CVOC: Natural gas poised for growth

| August 22, 2012

Interest in natural gas as a heavy-duty truck fuel remains high and the fuel will increase as diesel prices rise — in spite of continued infrastructure and acquisition cost issues, panelists at the Commerical Vehicle Outlook Conference in Dallas, Texas, told attendees today.

The panel, moderated by Dr. R. Eugene Goodson, alternate energy expert and former CEO Oshkosh Truck consisted of briefings by:

Dr.  Kennon Guglielmo, president of EControls
Robert Carrick, sales manager, CNG/LNG Freightliner
Dan England, chairman, C.R. England

Dr. Guiglielmo and Carrick were bullish on the continued growth of natural gas in trucking applications. Guiglielmo, in particular, noted that there are already more than 100,000 heavy-duty vehicles in operation today in Asia that are running with great success. And although natural gas has been a potential energy option for decades, he explained that it was only in 2007 when natural gas production methods became efficient enough to allow the dramatic prices drops seen in the past few years. “Coal has been the premier power generation  fuel in the United States for decades,” Guiglielmo notes. “In facto, more than 50 percent of all the power generated in our country is from coal. But over the past five years,  that figure has dropped by 13 percent. And it’s all been replaced by natural gas. That’s equal to putting 600,000 to 700,000 natural gas trucks on the road, and still the price of natural gas has gone down.”

Carrick noted that  increasing volumes of scale will eventually bring down acquisition costs and adds that newer engines coming on line, particularly the 12-liter Cummins ISX12G next year and as well as future smaller displacement engines will give fleets greater options in experimenting with, and adopting natural gas.

“Freightliner, PACCAR, Volvo and Mack are all offering natrual gas trucks today,” Carrick notes. “So the quatlity of installation is much better than it’s been in the past offering Cummins’ dependable spark-ignited technoloyg. We are now at the point where if you, as a fleet, can buy fuel at the right price, we — and our colleagues and competitors — can build a natural gas truck for you.”

Carrick says the biggest remaining hurdle is still the infrastructure issues — fleets worry about being able to easily find fueling public fueling stations. “We hear this called a chicken-and-the-egg scenario,” Carrick notes. “Fuel providers claim they can’t build stations until more trucks are on the road. And fleets claim they can’t buy trucks until they have a place to fuel them. But the trucks are out there, and more are coming. The problem is quickly becoming one of we don’t have a place to feed the chickens we’ve already hatched!”

For his part, Dan England, CEO of C.R. England detailed his company’s initial validation tests running five dual-fuel diesel/LGN trucks on a dedicated route from Los Angeles to Las Vegas.  So far, England says, his results have been mixed. “We’re not real high on what’s happening right now,” he says, noting that maintenance costs have been higher than anticipated (an issue Guiglielmo said could be related to the highly complex dual-fuel system England opted to experiement with.)

“We feel the real break-even point for a natrual gas truck is when diesel fuel is somewhere around $4.80 a gallon,” England notes. “We’re obviously not there yet, so we’re not breaking even now. But PACCAR is working closely with us on this project and we’re looking forward to getting the Cummins 12-liter natural gas engine next year which will be much more suitable for our application. Overall, we’ve learned so far that we really need the acquistion costs to come down for these engines and the break-even point to come down to around $4.10 a gallon for diesel.”

England says his company jumped into natural gas because the fleet wants to be environmentally friendly and encourage energy independence for the U.S. “But we want to run profitably as well,” he adds. “Customers think a lot of savings from natural gas engines should be passed on to them. And we hope so. We feel the benefits should be passed along to both the customer and ultimately the consumer. But we also feel we should benefit significantly from the savings we hope to accrue from natural gas in the future.”

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