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Research teams at the Gas Technology Institute (GTI) are working to lower the costs of adoption of natural gas vehicles (NGVs) and their fueling infrastructure, particularly first-cost entry. One key example of these initiatives is a new mobile fueling technology developed by the organization, recently debuted at the 2012 Republican and Democratic National Conventions.

The FuelMule is a mobile fast-fill compressed natural gas (CNG) fueling station that gives NGV fleets fueling capability at their home base—or anywhere—without the need to build a fueling station. GTI has worked with Ultimate CNG to bring the technology to fruition and help reduce barriers to market entry for NGVs.

“This technology helps to overcome the capital investment issues associated with building new fueling infrastructure,” says Tony Lindsay, R&D director at GTI. “In the past, there haven’t been enough NGVs to justify the high investment in building many fueling stations, and there are too few stations to allow widespread growth and adoption of NGVs in various fleets. This new innovation can work to balance things out with its ability to bring fueling capability to where it’s most needed.”

Dennis Pick, president of Ultimate CNG noted, “With FuelMule CNG fueling services, no longer must fleets choose between the convenience of diesel and clean natural gas. They can have access to CNG with no capital investment required and no fueling infrastructure maintenance.”

America’s Natural Gas Alliance (ANGA) provided 12 NGV shuttle buses used at the national political conventions to give delegates and guests a first-hand experience with these alternative-fueled vehicles.

Regina Hopper, ANGA’s president and CEO, added, “Our message in Tampa, Charlotte, and beyond is that this is an extraordinary opportunity for our nation, and it’s time to get on board with this American fuel choice. Companies and local leaders across the country are embracing natural gas as a fuel choice and calling for more vehicle options and filling stations to help drive greater use.”

In Tampa, NGV buses transported convention participants to several hotels and local attractions. Local utility TECO Peoples Gas partnered with Ultimate CNG to provide CNG fuel for the buses. As an important demonstration of the technology’s capabilities, the FuelMule made the 1,372-mile drive from Janesville, Wisconsin, to Tampa, Florida, without having to stop once for fuel—it fueled itself.

In Charlotte, North Carolina, Piedmont Natural Gas Company helped to keep the buses rolling for the Democratic Convention, with the FuelMule mobile fueling station quietly working in the background to keep things moving along.

CNG fuel provides significant cost savings over diesel-fueled vehicles—it costs about $1.69 less per gallon equivalent compared to diesel—and offers fleets a domestic fuel choice that is cleaner for the environment. The FuelMule fast-fill CNG can service an entire fleet quickly and easily, saving significant time and money.

The FuelMule station is equipped with a reciprocating gas compressor capable of dispensing eight diesel gallon equivalent (DGE) per minute at a pressure of 3,600 pounds per square inch (psi). The FuelMule’s payload area is fitted with light-weight, carbon composite tanks providing on-board storage capacity of 700 DGE. One of the novel aspects of the system is that the CNG compressor is driven by the same dedicated natural gas engine under the hood of the truck that is used to motor the vehicle down the road. It can fuel 35 to 50 medium to heavy-duty vehicles, and separate electronic metering allows filling two vehicles simultaneously. Loading of the FuelMule can take as little as two hours, also utilizing the on-board compressor.

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As America finds more reserves of natural gas, the auto industry is sure to take notice.

Natural gas got a strong vote of confidence as a future vehicle fuel at the Society of Automotive Analysts Strategic Planning Summit in Southfield, Mich., last week.

New methods of extracting the gas are one of the biggest changes affecting the auto industry in years, General Motors chief economist Mustafa Mohatarem said.

“The U. S. now has a 100-year supply of natural gas,” he said. “I’d make a bet it’s the next big transportation fuel. The price is so much lower than gasoline — people will find a way to use it.”

The idea got a second from John Casesa, senior managing director of investment banking at Guggenheim Partners. “We’re also very high on natural gas,” he said. “It’s a massive change for the United States, and probably a big deal for the motor industry.”

But it makes you wonder. U.S. automakers fielded some natural-gas models in the 1990s and haven’t shown much interest since. Only Honda makes a natural gas car for average consumers, a version of the Civic. So far, the biggest interest is among companies that operate fleets and can centrally fuel natural gas vehicles, not consumers.

Long-haul trucking might be the first field to make widespread use of the fuel, but other vehicles will follow, Mohatarem predicted.

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Automakers see a rare opportunity for natural gas vehicles to break into the market, but they continue to see the biggest opening in trucks and buses, not passenger cars.

For these cars, the engineering and infrastructure challenges remain too daunting, auto executives said at a conference here last week.

But for fleets, they said, cheap shale gas has strongly abetted the business case for using natural gas.

“The smaller the vehicle, the more electric powertrains make sense. And the larger the vehicle, the more you get toward CNG [compressed natural gas] or biodiesel,” said Jon Coleman, fleet sustainability and technology manager at Ford Motor Co. “And the reason is that whatever you get the vehicle for, it has do to what you intend it to do.”

For the moment, fleet managers intend to take a hard look at natural gas. The vehicles have been around for decades, but automakers have made them available only in small batches.

The main reasons: Fleet operators were unsure how they would refuel the vehicles. And natural gas vehicles cost more than the diesel models, so it could be hard to financially justify the switch.

Today, the panelists said, the tide has shifted. All of the major truckmakers are offering natural gas models, and some have “bi-fuel” models that can also run on gasoline. The price of natural gas has plummeted thanks to U.S. shale drilling, shrinking the time that it takes for a natural gas truck to pay for itself.

Those shifts could even reach the long-haul trucking industry, said Sam McLaughlin, an engineer at Volvo Powertrain North America. In recent years, fleet managers were deterred by the extra cost of the trucks — $30,000 to $50,000 more than diesel models — and the lack of fueling stations on the interstate.

“Both of those concerns are — if not already being addressed — they will shortly be addressed here, probably by the end of this year,” McLaughlin said.

The price hasn’t hurt, either. Liquefied natural gas, or LNG, the preferred fuel for long-haul trucks, cost between $2.60 and $2.80 in June, when measured in terms comparable to diesel. According to the Energy Information Administration, diesel cost $3.76 a gallon, with taxes, in June.

Businesspeople and energy experts gathered here, just miles from active production in the Marcellus Shale, to find new uses for natural gas. Their own experience has been instructive: As one of the low-cost regions in the United States, the Marcellus has experienced a boom and retrenchment in drilling.

Now, U.S. natural gas prices look poised to stay low for decades, prompting industries to think about how they can make use of it.

In transportation, one question is where the benefits of natural gas dry up. Dick Kauling, powertrain engineering manager for gaseous fuels at General Motors Co., described the company’s struggles with whether natural gas can work in a passenger car — and whether that’s a battle worth fighting.

If the car uses CNG, its tank will be four times the size of a gasoline tank, using today’s technology. If GM builds a car from scratch — building around that tank — then it can be done, he said. But whether it is a car people want to drive, and one that pays back GM’s investment, is a tougher question.

Coleman, of Ford, said customers often ask why the company doesn’t offer a natural gas passenger car.

“Functionally, it doesn’t work. Where do you put the tank?” he said. “If you have a four-passenger sedan, which passenger seat are you willing to give up so you can have a CNG-powered vehicle, or are you willing to give up the trunk? Or if you buy a sport utility [vehicle], which hockey bag are you going to leave at home when you take your kids to play hockey?”

That’s roughly when customers lose interest, Coleman said.

The Obama administration has targeted the natural gas tank as a critical technology to develop, saying that CNG cars will remain limited without a smaller, more efficient one (EnergyWire, July 20).

For larger vehicles, which have more space to hide the tank, it doesn’t appear to be a problem. Coleman said the F-250 pickup, run on natural gas, makes up its extra cost in just over three years. The F-650, a medium-duty commercial truck, recovers its extra cost in less than one and a half years.

Coleman said Ford sold 3,000 commercial natural gas vehicles in 2010, roughly 5,000 in 2011, and about 9,500 so far this year.

“These numbers are rounding errors in the automotive industry,” he conceded. But increasingly, major companies like AT&T, UPS and Frito-Lay are calling.

“When those companies come in and they’re asking to buy vehicles by the thousand, we take notice of that,” he said. “And we start designing vehicles for them.”

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Trucking powered by natural gas is poised to grow at a compound annual growth rate (CAGR) of 14% between 2012 and 2019, and the market for natural gas buses is expected to grow at a CAGR of 19% during the same period.

Heavier use of natural gas in each of these transportation sectors is being driven largely by lower fuel costs and emissions, compared to diesel. Fleet managers are increasingly turning to natural gas as a means to meet more stringent environmental regulations, as well as to save substantial capital on fueling.

Generally, original equipment manufacturers (OEMs) can build trucks and shuttle buses on assembly lines, or truck body builders or conversion companies can convert them from other vehicles. OEMs manufacture most heavy-duty transit buses on their standard assembly lines.

In terms of fuel, trucks typically run on compressed natural gas (CNG) because their tanks weigh less and are less costly than those for liquefied natural gas (LNG). LNG trucks, however, are increasingly used as longer-range vehicles (400 miles or more, compared to 150 to 300 miles for CNG).

Currently, the worldwide breakdown of refueling stations for these two types of natural

gas is 117 LNG refueling stations versus 20,233 CNG refueling stations. About 45% of the LNG refueling stations are located in the U.S., even though China has the largest number of annual sales for LNG-fueled trucks, with 3,020 vehicle sales anticipated in 2012.

In the truck market, end use largely drives vehicle design. As a result, the rebounding construction industry is expected to push growth in the overall truck market. Other strong targets for natural gas trucks are the refuse and transit bus markets – both of which are seeing significant growth in natural gas uptake despite relatively flat overall markets in North America. As cities expand in the Asia Pacific markets, the construction, refuse and transit segments are all seeing strong growth.

Drivers and barriers

Four basic demand drivers are propelling the market for natural gas vehicles (NGVs):

Economic interest. As a vehicle fuel, natural gas provides a financial benefit. In most cases, the incremental cost of an NGV is between 15% and 40% more than a diesel equivalent, depending on the vehicle type and fuel capacity. Due to lower fuel costs, this initial cost is typically recovered within two to seven years. After that, for its remaining lifetime, a natural gas truck or bus can still provide several years of cost savings.

Environmental benefits. NGVs emit substantially lower greenhouse gases (GHG), particulate matter (PM) and nitrogen oxide (NOx) than diesel-powered trucks and buses. Governments, therefore, perceive using natural gas trucks and buses as a tool for reducing emissions. And while these vehicles reduce smog and other emissions, the owners or operators can enjoy the marketing benefit of promoting themselves as “green.”

Availability of fuel and vehicles. The growth of fuel and vehicle availability and a wider range of heavy-duty truck engines have increased the appeal of trucks in segments in which they may not have had a strong presence in the past. New, more powerful engines are increasing the capabilities of vocational trucks and over-the-road tractors.

Energy security. In many countries, natural gas may be a domestic fuel that reduces reliance on imported petroleum products or imported refined gasoline.

Each of these key drivers holds different weight in different regions and with different stakeholders, but most market players generally accept all of them as the main reasons for purchasing NGVs. In turn, global sales of natural gas trucks will exceed 111,000 units in 2019, with medium-duty trucks expected to represent approximately 86,000 of that total.

The largest natural bus market will be Asia Pacific, accounting for 86% of sales by 2019. Although the North American and Western European markets will see strong natural gas bus growth (10% CAGR each), Asia Pacific will see a growth rate of 21%, with India, China, and Thailand leading the region in sales.

In markets where CNG light-duty vehicles (passenger cars and light trucks) predominate, the share of natural gas trucks and buses will actually be lower. Market manipulation is one reason for this, such as in Iran, where the government subsidizes diesel fuel so that it costs only about a quarter of CNG. Or, in places like Pakistan and Ukraine, the cost of CNG is not low enough for purchasers to recover the cost of heavy-duty CNG conversions within a reasonable time frame.

A key to growth in the NGV markets is robust opportunities for refueling. The regions with strong NGV markets now are likely to see slow growth in refueling stations, while markets with strong NGV growth forecasts should see a corresponding growth in NGV stations.

For instance, Thailand’s number of refueling stations is forecast to grow from 502 in 2012 to 1,338 in 2019. China’s refueling infrastructure is anticipated to increase by 2,145 stations, from 2,830 stations in 2012 to 4,975 stations in 2019. The Asia Pacific region overall will have more than 11,500 stations by then.

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T. Boone Pickens said natural gas vehicles can survive just fine without Congress approving his so-called Pickens Plan.

“It’s going to happen, and you don’t have to have Washington do it, thank God,” Pickens said at Wednesday’s energy luncheon hosted by POLITICO.

Pickens has had to increasingly tailor his proposal to offer federal incentives for natural-gas vehicles in the face of Capitol Hill stagnation.

He now says the low price of natural gas will serve the market for the vehicles well enough without the federal assistance.

“You don’t have to have a tax credit; it’s going to happen,” he said. The choices to run 18-wheelers, he said, are between natural gas and diesel — and natural gas is “$2 a gallon cheaper.”

And Pickens strongly suggested that he doesn’t have any plans to try to push his plan anymore in the nation’s Capital.

“I will not go back to Washington again unless it’s for a social event,” he said.

The billionaire and former oil baron also lamented that while his plan initially promoted wind energy, that hasn’t worked out so well.

“I’ve lost my ass” to wind-energy investments, he conceded.

Pickens is supporting Mitt Romney and complained about President Barack Obama’s energy agenda.

“Obama has had four years and done nothing,” he said.

Pickens said that he feels “like Obama is trapped with the environmentalists” who are against fossil fuels. “I think he is with that crowd,” he said.

Kateri Callahan, president of the Alliance to Save Energy, in a spirited back and forth on the panel, disagreed. “I know energy efficiency. I think on that front the president has done really a masterful job,” she said.

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American car companies are moving ahead with a plan to produce natural gas powered cars and trucks for public fleets in state-sponsored efforts to create a wider public market for the vehicles.

Representatives of the Big Three carmakers, and Honda, as well as auto dealers and companies that convert conventional engines to run on compressed natural gas, met with leaders of a consortium of states in Oklahoma City this month to discuss a request for proposal that has been issued by the states to the car makers.

The carmakers have been invited to bid on production of seven vehicle categories from compact cars to four-ton trucks to cargo vans. The bids are due by September 7 and will be announced in early October, based on demand from participating states and other levels of local government.

The RFP follows a memorandum of understanding initially issued by four states late last year, and now signed by 10 others, calling on the carmakers to produce CNG vehicles that would be purchased by state, county and municipal fleets, creating demand for the vehicles and, they hope, stimulating their increased use by businesses and individuals.

A total of 22 states have now joined the RFP process, and all others, plus counties and municipalities, are welcome to join, said Oklahoma’s Republican Governor Mary Fallin, who has led the initiative, along with Colorado Governor John Hickenlooper, a Democrat.

In the interests of stimulating public demand for the vehicles, the RFP requires that NGVs produced under the initiative are comparably priced to equivalent gasoline models, and that they are subject to the same standards of reliability and warranty.

“More people are becoming aware of what we are doing with this initiative to create demand for CNG vehicles,” Gov. Fallin told AOL Energy.

Soaking up each region’s gas

Natural gas vehicles are a potentially major source of demand for the current abundance of shale gas that’s being produced by states including Oklahoma, Colorado, Wyoming and Pennsylvania, all of whom have signed the MOU.

Low-priced natural gas could save money for cash-strapped state and local governments while helping them meet federal clean-air standards, and reducing US dependence on volatile sources of foreign oil, the initiative’s backers argue.

But widespread adoption of NGVs is challenged by a shortage of natural gas filling stations, of which only about 1,000 currently exist nationwide, Gov. Fallin said in an interview.

She said public acceptance of the vehicles – which are typically used currently by fleets such as transit, refuse and delivery services — is subject to a “chicken-and-egg” question over whether to build the vehicles or the refueling infrastructure first.

“We hope to create market demand so that there will be more infrastructure built,” she said.

The number of NGVs resulting from the initiative won’t be known until the RFP bids are in but Gov. Fallin said a total of 5,000 vehicles built in the first year would be seen as a success.

One automaker has indicated that 2,000 orders for a sedan car would be enough to spur production of such a model for the private market, she said.

Robert Schmitt, Director of Fleet Operations for Chrysler, said the August 8 meeting was an opportunity for automakers and other interested parties to ask questions about the RFP process. He said Chrysler has no specific targets for the number of NGVs it will produce under the initiative but said there is a good level of interest across the industry.

“We believe the market for these vehicles will grow,” he said.

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With nearly two dozen states looking to add natural gas-powered vehicles to their government fleets, it ultimately could push the public to follow suit in purchasing cars and trucks powered by cleaner, affordable and domestically produced fuel, Oklahoma Gov. Mary Fallin said Wednesday.

Fallin spoke to a group of automobile manufacturers and dealers, and purchasing officials from more than a dozen states, following a discussion about an effort involving 22 states to solicit bids for the purchase of natural gas-powered vehicles for state fleets.

“We’re serious. We’re ready to buy natural gas vehicles now,” Fallin said. “We all know that natural gas is a cleaner form of energy. It’s an abundant form of energy. It’s a less expensive and cheaper form of energy, one that will not only create American-made jobs, it will be good for our national security and economic security.”

Fallin and Colorado Gov. John Hickenlooper have led the effort to get auto manufacturers to produce more affordable vehicles that run on compressed natural gas. The initiative also is designed to promote the natural gas industry, and many of the states that have joined the effort — including Texas, Wyoming, West Virginia and Pennsylvania — are natural gas-producing states.

Fallin acknowledged that a vibrant natural gas industry “will help provide our states with money back into our local economies, money back into our state budgets, which will be beneficial for those governors who are participating in this.”

Twenty-two states have joined to issue a formal request for proposals, or RFP, being coordinated by Oklahoma state officials. Solicitation responses from auto manufacturers and dealers are due Sept. 7, and purchasing officials expect award a contract by Oct. 5.

The contract specifically details a potential purchase of as many as 60 compact sedans, 850 mid- to full-size sedans, 400 half-ton trucks and 480 three-quarter ton trucks, although it notes that the final number of vehicles purchased could fluctuate.

Wednesday’s meeting focused on an overview of the solicitation and details of the RFP, and state officials and vendors acknowledge there are still many details to be worked out.

“Anytime you have 22 states involved in something, you’re going to have 22 different opinions about how it needs to be done,” said Alan Rosner, fleet director for Sam Pack’s Five-Star Ford in Carrollton, Texas, who said he plans to participate in the bid process. “We’ll get it ironed out. It’s generic enough to work.

“The more product that we can put out there for choices, the better it is for everybody.”

Rosner noted only 12 of the 22 states allow out-of-state dealers to sell vehicles to the state.

Oklahoma’s Secretary of Energy Michael Ming acknowledged that a 22-state proposal is complicated and said Wednesday’s meeting was designed to help answer questions posed by manufacturers, dealers and state procurement officials.

“Now you’re going from a typical procurement of buying pencils or copiers to procuring something that doesn’t even exist in some cases or has never been procured before,” Ming said. “I think it would be unrealistic to expect a perfect RFP, so this is exactly the kind of conversation that we wanted.”

Ford Motor Co., Chrysler, and General Motors Co. all produce CNG-powered three-quarter ton pickup trucks, and Honda Motor Co. has produced a CNG-powered Civic since 1998. Now state officials are hoping their solicitation prompts manufacturers to consider producing even more CNG vehicles.

“We’ve got dealers in 37 states, over 200 dealers who can sell natural gas vehicles,” said Ryan Harty, a project manager for American Honda Motor Co., who said the sales of 2012 CNG models already have doubled last year’s sales figures.

“We see this as a great opportunity to show the capabilities of natural gas as a vehicle fuel to audiences that might not be aware of it, including the states.”

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The relationship between natural gas vehicles (NGVs) and natural gas stations is a ‘catch-22′ situation.

Without the former, companies are reluctant to built more natural gas stations, as the demand won’t be there. But without the latter, manufacturers see no reason to produce natural gas vehicles, because customers who can’t fill them up won’t be interested in buying them.

It only takes one side to make the first move, and according to Pike Research, it looks like the manufacturers are the ones to do it.

As the EPA is revamped its certification process for NGVs, carmakers have started releasing more models.

The 2012 Honda Civic Natural Gas, originally available only in a select few states, is now available nationwide. Chrysler has launched the RAM CNG pickup, Ford has released pickups and vans, and GM too has released a natural gas pickup.

Dave Hurst at Pike Research has revised his sales forecast to 20,000 NGVs sold in 2012, over 4,000 up from his previous 2012 forecast, as the selection of new models meets greater demand.

With the catch-22 broken, it’s now up to the infrastructure to catch up, with several companies–including GE and Shell–investing in the NGV infrastructure, and even home refueling once again becoming available.

Same route for hydrogen?

The question some will ask is whether carmakers should take the same lead with hydrogen vehicles, given the similar conundrum faced by supporters of hydrogen and fuel-cell vehicles.

Hydrogen’s use is currently limited by both vehicle availability and lack of infrastructure. It’s a worldwide problem, too. The 2012 London Olympic games might be using a fleet of hydrogen black cabs, but with one refueling station out of action they’re having to be taken on a flat-bed truck to refuel 130 miles away.

Germany is making strides to improve the network first, ready for hydrogen-supporting carmakers like Daimler to produce vehicles that use it.

California too is improving its network, with 68 hydrogen stations to appear by 2015. But elsewhere there’s still very little in place, and carmakers don’t seem to be making the first move either.

Chicken and egg

Ultimately, the success of any alternative fuel needs somebody to make the first move, or a suitable plan put in place that allows the chicken and egg to appear simultaneously.

That appears to be happening to some extent with plug-in vehicles, but with natural gas, hydrogen and others, the process may take a little longer.

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