Natural gas payoff: Utility, ROI in construction trucking apps

| May 29, 2013

This report was authored by Equipment World Executive Editor Tom Jackson

Freightliner’s Cascadia 113 natural gas daycab is outfitted with a 12-liter Cummins ISX12 engine and can run on either CNG or LNG.

Freightliner’s Cascadia 113 natural gas daycab is outfitted with a 12-liter Cummins ISX12 engine and can run on either CNG or LNG.

Remember when fuel was $2 a gallon and you could fill your big trucks up without gasping? Those days may be coming back, but it won’t be diesel that’s so cheap. Thanks to hydraulic fracturing and horizontal drilling techniques developed over the last decade, domestic petroleum sources have grown so much that last year the United States produced more barrels of oil than Saudi Arabia. Many experts think that the United States could become self-sufficient by 2020.

Drilling technology also has uncovered a bonanza of natural gas. As with any commodity, when supplies increase, prices decrease. The sudden price drop has opened up an intriguing natural gas prospect for construction contractors – everything from half-ton pickups to Class 8 heavy haulers and vocational trucks.

Natural gas gaining steam | “Fleets – particularly medium-duty fleets – are sold on this ‘new’ fuel. They know it works. They know the vehicles are dependable. They know they’ll save money. The problem now is infrastructure. OEMs and aftermarket suppliers have answered the call for natural gas vehicles in both medium- and heavy-duty markets. Once the natural gas producers get fueling stations up and running and catch up to the OEMs, we’re going to see a natural gas revolution ripple across this industry.” –Overdrive Equipment Editor Jack Roberts in part of his coverage of the Indianapolis Work Truck Show in March. Find here further insights on other fueling/power alternatives showcased at the show and much more.

While natural gas engines and retrofits are not cheap – prices range from $5,000 to $11,000 for light- and medium-duty pickups, and $30,000 to $40,000 for a Class 8 truck – the key question is your return on investment. Does it pay to run a truck or a fleet on natural gas?

While cleaner air doesn’t add to your ROI, it could become a big factor in the decision-making process. As a transportation fuel, natural gas produces 20-30 percent less carbon dioxide than gasoline or diesel. The U.S. Environmental Protection Agency and environmental groups have targeted CO2 as the leading greenhouse gas – the main reason the Natural Resources Defense Council favors fracking and natural gas as a transportation fuel.

The fuel | Natural gas is methane. Propane, a different chemical, comes out of the same wells and sometimes also is included under the term natural gas. Once methane is extracted from the wells, it is processed in one of two ways, creating two different products:LNG or liquefied natural gas is chilled to minus-260 degrees Fahrenheit, creating a liquid fuel stored in insulated fuel tanks.

CNG or compressed natural gas is compressed to 3,000 to 3,600 psi to reduce its volume to manageable levels, where it is stored in thick steel-reinforced tanks.

In the right engine, LNG and CNG have almost the same horsepower and torque characteristics as diesel, so they’re suited to heavy applications. However, they require more onboard storage room for the fuel tanks, which also limits the vehicle’s range. That’s why natural gas trucks are suited best for hub-and-spoke-type operations from regional haul to vocational applications such as mixers and dump trucks.

The engines | There are no substantial differences between natural gas engines and their diesel- or gasoline-burning counterparts. The main mechanical elements – block, pistons, cams and cranks – remain the same. What is different – aside from the fuel storage tanks – are the fuel delivery systems and injectors. Since natural gas lacks the lubricating properties of diesel fuel, valve seats may need to be hardened to withstand wear better.

Several different engine types burn natural gas. Dual fuel: HPDI (high pressure direct injection) engines inject natural gas with a small amount of diesel to kick off combustion in the cylinder. HPDI engines do not need spark plugs, and the diesel cycle’s basic parameters are maintained. Partial diesel mode is possible, but in normal operating situations, diesel makes up only about 5 percent of the fuel used. These are popular in large displacement 12- and 15-liter engines and are being used in many mining trucks. Bi-fuel: These engines run on both natural gas and diesel or gasoline but not simultaneously. They don’t limit your range or restrict you to hub-and-spoke operations; you can run on the low-cost natural gas until you run out and then flip a switch and run on gasoline or diesel until refueling with natural gas. GM, Ford and Chrysler offer three-quarter-ton-and-up bi-fuel pickup trucks. The downside is you sacrifice some room and payload capacity for the extra fuel tanks. Dedicated: These spark-ignited natural-gas engines run and store natural gas only.

The price of natural gas is trending at about $1.50 to $2 per diesel gallon equivalent. Natural gas doesn’t have diesel’s energy density – it takes about 1.4 gallons of natural gas to equal the energy output of 1 gallon of diesel – so rather than make you do the math, the industry uses DGE to compare the two. A DGE of natural gas has the same energy content and will do the same amount of work as one gallon of diesel fuel, even though a DGE of natural gas will be larger in volume than a gallon of liquid diesel. As long as the DGE price difference from diesel stays in the $1.50 to $2 range, natural gas trucks can make financial sense for many fleets. Most experts predict that the $1.50-to-$2 price spread is here to stay.

Assuming you have a fuel source and applications that fit into a hub-and-spoke arrangement, the final puzzle piece is figuring out if natural gas trucks make financial sense for your company. A National Energy Policy Institute study found that a natural gas-powered Class 8 truck needed to run about 70,000 miles a year to be economically attractive when natural gas was $1.50 cheaper than diesel per DGE.

When diesel prices exceed natural gas prices by $2.50 per DGE – near where it is currently – natural gas becomes an attractive option at 30,000 to 40,000 miles per year, according to the study.

For medium-duty pickups, at $10,000 for the upcharge and a $2-per-gallon difference between diesel and natural gas, you’d have to consume the equivalent of 5,000 gallons of diesel to break even. If you’re getting 12 mpg, that’s only 60,000 miles, and after you reach the break-even point, the $2-per-gallon saved goes straight to your pocketbook.

ART WITH ABOVE SIDEBAR: ISX12 G-1.jpg Cutline: Torque and power curves almost are identical when comparing same-displacement natural gas and diesel engines, according to Westport, whose equipment is part of the Cummins ISX12 G engine that operates on 100 percent natural gas in either CNG or LNG form. The ISX12 G provides 400 hp and 1,450 lb.-ft. torque and suits a variety of heavy-duty vehicles, including regional-haul truck/tractor, vocational and refuse applications.

Torque and power curves almost are identical when comparing same-displacement natural gas and diesel engines, according to Westport, whose equipment is part of the Cummins ISX12 G engine that operates on 100 percent natural gas in either CNG or LNG form. The ISX12 G provides 400 hp and 1,450 lb.-ft. torque and suits a variety of heavy-duty vehicles, including regional-haul truck/tractor, vocational and refuse applications.

Chesapeake Energy Corp. converted 5,000 of its vehicles to GM’s natural gas system and claims savings of $11-$12 million annually on fuel costs.

Grants and financial incentives for natural gas vehicles and conversions are available in some areas. Check out Cascade Sierra Solutions and the federal Clean Cities Coalition. The federal government maintains a database of natural gas incentives and laws.

Fueling
Filling up a natural gas truck with LNG or CNG is not as simple as tanking up with diesel. Pressurized systems at CNG refueling stations offer either a “timed” fill or a fast fill. Timed fills can take 5 to 8 hours (you leave it overnight) but result in a more complete fill, and it’s less expensive. “Fast” fills offer times almost as fast as diesel, but more fuel storage and pressurization make them slightly more expensive.

LNG fills about as fast as liquid diesel, but because it’s cryogenic, you must wear gloves, eye protection and closed-toed shoes; training and familiarity with the equipment is required.

For large quarry and mining operations, some natural gas vendors are building refueling stations on their customers’ sites. These may be fed by pipelines or a steady stream of natural gas delivery trucks. As of last year, there were 992 CNG and 47 LNG refueling stations in the United States. To find facilities, visit afdc.energy.gov/stations.

For operators and fleet owners considering investment in natural gas trucks, Westport Innovations, whose NG-power equipment is included in much of Cummins’ NG lineup, is holding an online seminar June 18, 2013, examining CNG and LNG fuel options. Details here.