet and Leasing Management Magazine

Is Natural Gas the Right Fit for Your Fleet?

September 2014, by Rob Minton

Source: U.S. Energy Information Administration
Source: U.S. Energy Information Administration

With U.S. natural gas production soaring, an increasing number of fleets are considering natural gas as a vehicle fuel. Proponents say natural gas vehicles (NGVs) are good for our economy, environment, national security, and a company's bottom line. Fleet managers have never before had so many natural gas products and services available, spurred by unprecedented industry investment and government incentives.

But, exactly what is this up-and-coming vehicle fuel, where does it come from, and is it a good choice for a fleet?

Domestically Produced Fuel

Natural gas is a domestically produced gaseous fossil fuel, readily available through a nationwide network of pipelines and delivered by local utilities. Most probably know natural gas as a fuel used in homes for heating and cooking. This clean-burning alternative fuel can also be used in vehicles as either compressed natural gas (CNG) or liquefied natural gas (LNG), although the latter is used exclusively in heavy-duty trucks and buses. Both forms are cleaner, safer, and less expensive than petroleum-based fuels, making natural gas an increasingly appealing alternative to gasoline and diesel.

In recent years, 80-90 percent of the natural gas used in the United States has been domestically produced — and virtually all of our natural gas imports came from Canada, resulting in exceptional security of supply.

Source: U.S. Energy Information Administration
Source: U.S. Energy Information Administration

Most natural gas is drawn from wells or extracted in conjunction with crude oil production, although increasing volumes are produced from subsurface porous shale reservoirs through an extraction process known as hydraulic fracturing, or "fracking." The boom in shale gas production in recent years has unlocked massive domestic supplies of this resource that will ensure low, stable costs relative to petroleum products for decades to come.

Natural gas accounts for about a quarter of the energy used in the U.S. About one-third goes to residential and commercial uses, such as heating and cooking; one-third goes to industrial uses; and one-third is used for electric power production. Although natural gas is a clean-burning alternative fuel that has been used in a wide range of vehicle applications for years, only about one-tenth of 1 percent is currently used for transportation fuel.

Growth of the Alternative Fuel

Transportation use of natural gas is set to grow rapidly in the years ahead. Our nation has the most extensive natural gas distribution system of any country in the world, making it feasible to install CNG fueling equipment at existing gasoline stations supplied from existing natural gas lines. There are more than 1,300 NGV fueling stations available now, and the number is growing fast.

Light-duty natural gas vehicles work much like gasoline-powered vehicles. In a CNG fuel system, high-pressure (3,000 to 3,600 pounds per square inch) natural gas moves from a storage tank to the engine where its pressure is reduced to the engine's required fuel injection system pressure. After the natural gas is injected into the engine, the fuel-air mixture is compressed and ignited by a spark plug. Because CNG-powered vehicles use the same internal combustion engine as conventional vehicles, they get about the same fuel economy as their gasoline-fueled counterparts.

There are nearly 20 million NGVs worldwide and 142,000 on U.S. roads, covering all vehicle types from passenger cars to heavy-duty trucks. In the light-duty category, there are a growing number of CNG vehicles offered by U.S. auto manufacturers through their dealers and fleet sales network, including natural gas-capable versions of popular fleet vehicles such as the Honda Civic, Chevrolet Express van, and the Ford F-150 and Ram pickup trucks. In addition, there are more than 100 models of gasoline-powered vehicles for which there is a U.S. Environmental Protection Agency (EPA)-approved aftermarket conversion system available.

Is Natural Gas the Right Fit?

There are many reasons why NGVs are increasing in abundance and popularity. New, stringent federal and state emissions laws require continuous improvements in vehicle emissions through 2025 and beyond. Natural gas offers automakers an opportunity to meet these environmental standards. Federal corporate average fuel economy (CAFE) regulations also require reductions in petroleum consumption by vehicles, and dedicated NGVs use no petroleum-based fuel at all.

Perhaps most important for fleets, natural gas is also an economical alternative to gasoline and other transportation fuels, offering fuel-cost savings of up to 40 percent or more. Natural gas prices are typically more stable than other fuels, since virtually all U.S. natural gas supplies come from North American reserves, which are insulated from international market dynamics.

By contrast, petroleum is a global commodity that is vulnerable to increasingly familiar price spikes caused by conflicts in the Middle East and other producing regions, as well as skyrocketing demand in major developing countries, such as China and India.

The commodity cost of natural gas is only about 20 percent of the total cost of CNG at the pump, so any increases in the commodity price would not have as large an increase at the pump. Since all the other cost components of CNG (transportation, taxes, and marketing) are relatively constant, this insulates fleets from the effects of any spikes in the price of the underlying commodity. Since the commodity cost is about 70 percent for gasoline/diesel, a sudden spike in oil prices would translate to a correspondingly larger increase at the pump.

Rob Minton is director of sales for VNG, which is a national fueling facility program for natural gas vehicles. He can be reached at [email protected]

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  1. 1. Mike Moser [ September 24, 2014 @ 03:09PM ]

    I'm fairly certain of the "1300 fueling stations in the US", a very small percentage of those are available to the public. We still have a very long way to go until CNG/LNG is a viable option for the majority of fleets. This article fails to mention the challenges like; the excessively high cost of building a fueling facility, required modifications to repair facilities, limited range (compared to other fuel options), components susceptible to leaking (3600 psi), and little savings if purchased at a public facility. And, if there is available fuel, are there secondary options should a station go down?
    NG is a great solution for industries which typically use diesel engines and burn 40+ gallons a day. But for light-duty vehicles, which generally don't consume enough fuel to offset the substantial incremental cost, other fuels like LPG (Propane) and electric will often be the better choice of the alternative fuels. It is always wise to perform an unbiased evaluation before making such an important business decision.

  2. 2. Scott Minton [ October 17, 2014 @ 02:47PM ]

    Rob Minton was my dad's name, so I have an instant affinity to like this article. Nice work. You are right on with most of your comments. The biggest risk to natural gas as a vehicular fuel having a major impact on America's fuel mix is the same technology that has brought such abundance to natural gas within our borders. Natural Gas fracking has created 100's of years of supply for natural gas and the price isn't likely to change significantly within the next 50 years. That price stability will translate into dependable, consistent fuel prices for fleets and families. However, fracking is now bringing down the price of oil too. Many countries who have a lot to lose if America becomes energy independent will be doing everything they can to interfere with new technology and techniques to further increase domestic oil and natural gas recovery. Having said that, natural gas will become an increasingly dominant alternative fuel over the next few decades. My company, OnCue, has installed 16 CNG stations in Oklahoma. We're building 10+ new stations/year. Our average price is $1.69/gallon and we've only experienced 5 price changes since installing our first station over 5 years ago. Price consistency is important to fleets and CNG will provide that consistency. Mike, you're right about needing more infrastructure. The nation needs to install CNG infrastructure as quickly as possible to help maximize the potential for our country and minimize the the impact foreign entities can have on our fuel mix. Propane is a great fuel. Don't misunderstand. However, it is not the answer to our nation's most important fueling infrastructure issues. Propane is a by-product of oil and natural gas production. It will always have larger price fluctuation's due to it's smaller percentage of recoverability. It too is a piece to our nation's fuel mix answers, especially when natural gas pipelines aren't available, but CNG will be more consistently less expensive, especially if the volumes sold continue to rise and the vehicle OEM's continue to bring down the cost of conversion.

 

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