Fill 'er Up With Natural Gas

The nation's truck fleets are ready for a fuel makeover

Economic, environmental, and national security considerations are crying out for reduced dependence on problematically priced oil as a motor vehicle fuel. But the pathway for achieving it is much clearer where trucks are concerned than for automobiles.

The technology and the infrastructure needed to support fleets of trucks of all sizes that run on natural gas instead of diesel fuel are coming into place. And the nation's super-abundant reserves of natural gas virtually assure a low-cost supply of all the fuel that's needed for at least a century—subject only to the environmental risks associated with the process known as fracking by which the gas is being extracted from deep under shale formations. These risks are generally deemed controllable by effective regulation, and greenhouse gas emissions and other air pollutants are much lower from vehicles fueled by natural gas than from oil derivatives.

Whether the recent surge in gasoline prices to nearly $4 a gallon (and above $4 for diesel) is a harbinger of further increases to come, no one can say for sure. But as long as the U.S. remains dependent on imports for half its 19 million barrels a day oil consumption, the risk of much steeper spikes is obvious. And together with electric power plants, motor vehicles account for nearly 75 percent of U.S. greenhouse gas emissions.

By contrast, U.S. natural gas production already exceeds annual consumption of 21 trillion cubic feet, and even with the emergence of exports there's a near glut on the market that virtually assures the gasoline gallon equivalent (GGE) price of a little over $2 isn't headed higher in the foreseeable future.

For an 18-wheeler that covers 120,000 miles a year and gets six miles to the gallon, that $2 a gallon difference represents annual fuel savings of $40,000 a year. That difference is spurring solutions to the double whammy that's stymied displacement of diesel trucks up to now: a dearth of vehicles equipped to run on natural gas, and a dearth of fueling stations to support them.

The largest company based in Knoxville, Pilot Flying J, is integral to the solution to the fueling problem. Via an exclusive partnership with Houston-based Clean Energy, some 100 of Pilot's 550 truck stops spanning the country are due to be equipped with liquefied natural gas (LNG) fueling stations over the next two years to constitute what's being billed as America's Natural Gas Highway. Clean Energy, whose largest shareholder is megabillionaire Boone Pickens, is investing $450 million in these stations, including $150 million provided by the nation's second-largest natural gas producer, Chesapeake Energy.

"Boone Pickens is a good friend of ours and partnering with him gives us an opportunity to be in the forefront if LNG really takes off," says Pilot Flying J's CEO, Jimmy Haslam. "With 100 of these stations out there, we will have a nationwide network placed such that trucking companies can go anywhere in the country and we'll have the fuel to take care of them."

Clean Energy will build the stations and the supply the fuel and Pilot Flying J "will share the margins," Haslam says.

At the same time, the nation's largest truck-engine maker, Cummins, has entered into a joint venture with a natural-gas engine speciality firm, Westport, to produce an LNG engine powerful enough to pull a fully loaded 18-wheeler on just about any terrain. The new Cummins Westport 12 liter, 400 horsepower LNG engine is due to come on the market at the end of this year and isn't expected to cost much more than a comparable diesel engine. However, the specialized fuel tank needed to store the highly pressurized LNG at the very low temperature of -260 degrees Fahrenheit and the fueling systems needed to convert it into gaseous form to feed the engine are expected to add on the order of $50,000 to the typical $150,000 cost of a fully equipped diesel 18-wheeler—at least initially, according to Richard Kolodziej, president of NVGAmerica, a trade association. But Kolodziej goes on to point out that, "If you're saving $2 a gallon on fuel, your payback time is less than two years, so you're going to be ramping up as fast as prudent."

Even so, the migration from diesel to LNG is expected to be evolutionary—as new trucks replace old ones in a fleet—rather than revolutionary because retrofitting existing fleets is impractical as a rule. So given truck lifespans of 10 years or so, Kolodziej looks out to 2025 before projecting displacement of most of the estimated 1.6 million barrels of oil a day that some four million "heavy duty" trucks consume.

The same holds true for conversion of another four million "medium duty" trucks that generally operate locally on a hub-and-spoke system around a central fueling station. Garbage trucks head the long list of vehicles in this category. One of the largest trash and recycling collectors, Waste Management, advises that 80 percent of the trucks it buys this year will run on compressed natural gas (CNG). But, again, it would be a decade before its entire fleet of 180,000 vehicles gets converted, assuming this year's replacement rate continues.

Collectively, medium-duty trucks are estimated to consume 400,000 barrels of oil a day, bringing the total subject to conversion to about two million barrels a year. While that's only 20 percent of last year's total oil imports, it's close to half of imports from OPEC's 12 member nations.

Scarcely a week goes by without an announcement that adds more impetus to the move to natural gas. For example, Chesapeake Energy and General Electric recently announced a partnership under which GE will produce CNG fueling stations known as "CNG in a Box." And within the past month both Chrysler and General Motors announced plans to introduce bi-fuel (CNG and gasoline) pick-up trucks later on this year.

The proverbial question of which comes first—vehicles or fueling stations—is still bedeviling extension of the NGV movement to automobiles. Hardly any of the nation's 160,000 gas stations have been able to justify the six-figure cost of CNG pumps. And the one home compression unit on the market, a product known as Phill, only delivers about one-half gallon of fuel per hour.