Compressed Natural Gas Vehicles and Kits

Story first appeared in ExxonMobil Perspectives.

With U.S. natural gas production booming, and the price of natural gas right now lower than the price of gasoline or diesel fuel, some are asking: Why don’t more of our cars run on natural gas?

Compressed natural gas (CNG) vehicles – the most common type of natural gas vehicle – have been around for decades. Today, natural gas accounts for about 2 percent of U.S. demand for transportation fuel, with most of that demand coming from fleet vehicles like buses and taxis.

Looking forward, we do see opportunities for natural gas to make an increasingly important contribution to U.S. transportation when it comes to certain fleet uses. But for average consumers, there are a number of challenges that limit the widespread adoption of natural gas vehicles. These include:

Vehicle cost. CNG vehicles are nearly 25 percent more expensive than conventional gasoline or diesel vehicles and nearly 10 percent more expensive than hybrids, based on equivalent models. For example, a CNG-powered passenger car available in the United States costs about $5,600 more than a similarly equipped conventional model, and a CNG-powered 18- wheeler costs an additional $60,000. Even with today’s low natural gas prices, it would take years for motorists to recoup these extra costs.
Infrastructure cost. For American motorists to fuel up on CNG as easily as they do today on gasoline and diesel, the U.S. would need to build an entirely new network of pipelines and service stations to accommodate high-pressure fueling. In a 2010 study, IHS-CERA estimated it would cost between $8 and $12 billion to have CNG facilities installed in just 10 percent of existing U.S. fueling stations. A single CNG station costs anywhere from $300,000 to $3 million more than a regular gas station.
Obviously, these two challenges are economic, and you’ve likely heard some supporters of CNG vehicles advocate for taxpayer subsidies and government support to overcome them. But other challenges to CNG as at transportation fuel are performance-related. For example:

Energy density. Just as foods like nuts and granola bars are popular with hikers because they pack a lot of calories into a small, light package, gasoline and diesel are popular with drivers because they are the fuels with the highest energy density. CNG has relatively low energy density; it contains nearly 70 percent less energy per gallon equivalent than gasoline or diesel. As a result, CNG vehicles pack less horsepower.
Frequency and duration of fill-ups. The lower energy density of CNG also means that drivers will have to fill their tanks more frequently to go the same distance. For example, you would have to fill a CNG-fueled passenger car about 1.7 times to go the same distance as its gasoline-powered equivalent. Refueling a CNG vehicle also takes longer – about twice as long as a standard passenger vehicle.
Cargo space. Because of CNG’s lower energy density – and its need to be kept under very high pressure – CNG vehicles are equipped with large, heavy fuel tanks (200 pounds versus 10 pounds for gasoline). These tanks reduce a car’s fuel economy and its cargo capacity. CNG-powered passenger vehicles currently have about half the cargo space of their conventional equivalents.
Given all these factors, where might natural gas-powered vehicles play a role? One important application for CNG vehicles is for commercial and municipal fleets with limited driving distances. For these vehicles, CNG can make economic sense because they can benefit from shared refueling locations and infrastructure costs. According to the Natural Gas Vehicle Coalition, buses account for more than 60 percent of all natural gas vehicles in the world.

We also are beginning to see expanded interest in the use of liquefied natural gas (LNG) as a vehicle fuel for commercial trucks in the United States. LNG, which is natural gas super-cooled to its liquid form, has a much higher energy density than CNG.

Demand for fuel for trucks, buses and other heavy-duty vehicles exerts a strong influence on U.S. transportation trends. Today, these vehicles — which are generally tied to commercial activity — account for about 20 percent of total U.S. demand for transportation fuels; by 2040, they will account for about 30 percent.

ExxonMobil supports the market-driven use of natural gas as a vehicle fuel. But a government push to subsidize or mandate the expanded use of natural gas in the transportation sector is a wrong turn.

National energy goals in the transportation sector – such as reducing Americans’ transportation costs and strengthening U.S. energy security – are better (and more economically) met through other methods, such as the expanded use of hybrid vehicles or improved fuel efficiency in conventional vehicles. This is, in fact, what we expect to happen. ExxonMobil’s Outlook for Energy projects that the average new car on U.S. roads in 2040 in will get 45 miles per gallon, compared to 22 MPG today, with hybrids and efficiency accounting for most of that improvement.

Like any fuel or technology, natural gas should compete with other transportation fuels on a level playing field – not one distorted by governments trying to pick which fuels and technologies will ultimately be the most successful. In this way, the nation’s energy needs are met at the lowest possible cost to consumers and taxpayers.


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Natural Gas Gains Recognition in Energy Industry

Story first appeared in The New York Times.

As horizontal drilling and the controversial extraction technique known as fracking have made domestically produced natural gas more available and sharply cheaper, that gas has been widely embraced by industry, electric utilities and trucking fleets.

There are about 1,000 natural gas stations in the United States (compared with nearly 160,000 gasoline stations) and only half of those are open to the public.

The rapid development of shale gas technology has helped reduce energy imports and, in some cases, encouraged companies producing petrochemicals, steel, fertilizers and other products to return to the United States after relocating overseas. Natural gas exports are growing and terminals built to hold imported supplies are being repurposed for international sales.

The American petrochemical industry, for example, uses natural gas as both its primary raw material, in the form of liquid ethane, and as an energy fuel. And cheaper prices have led to a major expansion of capacity in the United States.

The hydrocarbon molecules in natural gas are split apart and then recombined as building blocks for many products, including bulk chemicals and fertilizers. The chemical ethylene, which is largely derived from natural gas, is used to make things like pool liners, building insulation and food packaging.

According to the chief economist at the American Chemistry Council, European producers mostly use oil-derived raw materials for making these same products. The U.S. has a competitive advantage when oil is seven times as expensive as natural gas, but now there is more like a 50-to-1 advantage. The ‘shale gale’ is really driving this. A million B.T.U.’s of natural gas that might cost $11 in Europe and $14 in South Korea is $2.25 in the U.S. Partly because of that, chemical producers have plans to expand ethylene capacity in the U.S. by more than 25 percent between now and 2017.

A 2011 PricewaterhouseCoopers study estimates that high rates of shale gas recovery could result in a million new manufacturing jobs by 2025. The revived natural gas industry “has the potential to spark a manufacturing renaissance in the U.S., including billions in cost savings, a significant number of new jobs and a greater investment in U.S. plants.

The growing commitment to natural gas faces some headwinds because of continuing concern over the safety of fracking, which involves forcing pressurized fluids into shale formations to fracture the rock and release the gas deposits.

Some environmentalists say that fracking can cause drinking water to become contaminated with chemicals and released methane, which is a powerful naturally occurring greenhouse gas and the primary ingredient in natural gas. Other complaints tie the disposal of fracking wastewater to a series of small earthquakes. Some states and municipalities with questions about fracking have imposed temporary moratoriums on the extraction technique.

Despite these issues, natural gas is expanding its reach in manufacturing. The Nucor Corporation, which makes direct-reduced iron in a process heavily reliant on natural gas, said in 2010 that it would build a $750 million facility in Louisiana. In 2004, the company dismantled a similar Louisiana plant and shipped it to Trinidad.

According to Nucor, affordable domestic natural gas means its made-in-Louisiana direct-reduced iron, which is sold in pellet or briquette form as a raw material for steel mills, can be delivered at the same price as the product shipped from Trinidad. Affordable American shale gas has completely changed the economics.

Methanex, a Canadian company that makes methanol from natural gas is planning to move a plant from Chile to Louisiana, with production to begin in 2014. A Methanex vice president, said that the company had also shut down a Louisiana plant in the early 2000s. Certainly, the outlook for low North American natural gas prices is one of the reasons we selected Louisiana as a new location for our methanol plant.

Electric utilities see a significant natural gas price advantage over other fuels, but because of pending and potential environmental regulations they are also motivated by its status as the fossil fuel with the lowest carbon emissions. On March 27, the Obama administration proposed the first-ever rule to limit greenhouse gas emissions from new power plants. Natural gas plants are expected to meet the standard, but coal burners will have a much harder time. The electricity sector is the principal growth area for natural gas under carbon dioxide emission constraints.

Another advantage is that natural gas plants are cheaper to build than coal plants. Natural gas generally has a smaller footprint. Coal plants need to store coal, but natural gas plants get their fuel from a pipeline and don’t need physical storage. The Obama greenhouse rules would widen the price gap by requiring new coal plants to include carbon capture technology.

The United States still has a big investment in coal plants, and a transition will be gradual. The federal Energy Information Administration estimates that electricity generation from natural gas will increase about 9 percent in 2012, at the same time that coal production declines almost 5 percent. If there is a constraint on utility commitment to natural gas, it is the fuel’s history of large price fluctuations.

The share of natural gas as a transportation fuel has never been large, but it is growing rapidly. Refueling is an issue, because there are about 1,000 natural gas stations in the United States (compared with nearly 160,000 gasoline stations) and only half of those are open to the public. Only one automaker, Honda, sells a natural gas passenger car on the American market, and consumers are unlikely to buy them in large numbers any time soon. But the opportunities for truck fleets are quite different.

Almost 40 percent of new garbage trucks and 25 percent of new transit buses can run on natural gas, said the trade organization Natural Gas Vehicles for America. A chief executive of the truck maker Navistar, said that garbage truck number could grow to 50 percent by the end of next year. Navistar is also building long-range trucks.

Although natural gas cars and small trucks usually run on compressed natural gas, known as C.N.G., to avoid frequent refueling, the larger trucks will mostly use the liquefied form, L.N.G., which has much greater energy density per volume (but must be kept at very cold “cryogenic” temperatures).

Because of quick paybacks with a $1.50 a gallon equivalent price advantage, natural gas could capture 10 percent to 20 percent of the new tractor-trailer vehicle market within a year.

Chrysler, Ford and General Motors have all recently introduced “bifuel” pickup trucks that can run on both natural gas and gasoline. To ensure that such trucks have a place to fill up, Navistar has joined with a natural gas provider, Clean Energy Fuels, and Pilot-Flying J Travel Centers to locate stations 250 miles apart along Interstates. By the end of the year, Clean Energy hopes to have 75 stations open in 33 states.



Not only are automakers building natural gas co-dependent vehicles, there are also aftermarket compressed natural gas conversion kits out there that can be installed on existing gasoline using vehicles. Most notable vehicles are the Ford Motor Company's F-250 and F-350 Super Duty model trucks.

The aim was to make natural gas refueling available on the major trucking corridors. You don’t need 23,000 truck stops with natural gas, you need hundreds in the right places and you can move a lot of fuel. These stations will be where the trucks go now, and the economics look very good.

In March, Chesapeake Energy, a major natural gas producer, and General Electric said they would collaborate on developing natural gas infrastructure for vehicles, including construction of more than 250 C.N.G. stations beginning this fall.

The prospects exist for American producers to become significant natural gas exporters. In 2011, Dominion won approval from the Energy Department to export L.N.G. from its Cove Point terminal in the Chesapeake Bay to about 20 countries that have free trade agreements with the United States. It has applied for a permit to service the rest of the world. Dominion said that its terminal work force — initially intended to handle imports before the United States became a powerhouse producer — could nearly double with the added workload.


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