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Lafayette has been pegged as the “state’s most aggressive” mover toward compressed natural gas as a viable alternative fuel for vehicles. And as other cities and parishes look to Lafayette as a leader for reducing fuel costs and curbing harmful emissions, some industry leaders say Louisiana could be tops in the nation for its natural gas use.

According to a report from The Advocate, Louisiana Oil and Gas Association Vice President Gifford Briggs says major American motor companies are finally investing in mass-produced trucks that run on both natural gas and gasoline. But like Lafayette’s CNG success story, the CNG movement is largely based on local governments using CNG for public fleets and the incentives offered for making the conversion.

As IND Monthly reported in June, Lafayette has used state and federal grant money to convert five of its buses to run on CNG. The end goal is to have more than 100 city-owned vehicles converted to CNG within two years, while also working with UL Lafayette and the Lafayette Parish School System to have their transit buses running on the clean-burning fuel within the same time frame.

The Advocate notes that Louisiana is home to 10 CNG public fueling stations, two of which are up and running in the Hub City. Privately owned Apache opened the city’s first public station on Verot School Road in July, while LCG’s public works facility has its own fueling station. LCG is also slated to open another CNG fueling station soon on North University Avenue, with long-term plans calling for a fourth station in the next few years along I-49 or I-10:

Louisiana has seen CNG advances because of its Haynesville Shale natural gas formation, LOGA, the energy industry, and companies like Chesapeake Energy Corp., Encana Corp., Petrohawk Energy Corp. and Apache Corp., Briggs said. But trying to get Mississippi, Alabama and Florida and other states that don’t have the energy infrastructure to support CNG has been more challenging.

That may be changing. Twenty-two states are part of an effort, led by the governors of Oklahoma and Colorado, to encourage automakers to make more affordable CNG vehicles for state fleets. Oklahoma Gov. Mary Fallin has said the governors hope their efforts will help overcome some of the obstacles automakers face in producing a wider variety of CNG vehicles.

State government buys only about 40 percent of the public-sector vehicle purchases, Ming said. Municipalities and other political subdivisions account for 60 percent of sales.

If the municipalities — city and parish governments — tag along, the CNG sales could be significantly higher, Ming said.

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Join Chesapeake Energy Corporation and the Minden-South Webster Chamber of Commerce for a CNG/LNG Workshop.
Monday, August 20, 2012 from 11:30am to 1:00pm.
Minden, LA Civic Center at 520 Broadway, Minden, La.
Contact Sarie Joubert at sarie.joubert@chk.com or at 318-674-7206.

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Apache Corporation (NYSE, Nasdaq: APA) was joined by the Lafayette, La., city-parish president and other local dignitaries to commemorate the opening of the company’s first public-access compressed natural gas (CNG) fueling station in Louisiana.

“The state of Louisiana is a leader in supporting increased use of natural gas,” said Rod Eichler, Apache’s president and chief operating officer. “The addition of this CNG fueling station in Lafayette is a step toward building the infrastructure needed to fuel America’s cars and trucks with natural gas, a cleaner-burning and abundant domestic resource.”

Eichler and several Louisiana dignitaries attended the opening ceremony held at the Apache-branded station at 515 East Verot School Road. The event showcased a variety of natural gas-powered vehicles, including some of the city’s natural gas-powered buses. Lafayette is in the process of converting its entire fleet of buses and many of its city vehicles to natural gas power.

Dignitaries on hand to show their support for the station included: Joey Durel, Lafayette city-parish president; Keith Mosing, chairman and CEO of Frank’s; Rob Guidry president and CEO of the Greater Lafayette Chamber of Commerce; and Gifford Briggs, vice president of the Louisiana Oil and Gas Association, which has been a strong partner with Apache in its efforts to increase the use of CNG in vehicles.

“The infrastructure investment to enable Lafayette’s deployment of CNG is critical,” Durel said. “This investment is helping to forge partnerships, both public and private, that are decreasing the operating costs of private companies and governments in our area. Congratulations to Apache, and thank you to our many partners who are helping to ensure that this investment will be a true success for all of Lafayette.”

Guidry said the station helps provide momentum for increased CNG conversion.

“This event reflects a major advancement of the Chamber’s goal of expanding the market for CNG,” said Guidry. “Apache’s leadership in investing in this infrastructure provides strong impetus to those considering conversion programs.”

The site of the station was chosen in large part because of its proximity to a concentration of large public and private natural gas fleet vehicles. Apache’s CNG fueling station will provide local government, private industry and the public with an economic and environmentally friendly alternative to gasoline.

“Frank’s is pleased to do its part in getting this natural gas filling station opened,” said Mosing of Frank’s, which provided the land for the Apache-branded station. “There is an abundance of natural gas available and I believe we are heading in the right direction to continue to develop and use natural gas as a fuel source.”

CNG-powered vehicles showcased at the event included:

Lafayette City-Parish bus

Lafayette Parish Sheriff’s patrol car

Frank’s 3/4-ton Chevrolet field service truck

Apache Corp.’s Tahoe and Chevrolet Silverado

Ford Westport LD OEM F-250 truck

LEAM Drilling service vehicle

Ford Expedition of Gifford Briggs, vice president of the Louisiana Oil and Gas Association

Acadian Ambulance as converted by Tony Parich, owner of Control Tech.

The station boasts two dual-hose fueling dispensers capable of fueling four cars simultaneously at a rate of three-to-four gallons equivalent per minute. The self-service station accepts a broad range of credit cards, as well as standard fleet cards.

The station is unattended, but customers may contact an Apache representative with questions about CNG refueling anytime by calling a toll-free number posted on the fueling pumps.

Apache currently has converted 274 vehicles to run on CNG and plans to convert a total of 350 of its fleet by year’s end. By 2015, the company expects to have 80 percent of its 1,000-plus fleet in the U.S. converted.

Apache also offers financial incentives to its full-time employees who choose to switch to CNG. All full-time Apache employees who purchase a new dedicated CNG vehicle or convert their vehicle to CNG receive a $5,000 Visa credit card for purchasing fuel.

Currently, there are more than 120,000 natural gas vehicles on U.S. roads today and more than 15 million worldwide, according to NGVAmerica. Industry data shows that vehicular natural gas nearly doubled between 2003 and 2009. In 2010, natural gas displaced more than 350 million gasoline gallon equivalents. The International Association for Natural Gas Vehicles estimates that within 10 years there will be more than 50 million natural gas vehicles – or, about 9 percent of the world’s transportation fleets – on the road worldwide.

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While the latest buzz is centered on the “drop” in gasoline prices, reality indicates that gasoline is still well over $3 a gallon. These prices translate to continual pain at the pump causing many drivers to rethink their daily driving schedule.

With the price of crude oil hovering in the mid $80s, gasoline prices will not be coming down to a reasonable point any time soon. An obvious answer to this national problem of high gasoline prices should be the use of natural gas in America’s vehicles. Daily news articles across the country are constantly stating and or complaining that America has a glut of natural gas from the shale boom that has been taking place over the last four years. How can this glut be used for the country’s good?

Natural gas can be utilized in a vehicle in two ways: compressed, or CNG, or liquefied, or LNG. CNG and LNG are two terms that get tossed around in the media, but with little explanation to the consumer as to what they are, how they can be used, and what cost and savings are involved when using them.

CNG is typically used in lightweight and medium-duty vehicles, such as a Honda Civic or a Chevy, Ford or Dodge truck. Tanks are installed in the trunk of a car or in the bed or a truck from the factory, or can be installed by a licensed professional after market. While the initial costs for a new vehicle equipped with a CNG tank are around $10,000 to $12,000 more than a standard gasoline vehicle, state tax rebates are available in Louisiana and other states that reduce the cost significantly to the consumer.

Any additional costs left after the rebates are recuperated in a minimal time due to the drastic savings at the pump. CNG is selling for around $1.75 per gallon as opposed to the over $3 per gallon one pays in regular gasoline. CNG home-pumping stations are also available, again, with tax rebates accessible to recuperate the expense of the home unit.

A gallon of CNG dispensed into your vehicle from a home unit is less than 50 cents per gallon. The savings are quite obvious once the numbers are compared between CNG and gasoline.

Liquefied natural gas is another avenue for our natural gas supply to be used in the vehicles that drive our nation’s economy. LNG is typically used in large eighteen-wheelers, construction equipment, locomotives and barges that travel our waterways. While LNG requires larger tanks and is more user-friendly for larger scale vehicles, it also is a better fuel for high-mileage travel due to the process to which it is burned in the vehicle.

LNG and CNG are not only cheaper fuels, but they also burn at a higher octane level than gasoline giving a longer lifespan in the engines to which they are used. While price and quality are important factors to consider, the most important element to keep in mind is that natural gas is produced right here in Louisiana.

Don Briggs is president of the Louisiana Oil and Gas Association. His column is published every other week.

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Louisiana as a whole is “way behind” on the use of compressed natural gas as a cheaper and cleaner fuel for vehicles, but leave it to Lafayette to once again distinguish itself a leader in the state for its efforts to lower the city’s carbon emissions with CNG-run government vehicles and natural gas fueling stations for the public.

Lafayette Consolidated Government Planning Manager Mike Hollier says the city is roughly 2.5 years into its five-year plan to convert all of the city’s buses and most city-owned vehicles (more than 100) to run on CNG.

The benefits for the city and its residents are two-fold, Hollier says, because CNG is both cheaper (about $1.80 per gas gallon equivalent) and helps to lower the EPA-monitored carbon footprint in Lafayette.With grant money in place from both the state and the federal government, Lafayette has already converted five of its buses to run on CNG. Hollier hopes to have more than 100 city-owned vehicles converted to CNG within two years, while also working with UL Lafayette and the Lafayette Parish School System to have their transit buses running on the clean-burning fuel within the same time frame.

The city currently has two CNG fueling stations in operation — the privately owned Apache station on Verot School Road and the LCG-owned station at the public works facility — and a third slated to open in the next few months. That one, on North University Avenue, will be LCG-owned and open to the public. The five-year plan, if successful, will also bring a third public fueling facility (Apache is open to the public) to an undetermined location along I-49 or I-10.

“After two years and a lot of study, it was decided that CNG was the way to go both in the short term and the long term,” Hollier says. “There’s a very positive cost benefit. There’s an additional capital outlay up front, [but] once you make those conversions, the benefits begin to pay off in a matter of years.”

Louisiana is the nation’s top producer of natural gas, according to Louisiana Oil and Gas Association Vice President Gifford Briggs, a factor Hollier says played a role in the city’s decision to invest in CNG.

“It’s home-produced and readily available all around us,” Hollier says.

CNG conversion is a no-brainer for oil and gas industry advocates like Briggs, who notes that the U.S. has a 100- to 150-year supply of natural gas.

Briggs, who commutes daily from his home in Lafayette to the LOGA office in Baton Rouge, has so much faith in the future of natural gas he decided to “put his money where his mouth is” and converted his own Ford Expedition to a “bi-fuel” SUV that runs on both gasoline and CNG. The LOGA lobbyist is able to take advantage of two different types of CNG fueling stations — the Apache station on Verot as well as a home fueling station that’s been installed at LOGA’s office, the Jimmy Davis House in Baton Rouge.

“Apache donated the whole thing,” Briggs explains. “For all practical purposes it’s a box with a hose coming out of it that’s connected to our natural gas line. It’s similar to what we’d do to electric vehicles.”

Money, however, is one of the reasons natural gas hasn’t taken off as quickly as many had hoped in terms of replacing gasoline as the primary means of fueling vehicles. As a recent Wall Street Journal report notes, government agencies using dump trucks, buses and other gas guzzlers and heavy polluters are more eager to jump on board with the start-up costs that come with CNG conversion. The average American is less enthusiastic about conversion costs that run in the thousands, and before recently factories weren’t even churning out CNG-ready vehicles for consumers to consider.

But the nation and Louisiana are finally catching up with the rest of the world when it comes to CNG, Briggs says, with Ford, Dodge and Chevrolet all slated to place bi-fuel pickup trucks on the market soon, albeit in limited availability.

The 100 percent CNG Honda Civic could be available for purchase at Moss Motors within six months thanks to the Apache CNG station that recently opened and the plans for more CNG stations to come. Briggs notes that Honda does not allow dealerships to sell the CNG model unless there’s a fueling station within 25 miles.

“We have enough natural gas to fuel transportation infrastructure, and we rely heavily on oil from countries outside the U.S.,” Briggs says. “It’s cheaper; it’s better for the environment. It seems like it’s such an obvious win for Louisiana because we could very easily become energy independent.”

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East Baton Rouge is attempting to go green, and it’s starting with its vehicles.

Department of Public Works Director William Daniel said the city-parish is beginning the process of transforming its vehicles into a fleet that’s run by compressed natural gas.

Natural gas is a less expensive alternative fuel source to diesel and gasoline, and its harmful emissions are lower, Daniel said.

“We can save money (on fuel costs) and serve the people of the parish more efficiently by doing this,” Daniel said, noting that the switch is part of Mayor-President Kip Holden’s sustainability plan for city-parish government.

The city-parish selected a consultant, Professional Engineers Consultants Corp., to oversee the transformation, Daniel said. The contract is still in negotiations and will go before the council for approval within the next few weeks.

Next, the city-parish will seek requests for proposals from contractors. Costs, funding strategies, the time line and scope will be determined by the contractor who lands the bid, Daniel said.

There are hundreds of vehicles operated by the city-parish, but the contractor will ultimately recommend how many vehicles and what departments should be converted to CNG, Daniel said.

David Guillory, assistant DPW director, said his agency will be particularly interested in replacing its maintenance and operations vehicles, which include heavy dump trucks, tractors and large pickup trucks.

“We do have a lot of passenger vehicles, but it’s the heavy-duty pickups that we’d really like to save on fuel and burn cleaner fuel sources,” Guillory said.

The initial investment to convert to CNG is expensive because it requires new vehicles and fueling stations.

Gifford Briggs, vice president of the Louisiana Oil and Gas Association, said it costs about $10,000 to convert a vehicle to CNG, and fueling stations are between $1 million and $2 million to build.

Daniel said he expects there will be federal and state funds available to assist with financing. Also, he said, the city-parish could make an arrangement with the contractor to finance the project through the city-parish’s expected fuel cost savings over several years.

Briggs said CNG costs about $1.79 per “gasoline gallon equivalent,” and can run as cheap as 50 cents a gallon equivalent if an entity is using its own fueling station.

Baton Rouge follows in the footsteps of Lafayette and Shreveport, which already have some city buses that run on CNG.

Baton Rouge’s bus system, the Capital Area Transit System, is quasi-independent from the city-parish and has opted to pursue hybrid-electric buses rather than CNG partly because of the initial investment.

Lafayette also has about 41 other “nonbus” vehicles, Briggs said, ranging from police to public works vehicles, that use CNG.

But Briggs cautioned that it does not always make financial sense to convert.

“It depends on the source of the funding, and it depends on the mileage that a vehicle travels in any given year and how much fuel they consume,” he said. “If you’re using local or state tax dollars it may not make much economic sense because of the conversion costs.”

Briggs said converting makes sense for the “heaviest users of fuel,” which includes buses, street sweepers, garbage trucks and vehicles that travel more than 12,000 miles per year.

But, he added, “if the money comes from a grant, and you get the conversion costs for free, then anything makes sense because you’ll save on fuel regardless.”

Briggs said there should be plenty of federal funding opportunities for the city-parish, noting that when federal stimulus money was made available to the state in recent years, there were not enough applicants to spend the money.

Baton Rouge has a few CNG stations already, Briggs said — including at least three that are run by Entergy.

The city-parish also has a CNG station that was funded by a grant more than five years ago, Guillory said.

The grant also paid for five Honda Civics that run on CNG and are used by DPW inspectors.

But, Briggs said, the technology has changed since that station was built, and CNG vehicles are now built differently.

He said those cars have smaller fuel tanks than new CNG vehicles, and the station fuels cars very slowly.

Daniel said he hopes the first phase of the conversion will begin by next year.

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As billionaire T. Boone Pickens and politicians on Capitol Hill debate whether to offer tax credits to help facilitate a transition to natural-gas-fueled trucking fleets, U.S. automakers Chrysler and General Motors (NYSE: GM, Stock Forum) are rolling out their own plans for natural-gas-powered vehicles (NGVs).

Chrysler’s model – a heavy-duty Ram truck that runs on a combination of compressed natural gas and gasoline – is expected to begin production in June, while General Motors’ “bi-fuel” Chevrolet Silverados and GMC Sierra 2500s, which are retrofitted with compressed natural gas tanks, are forecast to hit production lines in the fourth quarter of this year.

Up until these announcements, the U.S. had only one dedicated natural-gas-powered vehicle – the Honda Civic GX.

However, one chink remains in the chain for a possible transition to commercially viable NGVs in the U.S.: How will people who purchase NGVs fill up their tanks?

Gifford Briggs, vice president of the Louisiana Oil and Gas Association, claimed that – since, unlike gasoline, natural gas equipment cannot be stored underground – the real estate necessary for building infrastructure to support NGVs will take years to finance and build:

For natural gas stations, storage tanks, dryers, compressors and other equipment need to be stored above ground, which takes a lot more real estate to put a station in. For a highway truck stop it wont [sic] be a problem, but for every gas station on the highway or in the middle of a city, that creates a problem.

NGV for America – a natural-gas-industry trade association – claims that there are roughly 1,000 NGV fueling stations in the U.S., but only half are open to the public. Many of the other 500 NGV fueling stations are used exclusively by public transit systems, which accounted for 62% of all vehicular natural gas uses in 2010.

Hope is on the horizon, as Chesapeake Energy (NYSE: CHK, Stock Forum) – the world’s second-largest producer of natural gas – and General Electric (NYSE: GE, Stock Forum) recently announced plans to fund numerous liquefied-natural-gas fueling stations along major U.S. corridors.

According to the plan, GE will provide more than 250 modular and standardized natural gas (CNG) compression stations. This “CNG in a box” will provide core infrastructure to enable expanded access to CNG fueling stations and other designated installations.

The two conglomerates claim that a vehicle using CNG can reduce annual fuel costs up to 40%, representing a total annual savings of $1,500 per vehicle. Additionally, for each vehicle using CNG in a box instead of gasoline, a fleet operator can reduce CO2 emissions from fuel combustion annually by roughly 24% (or 2.2 metric tons) per vehicle.

At the moment, the U.S. has 112,000 natural-gas vehicles on the road, while there are over 13 million NGVs operating worldwide. According to Gas and Vehicle Report, the U.S. currently ranks 14th worldwide for NGV use, well behind top-ranked Pakistan, which currently has 2.9 million NGVs on the road.

Whether you are a proponent of global warming or not, a transition to a domestically harvested, cost-effective, and clean-burning alternative such as natural gas has benefits that stretch far beyond environmental impact. And, since the International Energy Agency forecasts that the global over-supply of natural gas could continue until 2030, U.S. automakers and conglomerates are simply responding to market forces.

It might not be an overnight energy revolution, but as long as unconventional production maintains the current supply glut (and thus low prices), the market will continue to be nudged in this direction.

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GE GE +0.27% and Chesapeake Energy Corporation CHK +0.17% today announced a collaboration to develop infrastructure solutions that will help accelerate the adoption of natural gas as a transportation fuel. This groundbreaking technology and services project marks a significant milestone toward increasing energy independence in the United States through the increased use of natural gas–an abundant, reliable and cleaner-burning source of energy for both consumers and commercial users.

To formalize the agreement, GE and Chesapeake have signed a memorandum of understanding on a product and services development partnership, representing a multi-year collaboration between the two companies to develop and bring to market compressed natural gas (CNG) and liquefied natural gas (LNG) transportation and natural gas home-fueling solutions. By improving access to CNG, which is most commonly used in light- to medium-duty vehicles such as pickups, vans, SUVs, taxicabs, transit buses, refuse and delivery trucks as well as consumer vehicles, along with LNG, which is commonly used for heavy-duty industrial purposes, dependence on foreign energy sources can be reduced while simultaneously lowering fueling costs and vehicle emissions.

The collaboration is designed to leverage GE’s global Oil & Gas technology portfolio with Chesapeake’s expertise in developing innovative fueling solutions to lower the ownership and operational costs of natural gas vehicle (NGV) fueling stations. With the development of shale resources dramatically increasing the amount of low-cost natural gas in North America, the GE-Chesapeake collaboration can help incentivize operators to put more NGVs on the nation’s highways.

As part of today’s announced collaboration, beginning in the fall of 2012 GE will provide more than 250 modular and standardized CNG compression stations for NGV infrastructure. These units, also known as “CNG In A Box(TM),” have gone through GE’s rigorous ecomagination-qualification process and will provide the core infrastructure to enable expanded access to CNG at fueling stations and other designated installations.

A vehicle using CNG can reduce annual fuel costs up to 40 percent, assuming 25,700 miles per year driven, gasoline priced at $3.50/gallon and CNG at $2.09/gasoline gallon equivalent. This represents savings totaling as much as $1,500 per fleet vehicle per year. In total, for each fleet vehicle using fuel provided by CNG In A Box instead of gasoline, a fleet operator can reduce CO2e emissions from fuel combustion by about 24 percent, or 2.2 metric tons per vehicle annually, assuming an average fleet vehicle travels approximately 25,700 miles per year.

“Both GE and Chesapeake are known for taking on tough energy challenges and putting the best minds and technologies to work to develop solutions,” said Aubrey K. McClendon, Chesapeake’s Chief Executive Officer. “The partnership announced today between GE and Chesapeake’s affiliate, Peake Fuel Solutions, combines Chesapeake’s natural gas expertise with GE’s extensive global manufacturing capabilities and will bring transformative products to industries and individual consumers across the U.S. These products and services will allow customers to enjoy the clear advantages of clean, affordable and abundant American natural gas at about half the cost of gasoline.”

Said GE Energy President & CEO John Krenicki, “GE is fundamentally committed to natural gas–our technologies help extract it, move it and turn it into power, whether it’s highly efficient gas turbines delivering electricity at the utility scale or, in the near future, a vehicle at a refueling station. What makes this project particularly exciting is that it paves the way to taking the immense reserves of natural gas being discovered in the U.S. and using them right here in the U.S. That paves the way for faster economic growth, energy security, more jobs and reduced environmental impact.”

This CNG technology will be brought to market by Peake Fuel Solutions–a Chesapeake affiliate–which has extensive experience with natural gas vehicles, vehicle emission controls and natural gas market dynamics. Chesapeake also brings considerable in-house expertise in CNG market development to the GE collaboration, including retail station relationships, fleet outreach and education programs and policy engagement.

CNG In A Box takes natural gas from a pipeline and compresses it on-site at an industrial location or at a traditional automotive refilling station to then turn it into CNG. A CNG vehicle, such as a taxi, bus or small truck, can then refill its tank using a traditional fuel dispenser, much like those used for diesel or gasoline refueling.

Key features include:

– The gas compression, storage, cooling, drying and controls are easy to ship and maintain due to its compact “In Box” design.

– The units come in two configurations: an 8 foot x 20 foot container or 8 foot x 40 foot container, depending on the site’s need.

– Its modular and intuitive design makes it “Plug & Play” on-site.

– The offering includes GE Wayne branded dispensers with credit card capability and provision for “Point Of Sale” interface.

– The fuel dispenses at a rate of about 7 gasoline gallon equivalent per minute.

Other elements of the new collaboration include:

– Aftermarket services for natural gas fueling infrastructure.

– GE’s LNG fueling plants, which adapt GE’s proven large-scale LNG liquefaction technologies to smaller-scale operations. Using LNG as a substitute for diesel or fuel oil can reduce combustion emissions up to 25 percent.

– Development of home refueling technologies.

– Co-marketing of products and services resulting from the partnership.

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