Natural Gas Vehicle Market Whitepaper USA 2013-2014

Natural Gas Vehicle
Market Whitepaper USA
2013-2014
Whitepaper highlights include:
NGV USA Market Overview:
Comprehensive analysis of the
North American NGV Market
Government Policies:
How they will impact the NGV
market over the next 5 years
Converting to Natural Gas:
Key considerations to address
when converting your fleet to NGV’s
Infrastructure Development:
How to successfully plan and build
NGV infrastructure

For more information, visit www.ngvevent.com

WELCOME

Welcome

Dear Colleague
Thank you for your interest in this FC Gas Intelligence Whitepaper on the Natural Gas Vehicle market in North
America, 2013-14, I hope you find it valuable.
Natural Gas Vehicle’s (NGV) are at a seminal moment in the United States currently, with a range of
stakeholders driving the development of the market. To get a thorough overview the report interviewed over
20 industry experts, drawing their combined expertise into this document to better inform your strategies
over the next few years.
This Whitepaper is only the beginning of the debate on Natural Gas Vehicle’s, it has been created in
conjunction with the 3rd Natural Gas Vehicle USA Conference & Exhibition (June 11-13, Houston) more info
can be found here www.ngvevent.com
I hope you find the report useful and I look forward to speaking to you soon,

With very best wishes
Joshua Bull
Sector Head | FC Gas Intelligence

josh@fc-bi.com

For more information visit www.ngvevent.com

NGV INDUSTRY OVERVIEW

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ABOUT FC BUSINESS INTELLIGENCE

About FC Gas Intelligence

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and direction, develop growth opportunities and solve the problems facing their sectors. The engines of our
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Our aim is to provide companies with insights into strategic options for the future in order that they can
capitalise on opportunity.

Author

Disclaimer
FC Business Intelligence Ltd and its partners prepared the information and
opinions in this report. FC Business Intelligence has no obligation to tell you
when opinions or information in this report change. FC Business Intelligence
Ltd makes every effort to use reliable, comprehensive information, but it makes
no representation that the information is accurate or complete. In no event
shall FC Business Intelligence Ltd and its partners be liable for any damages,
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the material or contents of this report.
No part of this document may be distributed, resold, copied or adapted
without FC Business Intelligence Ltd ‘s prior written permission.
© FC Business Intelligence Ltd © 2013



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CONTENTS

Contents
Welcome . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
About FC Gas Intelligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
List of Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-8
Chapter 1: NGV Industry Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.0 Market Size and Growth Forecasts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.1 Growth drivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.2 NGVs on the Road . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.3 Locations of Existing CNG and LNG Stations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.4 Proposed expansion of
CNG and LNG fueling networks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.5 Expansion of Small and Midsize LNG Liquefaction Plants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.6 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Chapter 2: Government policies: How they will shape the NGV market over the next 5 years. . . . . 22
2.0 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.1 Policy in context. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.2 Subsidies and tax incentives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.3 Procurement policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.4 CAFÉ standards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.5 Environmental regulation: potential risk?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.6 Export policy: potential risk?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.8 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Chapter 3: Converting to Natural Gas, Vehicle issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.0 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.1 Passenger automobiles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.2 Light and medium duty trucking vehicle options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.3 State subsidies for light-duty NGVS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.4 Heavy duty trucking. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.5 Factors to consider in HD fleet conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.6 State subsidies for heavy-duty fleet conversion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.7 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Chapter 4: Building Dedicated Fuelling Infrastructure, CNG and LNG. . . . . . . . . . . . . . . . . . . . 38
4.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.2 Basic cost considerations, CNG compared to LNG. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.3 Design, planning, and siting of CNG fuelling stations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.4 Design, planning, and siting of LNG fuelling stations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.5 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44


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FIGURES

Figures
Figure 1 Natural gas consumption by sector, 1990-2040 (trillion cubic feet). . . . . . . . . . . . . . . . . . . . . . . 9
Figure 2 U.S. Natural Gas Vehicle Fuel Consumption MMcf. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Figure 3 Average diesel, gasoline, and CNG prices, 2000-2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Figure 4 Price differential CNG to diesel, by state. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Figure 5 PCT. Growth in public access CNG stations 7/11-8/13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
. .
Figure 6 Regional Transportation Corridors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Figure 7 Locations of CNG stations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Figure 8 Locations of LNG Stations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Figure 9 United States truck traffic volumes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Figure 10 Projected expansion of Trillium CNG station network, 2013-2016. . . . . . . . . . . . . . . . . . . . . . . 17
Figure 11 Projected expansion of Love’s CNG network. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Figure 12 Projected rollout of Clean Energy’s America’s Natural Gas Highway of LNG and LCNG
stations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Figure 13 Projected network of LNG stations proposed by Shell and TravelCenters of America
partnership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Figure 14 Blu LNG operational and pending LNG fuelling network (as of end 2013) . . . . . . . . . . . . . . . 19
Figure 15 Small and Mid Scale LNG Liquefaction plants*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Figure 16 Calculation of light-duty truck payback, based on various fuel price and truck premium
assumptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Figure 17 Map of states offering various incentives for light-duty CNG vehicles. . . . . . . . . . . . . . . . . . . 32
Figure 18 Natural gas engine comparison-- power (hp). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Figure 19 Natural gas engine comparison – torque (ft-lb). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Figure 20 Sample calculation of expected payback for HD fleet conversion. . . . . . . . . . . . . . . . . . . . . . . 34
Figure 21 Sample CNG range calculation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Figure 22 Calculation of Heavy-duty truck payback, based on various fuel price and truck premium
assumptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Figure 23 Heavy-duty incentives, Canada and US (as of August 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Figure 24 GE CNG in a Box . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Figure 25 GE LNG in a Box™ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Figure 26 Micro LNG. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43



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TABLES

List of Tables
Table 1

CNG average prices per region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Table 2

Reduction of pollutants from CNG use, as compared with reformulated gasoline . . . . . . . 12
. .

Table 3

Small and Mid Scale LNG Liquefaction plants in the United States*. . . . . . . . . . . . . . . . . . . . . . 20

Table 4

LNG Export facilities approved. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Table 5

Home fuelling specifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Table 6

Ford CNG model options (as of model year 2014). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Table 7

Chrysler CNG model options (as of model year 2014). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Table 8

GMC and Chevrolet CNG model options (as of model year 2014) . . . . . . . . . . . . . . . . . . . . . . . . 30

Table 9

Summary of state incentives for light-duty CNG vehicles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31

Table 10 Heavy-Duty engine options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Table 11 Weight diesel truck compared to CNG truck and LNG truck (full tanks in lbs). . . . . . . . . . . . . 35
Table 12 CNG to LNG compared. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39



| 6

EXECUTIVE SUMMARY

Executive Summary

FC Gas Intelligence’s Natural Gas Vehicles Market
Report USA 2013-2014 provides an up-to-theminute summary of current conditions in this
fast-growing market segment. The report’s
four chapters summarizes the latest business
intelligence vital to understanding issues currently
confronting stakeholders in this market, and
provides direct guidance for fleet managers looking
for first-hand advice on key issues to consider when
deciding whether to switch to cheaper, cleanerburning natural gas.
Chapter 1: NGV USA Market Overview:
Comprehensive Analysis of the North American
NGV Market
Natural gas has significant potential to transform
the transportation sector, particularly for fleets
and commercial trucking, due to its cheaper, less
volatile price, compared diesel or gasoline. The fuel
is largely sourced in North America, in contrast to
petroleum-based fuels, which are largely sourced
from politically unstable and potentially hostile
regions of the world, especially the Middle East.
The fuel is also cleaner burning than traditional
transportation fuels, and can help provide a bridge
to a greener, lower-carbon future.
The chapter lays out in detail how the number
of CNG and LNG public access fuelling stations is
expanding rapidly, with several companies rolling
out new NG infrastructure. Detailed information
is provided about ambitious expansion plans,
launched by companies such as Trillium and Love
Travel Stops, in the era of CNG infrastructure, and
Clean Energy, Shell, and ENN- Blu LNG on the
LNG side. In partnership with Pilot Flying J Truck S,
Clean Energy is also exploring LCNG options. The

net effect of these expansion plans is that some
fleets—particularly heavy-duty trucks servicing
major interstate transportation corridors may soon
be able to convert to natural gas without having to
develop independent fuelling infrastructure.
Chapter 2: Government Policies: How they will
impact the NGV market over the next 5 years
Federal and state government policies have
been crucial to fostering the development of NG
as a transportation fuel. Stakeholders currently
operating in this market, as well as companies
considering undertaking fleet conversions, need to
understand how government policies will continue
to shape the future development of the NGV sector
in both positive and potentially negative ways
over the next five years. The chapter provides an
overview of current federal and state policies to
promote NGVs, and provides information on what
government and private resources are available for
getting the latest information about these rapidly
evolving policies. Detailed discussion follows of
two significant policy areas— environmental
regulation, both state and federal, and export
policy— that could thwart or at minimum slow
development of NGVs. Understanding potential
policy risks is important for companies undertaking
or continuing significant investments in NGVs or
infrastructural development.


| 7

EXECUTIVE SUMMARY

Executive Summary

Chapter 3: Converting to Natural Gas: Key
Considerations to address when converting
your fleet to NGVs
The higher relative costs of NGVs compared
to traditionally-fuelled vehicles has thus far
presented a major obstacle to wider use of NG
as a transportation fuel. This chapter summarises
the current state of the NGV market. OEMs have
started to offer a wider range of NG options,
from automobiles, to vans—both passenger and
cargo—and light and medium-duty truck options.
These vehicles cost more than conventionally
fuelled models, but some of these costs can be
offset by state incentives available for converting to
NG.
All major heavy-duty truck manufacturers
now offer NG options, either in CNG or LNG
formats, prodded by customers responding to the
potential significant fuel costs savings. The chapter
walks through specific examples of how to evaluate
the value proposition for fleet conversions, looking
at both light-duty, and heavy-duty, examples.


Chapter 4: Infrastructure Development: How to
successfully plan and build NGV infrastructure
Infrastructural considerations continue to loom large
in decisions to convert all or part of a fleet’s vehicles
to NGV. The future U.S. NG infrastructure will combine
a network of CNG, LNG, and LCNG stations.
This chapter analyses issues fleet managers need
to consider in deciding whether to opt for CNG of
LNG, based on where their fleets will operate, and
what their range needs are. Although more CNG
and LNG infrastructure is continually coming online, most fleets must still construct or secure access
to independent fuelling infrastructure, as existing
public access infrastructure alone cannot support
fleet range needs. This chapter discusses the issues
companies must consider when deciding whether,
where, and how to construct CNG or LNG fuelling
stations. Infrastructural specialists are expanding
their product offerings, focusing on modular, and
lower-cost options that reduce the necessary up-front
investments and also lower on-going operational and
maintenance costs, for companies constructing both
CNG and LNG fuelling infrastructure.


| 8

INDUSTRY OVERVIEW

Chapter 1: NGV Industry Overview
1.0 Market Size and Growth
Forecasts

Citigroup forecasts NG demand in transportation
alone to reach 2.2 billion cubic feet per day (Bcf/d) by
2020, while a Reuters poll of analysts is less bullish,
Petroleum-based fuels currently dominate the U.S.
expecting NG demand in this sector to reach only
transportation market, and this lack of fuel diversity
1.2 Bcf/d over the same period. The United States
makes this market particularly vulnerable to price
Energy Information Administration (EIA) predicts
shocks. The United States currently consumes 35
billion gallons of diesel fuel per year. Analysts disagree a gradual rise in NG usage in the transportation
sector over the next decade, as shown in Figure 1,
about how much of this current energy demand
could be displaced by cheaper alternative fuels such as a more comprehensive NG sourcing and fuelling
infrastructure is developed, comprising both
as natural gas (NG), particularly in the industrial,
compressed natural gas (CNG) and liquefied natural
power generation, and transportation sectors.
gas (LNG).
Figure 1 Natural gas consumption by sector, 1990-2040 (trillion cubic feet)

The use of NG as a transportation fuel has increased
steadily over the last decade, reaching 32,000 Million
cubic feet (MMcf ) in 2012. Most of this consumption
is currently concentrated in the heavy-duty trucking
sector. The American Clean Skies Foundation
suggests that NG provides a promising opportunity
to diversify fuel sources for both the heavy and
medium duty trucking sector, which, taken together,
account for 22% of the U.S. transportation sector’s fuel


use. This diversification would come with another
benefit, for the cost of fueling with NG is substantially
cheaper than buying petroleum-based fuels, even
when necessary costs are included, both buying
relatively more expensive NGVs, and developing
fueling infrastructure, Fleet operators have a potential
opportunity to capitalize on a major cost-saving
opportunity, since fuel accounts for their secondhighest cost.


| 9

INDUSTRY OVERVIEW

Figure 2 U.S. Natural Gas Vehicle Fuel Consumption MMcf

1.1

Growth drivers

Fuel price

The principal factor driving growth in interest in NGVs
is the lower overall price of NG compared to the cost
of either gasoline or refined diesel fuels. Over the last
decade, NG prices have dropped dramatically as new
North American sources of supply have opened up,
with the United States moving from a potential NG
importer to a potential significant NG exporter over
this time period.

Oil prices, by contrast, have been especially volatile
over the same time period. Since 2000, refined diesel
prices as measured by Diesel Gallon Equivalents
(DGEs) have always exceeded NG prices, sometimes
by as much as $2, but usually by at least $1.50, per
DGE. Similarly, gasoline prices have always exceeded
NG prices, when measured by Gasoline Gallon Equiva
lents (GGEs), by as much as $1.50 per unit.

Figure 3 Average diesel, gasoline, and CNG prices, 2000-2012

Source: Clean Cities Alternative Fuel Price Report, July 2013



| 10

INDUSTRY OVERVIEW

Politically stable source of supply

Regional price variations

In addition to the comparative price advantage, NG
supplies are more stable and certain, and virtually
all demand can be supplied either domestically, or
by turning to Canada or Mexico; the three countries
are linked in a fully integrated NG transportation and
distribution system. About 85% of the NG consumed
in the United States is sourced domestically, from
one of the 32 U.S. states that currently produce NG.
Overall, 97% of the NG used in the U.S. comes either
from the United States, Canada, or Mexico.

As Table 1 indicates, CNG currently has a lower
average price than diesel for all regions of the country,
with the largest difference ($1.83 per DGE) being in
the Rocky Mountain region. CNG costs on average
about $1.52 less than diesel on a DGE basis.
Table 1 CNG average prices per region
Region

CNG Price ($/DGE)

Diesel Price ($)

New England

$2.86

$4.07

Central Atlantic

$2.48

$3.81

By contrast, oil is sourced from politically unstable or
Lower Atlantic
$2.24
$3.82
potentially hostile places, including Latin America,
Midwest
$2.08
$3.86
Russia, and especially the Middle East. Political
Gulf Coast
$2.26
$3.82
instability in the Middle East often translates into
Rocky Mountain
$2.03
$3.86
price volatility and also raises periodic concerns
West Coast
$2.71
$4.08
about supply interruptions. Increased use of NG
National Average $2.39
$3.91
would translate into lessened dependence on energy
imports from these politically unstable parts of the
world.
Price stability

In addition to their more attractive absolute price
levels, NG prices also have another advantage for
corporate planning purposes in that they have in
recent years traded in a much narrower band than
either diesel or gasoline prices, with the prices varying
since 2000 about $1 from lowest to highest price.
Since late 2004, this price spread has been even
tighter, varying by no more than $0.75.
It has not always been the case that NG prices have
traded in such a narrow band, and in fact, until
technology increased the domestically produced
supply, NG prices had been among the most volatile
commodities traded on the New York Mercantile
Exchange (NYMEX). Future forecasts of NG supply
suggest that future volatility will follow the recent
pattern of tighter trading spreads.



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INDUSTRY OVERVIEW

Figure 4 illustrates price differentials by state for CNG
relative to diesel. In this map, negative numbers
represent prices for CNG lower than prices for diesel.
States not highlighted with a colour did not have any
CNG data points in the latest Clean Cities Alternative

Fuel Price Report, published in July 2013. For all states
for which pricing data are available, CNG prices were
cheaper than diesel, with the most favourable relative
CNG prices found in states located in the Midwest,
Rocky Mountain, and West Coast regions.

Figure 4 Price differential CNG to diesel, by state

CNG Price Difference
Relative to Diesel

($1.99) - ($1.50)
($1.49) - ($0.95)
($2.30) - ($2.00)
($1.99) - ($1.50)
($0.94) - ($0.55)
Environmental benefits

There are considerable environmental benefits
to wider adoption of NG as a transportation fuel,
whether in CNG or LNG form. The United States
Environmental Protection Agency (EPA) recognizes
that natural gas vehicles (NGVs) produce lower levels
of harmful emissions, including greenhouse gases,
carbon dioxide, nitrogen oxide, particulate matter,
and toxic and carcinogenic pollutants. The exact
degree of emissions benefits depends on the type
and model of the vehicle used, as well as the choice
of the conventionally fueled vehicle benchmark. The
Alternative Fuels Data Center (AFDC) of the United
States Department of Energy (DoE) provides tools for
performing detailed emissions comparisons. Many
fleet operators are as attracted to NG’s potential to
enable them to meet their emissions targets as they


are to the potential for fuel cost savings compared to
using diesel or gasoline.
Table 2 Reduction of pollutants from CNG use, as
compared with reformulated gasoline
Volatile Organic Compounds
Carbon Monoxide
Nitrogen Oxides
Particulate Matter

10%
20-40%
0%
80%

Source: A Full Fuel-Cycle Analysis of Energy and Emissions Impacts
of Transportation Fuels Produced From Natural Gas, Wang, M.Q.
and Huang, H.S., 1999


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INDUSTRY OVERVIEW

1.2 NGVs on the Road
The DoE as of September 2013 estimated that about
112,000 NGVs operate in the United States.
Market observers say that these DoE figures lag the
actual state of play, and that the number of NGVs
currently on the road is probably approaching
150,000. Transit buses currently form the largest
category of NGVs, and are powered by either CNG or
LNG. Waste collection vehicles comprise the second
largest category of NGVs, with roughly half of all such
vehicles fueled by NG. Airports are the third largest
NGV users, with about 35 using NGVs, either by
operating their own fleets or promoting the use of
private fleets that burn NG.
Wider use of NG in both short-haul fleets and
long distance trucking is being facilitated by the
development of CNG, LNG, and LCNG fueling
networks. Technological innovation is producing more
affordable light-duty, medium-duty, and heavy-duty
NG truck options, as well as NG-fueled passenger
vehicles, largely for fleet use, although the premium
for all such vehicles remains high. These premiums
are expected to drop as demand for these vehicles
increases, but even on current estimates, a viable
model for heavy-duty trucks driving 125,000 miles a
year suggests that payback on CNG fleet conversion
can occur in fewer than 2 years (as described more
fully in section 3.__ below).

1.3 Locations of Existing CNG
and LNG Stations
CNG stations

As of September 4, 2013, 602 public access CNG
stations operate across the United States, and
633 private access stations. These stations are
substantially concentrated regionally. California and
Utah have been at the forefront of adopting NG as
a transportation fuel, and now each of these two
states is covered with a network of stations, with 157
stations operating in California, serving a population
of about 38 million, and 42 in Utah, serving a
population of approximately 2.9 million. (The state
of Utah owns natural gas production facilities and
has promoted NG use in transportation; in contrast to
other states, Utah has eschewed direct subsidies to
this end, and has instead concentrated on building
NG infrastructure.)
Other states with significant concentrations of CNG
stations include the key NG producing states of
Louisiana, Oklahoma, and Texas, as well as urban
states such as New York. Pennsylvania and Ohio have
shown the highest growth rate in building CNG
stations in the last two years, and now have 21 and 13
public access stations operating, respectively.

Figure 5 PCT. Growth in public access CNG stations 7/11-8/13

Source: NGV Today, August 19, 2013, p. 9



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INDUSTRY OVERVIEW

LNG stations

There are 33 LNG public access stations, and 40
private access LNG stations operating in the United
States as of September 2013. The initial impetus for
creating LNG infrastructure for heavy duty NGVs was
provided by the development of clean transportation
corridors. The first of these, the Interstate Clean
Transportation Corridor (ICTC), was a public-private
partnership launched in 1995 to link major Californian
cities, and Salt Lake City, Las Vegas, and Reno. The ICTC
network now comprises 28 public access

alternative fuel stations and displaces nearly 8 million
gallons of diesel each year. Other regions have
followed suit, such as Texas, which created the Texas
Clean Transportation Triangle; the Rocky Mountain
states, which created the Rocky Mountain Corridor;
Pennsylvania, which launched the Pennsylvania
Clean Transportation Corridor; and the states linked
by interstate highway 75-- Michigan, Ohio, Kentucky,
Tennessee, Georgia, and Florida-- which created the
I-75 Green Corridor Project.

Figure 6 Regional Transportation Corridors

87
82

94

43

39

90

84

5

75

29

81

76
72

ICTC

74
57

64

55 24
40

27

8
29

10

I-75

44

25

65
12 59

35

37

91

85
77
26

30

20

84

89

PCTC
68
70
66
71
79

88

RMC

86

69

96

90

95
4

35

Source: Pioneer Natural Resources, http://www.tamest.org/assets/docs/events/2011-texas-energy-summit/lyon-presentation.pdf
Locating CNG and LNG stations

The DoE’s AFDC provides up to date numbers on the location of public access CNG and LNG stations across
the United States, through an interactive website: http://www.afdc.energy.gov
Users of this website may locate public access stations supplying different types of alternative fuels, including
but not limited to NG. The website allows users to generate a map to locate facilities within a state, or near an
address or zip code, and includes a function to plot CNG or LNG stations located along a particular route.



| 14

INDUSTRY OVERVIEW

Figure 7 Locations of CNG stations

Source: http://www.afdc.energy.gov/locator/stations/results?utf8=✓&location=&filtered=true&fuel=CNG&owner=all&payment=all&
ev_level1=true&ev_level2=true&ev_dc_fast=true&radius_miles=5

Some companies have stepped in to make publicly
available via the internet not only station location
and tracking tools, but other relevant information.
CNGprices.com, for example, supplies up-to-theminute information on CNG prices at a particular
station, as well as crowd sourced information about
station reliability, opening hours, and payment
information.

http://www.cngprices.com/index.php
CNGnow.com incorporates a GPS application. http://
www.cngnow.com
LNG suppliers, such as Blu LNG, have incorporated
station finder features in their websites, which also
include pricing information, opening hours, and
payment options. http://blulng.com

Figure 8 Locations of LNG Stations

Source: http://www.afdc.energy.gov/locator/stations/results?utf8=✓&location=&filtered=true&fuel=LNG&owner=all&payment=all&
ev_level1=true&ev_level2=true&ev_dc_fast=true&radius_miles=5


| 15

INDUSTRY OVERVIEW

1.4 Proposed expansion of
CNG and LNG fueling networks
In the past two years, several companies have
announced ambitious efforts to construct public

access NG infrastructure. These plans generally closely
track major U.S. trucking routes and patterns. In
general, to date CNG fuelling station networks have
been designed largely to serve local and regional
fleets. The thrust of LNG station development has
been to connect these regional hubs.

Figure 9 United States truck traffic volumes

CNG stations

In the CNG area, for example, Trillium announced
an expansion project in June 2013 to construct
and open 101 new CNG stations in 29 states within
three years. This project includes plans to build new
stations in states that already have extensive CNG
infrastructure-- including California, New York, Ohio,


and Pennsylvania, Texas—and will also locate many
new stations in states that currently have few public
access CNG stations, including Florida and Georgia,
but are nonetheless high-volume parts of current U.S.
trucking networks.


| 16

INDUSTRY OVERVIEW

Figure 10 Projected expansion of Trillium CNG station network, 2013-2016

Stations Opening
2013-2016 Projected
06/
13

Existing Trillium Stations
Existing
Trillium
Stations

Stations Opening
2013-2016 ojected
rP

Source: Trillium CNG, http://www.trilliumcng.com/fuel/pdf/expansion_map.pdf
Love’s Travel Stops and Country Stores

Love’s Travel Stops & Country Stores, a familyowned, Oklahoma City-based company, currently
operates more than 300 travel stops across 39 states
that include fueling facilities and restaurants. The
company has provided NG fueling capabilities at
some of its locations for light and medium—duty
vehicles since 2010. In 2012, Love’s constructed

its first heavy-duty CNG station in its home city of
Oklahoma City, specifically for Class 8 vehicles, and
the company is adding fast-fill CNG fueling capability
to service Class 8 trucks at eight of its travel stops on
highways along the Texas Triangle of Dallas, Houston
and San Antonio, each intended to be operational by
the fourth quarter of 2013.

Figure 11 Projected expansion of Love’s CNG network
TACOMA

WASHINGTON
ELLENSBURG

NAPAVINE

POST
FALLS

WILLISTON
TROUTDALE

MONTANA

MAINE

NORTH DAKOTA
MINNESOTA

85

FARGO

ROSEBURG
ONTARIO

IDAHO

NEW
YORK

WISCONSIN

OREGON

VT
NH

SOUTH DAKOTA
IDAHO FALLS

MA

OAKDALE

HEYBURN

MICHIGAN

ALBERT LEA

SIOUX FALLS

BINGHAMTON

CT

WYOMING
CORNING

CALIFORNIA

OAK CREEK

CONNEAUT

MARSHALL
WELLS

WAMSUTTER

FERNLEY

SALT LAKE CITY

PERRYSBURG

CHEYENNE

NEWTON

CLIVE

UTICA

De MOTTE

RIPON

ELLIS

BOONVILLE

MEMPHIS
INDIANA

OTTAWA

PUEBLO
LAMAR

BOISE CITY

ARIZONA

BARSTOW

KINGMAN

MATTHEWS

TONKAWA

CHOUTEAU
MILAN

ALBUQUERQUE
SANTA ROSA

TUCUMCARI

AMARILLO

BUCKEYE
CHANDLER
YUMA

ERICK

CLAUDE

ARDMORE

ELOY

WICHITA FALLS
BENSON

ATOKA

WEATHERFORD FT. WORTH
RANGER

SWEETWATER
ANTHONY

HUTCHINS

ODESSA
EL PASO

BATESVILLE

TENNESSEE

GREENWOOD MINDEN

LUFKIN

TALLULAH

FLOWOOD

CLEVELAND

WALLER
SEGUIN LULING

WEIMAR

SAN ANTONIO
EDNA

KATY

VINTON LAKE CHARLES

HOUSTON DEER PARK

SOUTH
CAROLINA

DUBLIN

CLANTON

RICHMOND HILL

TOOMSUBA
EVERGREEN

LOXLEY

COTTONDALE

JASPER
LEE

BILOXI

ORMOND BEACH
OCALA

BAYTOWN

NATALIA
THREE RIVERS
LAREDO

CNG AVAILABLE NOW

FEASIBLE CNG STATIONS

CNG COMING SOON

FA

BRUNSWICK
TIFTON

GEORGIA

PORT ALLEN

ORANGEBURG

JACKSON

McCALLA

LOUISIANA
McCOMB

WILLIS
COMFORT

THOMSON

HOGANSVILLE

HEARNE

NORTH
CAROLINA

DILLON

NEWBERRY

EMERSON

ALABAMA
FAIRFIELD

HILLSBORO

DUNN

BLACKSBURG
FT. MILL

WACO

JASPER

CANTON MISSISSIPPI

MIDLOTHIAN
VAN HORN

TEXAS

STEELE

SKIPPERS

LAMBSBURG

MARION
LENOIR CITY

CHARLESTON
FAIR PLAY

FALKVILLE

TUPELO

PRESCOTT
MT. VERNON

ROCKWALL
VAN

CHRISTIANA

MEMPHIS

LEARY

ANNA

DALLAS

LAS CRUCES

DICKSON
COLUMBIA

WEST MEMPHIS
PALESTINE

MORRILTON

N. LITTLE ROCK
LITTLE ROCK

COLBERT

DENTON
RHOME

NEW MEXICO

LORDSBURG

EUFAULA

PAULS VALLEY

LAWTON

GILA BEND

WEBBERS FALLS OZARK

OKEMAH

NORMAN

HINTON

MEMPHIS

CLOVIS

OKLAHOMA CITY

ELK CITY CLINTON

JACKSON

ARKANSAS

SOUTH HILL

DANDRIDGE
BAXTER

NASHVILLE

OKLAHOMA

GALLUP
JOSEPH CITY

QUARTZSITE

VIRGINIA
MAX MEADOW

HORSE CAVE

CALVERT CITY

JOPLIN

HOOKER

CLAYTON

LAKE HAVASU
COACHELLA

RUTHER
GLEN

GRAYSON

CORBIN

KENTUCKY

STRAFFORD

TEHACHAPI

MD DE

WEST
VIRGINIA

RICHMOND

SHEPHERDSVILLE

MISSOURI

KANSAS

SPARTA
WADDY

HAUBSTADT

INA
ROLLA

LAS VEGAS

RIPLEY

OHIO
WHITELAND ST. PAUL

GREENVILLE

CEDAR CITY

TULARE
LOST HILLS

NJ
TOMS
BROOK

JEFFERSONVILLE

BELLEVILLE

NEVADA

SANTA NELLA

BORDENTOWN

CARLISLE

ZANESVILLE
RICHMOND

PITTSBORO

ST. JOSEPH

BENNETT

HAMBURG

MARION

WHITESTOWN

LEROY

ILLINOIS WILLIAMSVILLE

RI

MIFFLINVILLE

JONESTOWN

BURBANK

N. BALTIMORE

KANKAKEE
DWIGHT

AURORA
HUDSON

COLORADO

HUBBARD

GARY

DAVENPORT

NORTH PLATTE

UTAH

PENNSYLVANIA

ROSCOE

IOWA

SIOUX CITY

NEBRASKA

AUBURNDALE

FT. PIERCE

FLORIDA

CNG UNLIKELY

KINGSVILLE

EDINBURG

Source: Love’s Travel Stops and Country Stores, August 3, 2013 presentation



| 17

INDUSTRY OVERVIEW

America’s Natural Gas Highway

Clean Energy Fuels, the largest provider of NG fuel
for transportation in North America, in July 2011 was
the first private company to jump aggressively into
supplying NG infrastructure when it announced plans
to construct America’s Natural Gas Highway, a network
of 150 public access LNG-fuelling stations, across 33
states. So far, about 70 stations have been completed,
although rollout is proceeding slower than originally
anticipated, partly due to Clean Energy’s desire to
secure anchor tenants before construction of new
facilities. Using two liquefaction plants, one planned
and one operational, Clean Energy will supply both

stages of the supply chain, production and marketing.
Clean Energy has also entered into a partnership
with Pilot Flying J Truck Travel Centers, which will
allow Clean Energy to add NG fuelling options to the
services already offered at Pilot Flying J’s extensive
network of existing truck stops throughout the United
States. Clean Energy also intends to add CNG-fuelling
capacity at selected locations on the network, as and
where it determines there will be sufficient demand to
support such facilities.

Figure 12 Projected rollout of Clean Energy’s America’s Natural Gas Highway of LNG and LCNG stations

Source: Clean Energy Fuels
Shell and TravelCenters of America partnership

Shell and TravelCenters of America announced in April
2013 that they would partner to provide a nationwide
network of LNG fueling stations for heavy-duty road
transportation customers. The companies intend to
construct at least two LNG fueling lanes and a storage
facility at 100 existing TravelCenters of America or
Petro Stopping Centers full service travel centers
located along the U.S. interstate highway system.
Shell anticipates that the first of these stations will
be operational within a year and intends to make it a
priority to develop LNG fueling infrastructure along
the main trucking corridors.
Shell is also investing in both LNG liquefaction and
refuelling infrastructure, and plans to build two

liquefaction plants. These will supply the basis for
two new LNG refuelling networks, in the Gulf Coast
Corridor (Texas and Louisiana) and the Great Lakes
Corridor. These Shell-fueled networks have the
potential to link up with planned or existing clean
transportation corridors, including the Texas Triangle
and the I-75 Clean Transportation Corridor. Market
observers suggest that Shell’s entry into the NG market
is serving as a wake-up call signaling the growing
importance of NG as a transportation fuel, as Shell
is a major multinational player with the scale and
resources to transform this domestic U.S. LNG market
substantially.

| 18

INDUSTRY OVERVIEW

Figure 13 Projected network of LNG stations proposed by Shell and TravelCenters of America
partnership

Source: Shell
ENN initiatives

Chinese-owned ENN is also investing heavily in U.S.
LNG fuelling infrastructure, with plans to build up
to 500 LNG stations. ENN has partnered with a small

Utah company, CH4 Energy, to create a joint venture
trading as Blu LNG. ENN has ambitions of building
LNG plants in the future.

Figure 14 Blu LNG operational and pending LNG fuelling network (as of end 2013)

Source: Blu LNG, http://blulng.com/station-finder/



| 19

INDUSTRY OVERVIEW

1.5 Expansion of Small and
Midsize LNG Liquefaction Plants
Crucial to the rollout of a wider use of LNG as a
transportation fuel is increasing geographic access

to its supply, which is partly being achieved by
developing small and midscale LNG liquefaction
infrastructure. Gas producers, suppliers, utilities, and
public companies are planning and building new
facilities.

Figure 15 Small and Mid Scale LNG Liquefaction plants*

*Planned and operational small and mid scale liquefaction facilities in the United States, where the location has been made public or
disclosed directly to FC Business Intelligence.

Table 3 Small and Mid Scale LNG Liquefaction plants in the United States*
Small-Mid Scale LNG Liquefaction Faciliies in the US*
Map Key

Name

Location

LNG production

Stage

1

Noble Energy

Weld County, Colorado

100,000 gal/day

P

2

APNG Topock LNG Plant

Arizona

86,000 gal/day

E

3

Clean Energy California Plant

Boron, California

160,000 gal/day

O

4

The Pickens Plant

Willis, Texas

100,000 gal/day

O

5

Shell, Geismar

Geismar, Louisiana

250,000

P

6

Shell, Sarnia

Sarnia, Ontario

250,000

P

7

Stabilis Energy

Eagle Ford Shale

100,000/250,000

R

8

Stabilis Energy

West Texas

100,000/250,000

S

9

Stabilis Energy

The Bakken

100,000/250,000

S

10

Stabilis Energy

Western Oklahoma

100,000/250,000

S

11

Stabilis Energy

Haynesville, East Texas

100,000/250,000

S

12

Grande Prairie

Elmworth, Canada

190,000 litres/day

C

13

Colony Energy Partners

Reno

180,000 gal/day (initial)

P

14

Spectrum LNG

Prudhoe Bay, Alaska

100,000 gal/day

P

15

Spectrum LNG

Ehrenberg, Arizona

60,000 gal/day

O

16

Exxon LaBarge

Shute Creek, WY

60,000 gal/day

O

17

Prometheus Bowerman LFG to LNG California

5,000 gal/day

O

P = Planned
E = Expansion
*Details disclosed/available

O = Operational S = Site Selection C = Construction R = Reg. approvals



| 20

INDUSTRY OVERVIEW

1.6 Conclusion
Natural gas has significant potential to displace diesel
and gasoline usage in the transportation sector. NG
prices are both cheaper than either diesel or gasoline,
and are also less volatile. NG is largely sourced in
North America, especially the U.S., in contrast to oil
and diesel, which are largely foreign-sourced, from
politically unstable and potentially hostile regions of
the world, especially the Middle East.


The number of CNG and LNG public access fuelling
stations is expanding rapidly. Several companies
have committed themselves to rolling out new NG
infrastructure. On the CNG side, Trillium and Love
Travel Stops have announced extensive plans, while
on the LNG side, Shell, and ENN in a joint venture
with Blu LNG, are major players. Clean Energy has also
announced an extensive LNG plan, America’s Natural
Gas Highway, and in partnership with Pilot Flying J
truck stops is also exploring LCNG options.


| 21

INDUSTRY OVERVIEW

Chapter 2: Government policies: How they will
shape the NGV market over the next 5 years
2.0 Introduction
Government policies, at both federal and state
levels, have played a significant role in fostering the
development of NG as a transportation fuel. The
following chapter describes how such policies will
continue to shape the future development of the NGV
sector, focusing on the next five years. The chapter
begins by discussing various state and federal policies
to promote NGVs, including subsidies, tax incentives,
procurement policies, and emissions standards. The
chapter concludes by discussing two potential policy
risk factors that could thwart or at minimum slow
development of NGVs—environmental regulation,
and export policy.

2.1 Policy in context
The DoE in 1993 launched the Clean Cities initiative,
the flagship federal program designed to reduce
petroleum consumption for transportation uses
by promoting the use of alternative fuel vehicles.
This program created a national network of more
than 100 Clean Cities coalitions, which link fuel
suppliers, private companies, original equipment
manufacturers (OEMs), federal and state agencies,
national laboratories, and local governments, among
others, in designing and implementing alternative
transportation policies for their local communities.
Clean Cities seeks to reduce the use of fossil fuels by
measures such as using alternative and renewable
fuels, making improvements in fuel economy, and
promoting emerging transportation technologies.

or heavy-duty trucks, compared to diesel or gasolinepowered vehicles; and the lack of a comprehensive
fuelling infrastructure for either CNG or LNG vehicles.
Both the federal government and many state
governments provide a plethora of subsidies, tax
incentives, and loan programs to address these two
obstacles (some of these incentive programmes
are discussed more fully below—see sections 3.__
and 3.__, and 4.__ and 4.__). These public policies
promote the use of NGVs (and other alternative fuel
vehicles) by defraying their higher upfront costs
and also support build-out of more NG fuelling
stations. Other policies provide incentives to use
alternative fuel vehicles—such as the ability to use
high occupancy vehicle (HOV) lanes regardless of the
number of passengers in a vehicle.
Most of the NG-specific policies the United States
has in place promote the use of NG. But one federal
excise tax policy currently disadvantages LNG,
and this measure has attracted many reform calls
among various NGV stakeholders. The federal
excise tax on both LNG and diesel is currently 24.3
cents per gallon, but since it takes 1.7 gallons of
LNG to produce the same amount of energy that
a gallon of diesel produces, LNG is effectively
taxed at a rate 70% higher than that of diesel.
Both gasoline and CNG are also taxed according to
energy output, leaving LNG as the odd fuel out.

Taxing the fuels on an energy content basis rather
than on a volume basis would create a level playing
2.2 Subsidies and tax incentives field for LNG, and Mac Thornberry, a member of the
United States House of Representatives from Texas in
2013 introduced the LNG Excise Tax Equalization Act
The significant and sustained lower relative cost of
of 2013 (H.R.2202), to achieve that goal. Thornberry
NG compared to petroleum-based fuels provides a
believes that this reform would promote expanded
strong incentive for fleets and individuals to shift to
NGVs. Yet those who seek to make such a switch face private-sector investment in LNG infrastructure and
production.
two significant obstacles: the higher upfront cost of
NGVs, whether automobiles, vans, or light, medium,


| 22

INDUSTRY OVERVIEW

Senator Michael Bennet of Colorado has introduced
a companion bill, S. 1103, l into the United States
Senate, but as of October 2013, the measures had
been referred to their respective committees for
consideration, and no further action has been taken
on these measures.
The federal government currently has twenty-seven
NG promotion policies in place, covering a range
of areas, including infrastructural development,
HOV lane use, aftermarket conversions, public
transportation, and technological development.
The DoE’s AFDC regularly updated website provides
current summaries of existing federal policies: http://
www.afdc.energy.gov/laws/laws/US/tech/3253
All states currently have at least one NG promotion
policy in place, and the DoE’s AFDC website allows
to search current such policies by fuel, and by
state. Many urban states are strong NG supporters,
including California (with 27 NG policies in place),
Virginia (16), and Indiana (18). States that produce
NG also promote its use, these include Colorado (11),
Oklahoma (14) Texas (15), and Utah ( 10).
http://www.afdc.energy.gov/laws/matrix/tech.
Policies fall to three broad areas: those that offset
the incremental costs of NGV purchase; those that
provide fuel incentives; and those that provide
special privileges to NGV users (e.g., access to HOV
lanes, additional parking, concessions on emissions
inspections).
California has led the way in promoting clean air
policies, and adopted its Air Pollution Control
Act in 1947—nearly a decade before the federal
government began to address air quality issues.
The state has been at the forefront of promoting
the use of alternative fuels, and currently has 27
NG state incentives in place—more than any other
state— and these include policies to promote
NGVs, to encourage NG infrastructural
development, to advance the use of NG for public
transit, and to foster NG-related technological
development.

The DoE’s AFDC website summarises the state’s
current policies http://www.afdc.energy.gov/laws/
laws/CA/tech/3253

California has pioneered some innovative alternative
fuel promotion policies, including parking incentives,
and the ability to use HOV lanes regardless of
the number of passengers in a vehicle. Drivers of
qualifying alternative fuel vehicles—including CNG,
hydrogen, electric, and plug-in hybrids-- that meet
specified state and federal emissions standards are
given special stickers. Vehicles are also exempted from
certain toll charges, unless prohibited by federal law.
On September 28 Governor Jerry Brown signed
into law a bill that will extend various other clean
vehicle incentive programs until 2023. He also signed
another piece of legislation that will extend for HOV
lane access for certain alternative fuels vehicles until
January 1, 2019.

2.3 Procurement policy
Both federal and state governments can advance the
use of NGVs via the procurement policies they enact.
Federal policy

President Obama issued a Presidential Memorandum
in May 2011 directing all federal agencies to purchase
or lease only alternative fuel passenger vehicles or LD
trucks by 2015. This policy required no congressional
action to be implemented and took immediate
effect upon announcement. Mandating the use of
alternative fuel vehicles for federal fleets was expected
to have the direct effect of stimulating demand for
such vehicles and, by creating economies of scale,
reducing the upfront costs of such vehicles, thus
increasing their attractiveness to a wider market.
Further, in the case of NGVs, placing more of them
on the road was also intended to increase utilization
of existing NG infrastructure, and promote demand
for additional fuelling stations. The policy was also
expected to have indirect effects, as drivers of these
vehicles will increase their familiarity with these
vehicles and, in the case of NGVs, become aware of
their far lower fuelling cost compared to petroleumfuelled vehicles.
State policy

States have followed the federal lead in developing
their own NGV procurement policies. The governors
of Colorado, Wyoming, Pennsylvania, and Oklahoma

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INDUSTRY OVERVIEW

announced a Memorandum of Understanding (MOU)
in November 2011 to work together to convert their
state vehicle fleets to NG. The MOU calls for a joint,
multistate request for proposal for purchasing NGs
for state fleets, and commits each state to purchase a
specific number of NGVs. Many state fleets standing
alone are not large enough convince OEMs that the
vehicle needs of individual states represent a viable,
stable, long-term market upon which to base product
launch decisions. By developing a common proposal
for NGV purchases and pooling their resources, the
states hope to encourage OEMs to offer a wider range
of NGVs. More than 20 states are now committed to
follow this NGV sourcing approach.
These procurement policies have already influenced
product offerings. The three major U.S.-headquartered
OEMs – Chrysler, Ford, and GM (Chevrolet) – have
all launched bi-fuel pickup trucks, and GM and Ford
offer a bi-fuel van for commercial and fleet customers.
Honda is the first OEM to offer a NG-fuelled
automobile, the Civic NG, nationwide to non-fleet
customers, and Chevrolet intends to offer its Impala
model in a bi-fuel option for model year 2015. Various
other companies offer competitive NG-conversion
options.
Private initiatives

greenhouse gas emissions by over 20 million metric
tons annually. Moreover, the foundation emphasizes
that by leveraging its influence with freight carriers
and other suppliers, such a programme would allow
the federal government an opportunity to create very
large multiplier effects, and thus effectively reduce
the dependence of the trucking industry and other
private sector transportation providers on petroleum
imports.

2.4 CAFÉ standards
The United States in 1975 first implemented
Corporate Average Fuel Economy (CAFÉ standards)
to encourage manufacturers to produce more fuelefficient cars. The Obama administration and thirteen
OEMs on August 28, 2012 announced new standards
for automobiles, and light and medium duty trucks,
levelling the playing field between NG and other
alternative fuels for these categories of vehicles.
These standards cover model years 2017-2025. The
standards are ambitious ones, which by setting
an average fuel economy standard of 54.5 miles
per gallon (MPG) by 2025—double the 27.3 MPG
2011 average-- are intended to push OEMs toward
technological innovation. The standards include tax
incentives for purchase of certain types of alternative
fuel vehicles, and an incentive multiplier to encourage
adoption of fuel. The highest multiplier, 2.0, applies to
electric vehicles; NGVs and hybrids enjoy a multiplier
of 1.6—a significant improvement on the previous
standard.

These public procurement initiatives have inspired the
American Clean Skies Foundation to develop a wider
procurement plan for the third-party transportation
services used by the federal government. Every year,
federal agencies spend roughly $150 billion on such
transportation services.
The Obama administration was the first to launch
emissions standards for heavy-duty vehicles in 2011.
The foundation has proposed requiring federal
These are due to be revised and extended soon, with
agencies to apply to third-party transportation
a proposed rule expected imminently, which will be
providers the same kinds of alternative fuel targets,
finalized sometime in 2015.
efficiency standards and reporting practices they
currently apply to their own vehicle fleets. Such a
policy would reduce overall oil consumption—and
its associated economic and environmental costs.
The foundation estimates that the programme it
outlined in an August 2012 report could deliver
approximately $7 billion in annual cost savings; cut
petroleum consumption by billions of gallons each
year; stimulate the introduction of tens of thousands
of new alternatively fuelled vehicles; and reduce


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INDUSTRY OVERVIEW

2.5 Environmental regulation:
potential risk?
One potential risk factor for broader NGV development
is whether additional environmental restrictions will
be imposed on fracking operations. At the federal
level, the Bureau of Land Management sets drilling
standards for federal lands, and the Environmental
Protection Agency (EPA) has broad influence over
fracking due to its authority to set air and water quality
standards. The EPA in 2012 set air quality standards for
fracking operations, requiring companies to capture
gases released in the process—but these measures
only codified best industry practices. The EPA is
expected to announce fracking-related water quality
standards in 2014, and is expected to take a similar
approach.
The fracking industry remains vulnerable to the risk
of lawsuits, which are largely brought under state law.
Landowners have targeted energy companies in many
states where fracking is widespread, in some cases, via
class action lawsuits. But the United States Supreme
Court has in recent years made it much more difficult
for private plaintiffs to succeed in such lawsuits,
especially, in class actions. So far, no company has lost
a fracking suit, and the barriers to prevailing in such
litigation for alleged harms including groundwater
contamination, triggering of earthquakes, or
environmental degradation, are formidable.
The possibility exists that lawsuits or state-level policy
changes could slow the spread of fracking in certain
states. Yet absent a major shift in the composition of
either Congress or the Supreme Court, it is unlikely
that fracking lawsuits will impose major constraints on
energy producers nationwide.

2.6 Export policy: potential
risk?
United States NG export policy could also have
a significant impact on the development of NG
as a transportation fuel. Until recently, NG from
domestic sources was not traded widely outside
North America, and the United States did not export
significant quantities of NG. In fact, before the shale
gas revolution began, plans were underway to allow
importation of substantial quantities of NG, and these

included proposals to develop the infrastructure to
achieve this goal. Some of the NG export terminals
discussed below were originally intended to be import
facilities.
Now, as domestic NG reserves continue to be
developed, and the spread between NG and world
oil prices continues to be so wide, this situation
has reversed itself. Yet U.S. NG exports are subject
to a complex export regime, which requires federal
government approval of NG export facilities and
involves separate permitting processes undertaken
by the DoE and the Federal Energy Regulatory
Commission (FERC). To date, the DoE has approved
four applications to permit export of U.S.-produced
LNG have been approved, and more than twenty
are pending. In 2011, the DoE approved Cheniere
Energy’s Sabine Pass project, located on the Sabine
River in the Louisiana/Texas border, thus clearing the
way for the first new LNG construction in forty years
(this project had originally been planned as an import
terminal). Final clearance for this project led to a
pause in consideration of other export applications.
During this period, two studies were undertaken that
examined the expected impact of NG exports on
domestic prices, and in this interim period, NG exports
were authorized to countries with which the US has
free trade agreements, such as Canada and Mexico
-- both members of the North American Free Trade
Agreement (NAFTA).
In 2013, the DoE has approved three projects for
export to non free-trade agreement destinations:
Freeport LNG’s in Quintana Island, Texas, in May; Lake
Charles LLC’s in Lake Charles, Louisiana, in August; and
Dominion Resources’s Cove Point facility on Maryland’s
Chesapeake Bay, in September. The DoE has seemingly
accelerated its review process in response to political
and company complaints about previous delays, and
is currently reviewing expansion of Freeport LNG’s
terminal in Freeport, Texas; Sempra Energy’s proposed
project in Cameron, Louisiana; and Veresen’s Jordan
Cove project in Coos Bay, Oregon.


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INDUSTRY OVERVIEW

Table 4 LNG Export facilities approved
Company

Location

State

Date

Cheniere
Energy

Sabine Pass

Louisiana/
Texas
border

Apr 2012

Freeport LNG

Quintana
Island

Texas

May 2013

Lake Charles

Louisiana

In September 2013, AEA filed a formal motion
to intervene in the DOE’s proceeding evaluating
Freeport LNG’s export application for its Freeport,
Texas terminal. This application, if authorized would
raise the cumulative volume of authorized LNG
exports to 8.31 Bcf/d.

AEA seeks to encourage the DoE to develop a more
formal rulemaking process based on current data
and assessments of the current supply and demand
Dominion
Cove Point
Maryland
Sep 2013
environment. AEA asserts that current LNG export
Resources
(Chesapeake
applications are being granted based on guidelines
Bay)
developed for NG imports in the 1980s. AEA’s motion
NG producers view exports as a way to earn higher
also alleges that the legal standards the DOE used to
prices than are available for NG in either the domestic analyse the public interest in two previous permitting
U.S. or wider North American market. Yet significant
applications were not “adequate, appropriate, or
LNG exports could distort the domestic supply/
sustainable.”
demand relationship, and thereby raise domestic NG
prices. As long as NG is largely traded within North
APGA and the Industrial Energy Consumers of
America, prices remain insulated from the volatility
America (IECA) are working toward developing a
(and outright manipulation) that occurs in the world responsible production policy, arguing that while
oil market.
exporting NG might maximize the price domestic
producers receive for their product, it will reduce the
The acceleration of export procedures is already
price advantage NG currently enjoys relative to refined
provoking a backlash. Cove Point’s conditional
diesel or gasoline, and thus reduce the attractiveness
approval to export up to 0.77 Bcf/d of NG raises
of NG as a transportation fuel. If that occurs, these
the overall amount of permitted NG exports,
organizations emphasize, NG’s full potential to reduce
breaching the export levels of 6 Bcf/d — the “low
America’s energy dependency will not be achieved.
export scenario” — set forth in an earlier report
commissioned by the DoE that examined the impact The DOE may choose to undertake another pause in
of NG exports on domestic prices and on which the
its permitting procedures, but this is unlikely to occur
agency relied in approving three previous LNG export before year-end 2013, when new data should be
applications.
available from the Energy Information Administration’s
preliminary annual energy outlook for 2014.
America’s Energy Advantage (AEA), a coalition
of manufacturers and consumers, is working to
A lively debate is raging on how America’s NG
reserve US NG to promote a US manufacturing
reserves should be deployed—to maximize producer
renaissance. AEA members include domesticrevenues, or to support domestic manufacturing
headquartered companies such as Alcoa, Celanese,
and encourage energy self-sufficiency. Opponents of
Dow Chemical, Eastman, Huntsman, and Nucor, and increased NG exports emphasise that if all pending
trade associations, such as the American Public Gas
export applications were to be approved, half of
Association (APGA). Its membership also includes
current NG supply would be exported. Instead,
firms such as Incitec Pivot, a global explosives and
they advocate building necessary infrastructure to
fertilizer manufacturer based in Australia, that recently consume NG domestically, not only for transportation
began construction of an $850 million ammonia plant uses, but for power generation as well.
in Waggaman, Louisiana.
Lake Charles
LLC


Aug 2013


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INDUSTRY OVERVIEW

2.8 Conclusion
Government policies, both federal and state, have
played a major role in promoting the development of
NG as a transportation fuel, and will continue to do so
both in the near-term ad over the coming decades.
California has been a leader in developing alternative
fuels, and currently has the most comprehensive NG
fuelling infrastructure. While the state continues to
lead the way in policy innovation, many other states
are also on the NG bandwagon, and are providing
various incentives as well as setting their own
procurement policies, to promote NG use.


Although it at this point appears unlikely that
environmental regulations or public or private
lawsuits, may significantly slow U.S. shale gas
production, the long-term shape of U.S. NG export
policy is a cause for some concern, as it has the
potential to equalise somewhat domestic and world
NG prices, and thereby, reduce the economic case for
fleets to switch to NG. A lively debate is brewing over
whether NG should be reserved for domestic uses,
pitting conflicting interests of NG producers against
other among NG stakeholders. Since the setting of
export policy requires federal government action, this
debate will require political resolution at the highest
level.


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INDUSTRY OVERVIEW

Chapter 3: Converting to Natural Gas, Vehicle
issues
3.0 Introduction
Despite the relative cost advantage for fuelling NGVs
compared to traditional diesel or gasoline-fuelled
models, the higher relative costs of NGVs compared
to traditionally-fuelled vehicles has presented a major
obstacle to wider use of NG as a transportation fuel.
This chapter focuses on costs and other issues that
should be considered when contemplating switching
to NGVs, while the next discusses the equally
important issue of ensuring access to adequate
fuelling infrastructure.
OEMs have started to offer a wider range of NG
options, from automobiles, to vans—both passenger
and cargo—and light and medium-duty truck
options. Total sales have been modest but growing,
and each OEM has announced plans for expansion
of NG product offerings in forthcoming model years.
At least twenty-one states provide some form of
incentive for fleets to convert to light-duty CNG
vehicles, in the form of grants or rebates, loans, state
tax credits, or combinations of these policies.
With OEMs now offering a wider range of NGVs, the
impact of these incentive policies may now be more
pronounced.

Chevrolet announced in October 2013 that it will
launch a bi-fuel Impala, beginning with the 2015
model year, to both passenger and fleet customers.
The vehicle will include both a CNG tank in the trunk,
and a gasoline tank, allowing for a total range of up to
500 miles by switching between the two fuels-- 150
miles on CNG and 350 miles on gasoline. GM has
neither announced an expected price, nor projected
fuel economy figures, and expects to sell as many as
1000 vehicles, largely to fleets, during its first model
year.
Despite a lack of strong consumer demand, OEMs
recognize that shifting to NG provides immediate
emissions benefits, without any need for further
technological innovation, and thus help fulfil their
obligations to meet emissions standards for their
product offerings.

Two major obstacles have prevented wider consumer
adoption of NGVs. Although the costs of operating
CNG vehicles are much lower, consumers must first
pay the higher incremental cost of buying a CNG
vehicle. The actual break-even point depends on
the higher incremental cost for the CNG vehicle, and
All major heavy-duty truck manufacturers offer NG
average number of miles driven. Moreover, passenger
options, either in CNG or LNG formats.
cars face greater infrastructural obstacles, for unlike
fleets, they do not necessarily drive in consistent and
familiar patterns, and they lack access to dedicated
3.1 Passenger automobiles
fuelling arrangements—either company-owned, or
The US market lags significantly behind the European third-party— that are available to fleets.
market in the number of NG options offered as
Use of NG is impractical, at present, for non-fleet
passenger vehicles. Currently, only Honda offers
passenger vehicles, outside of states that have wella CNG option, the Civic NG, nationwide in the US,
developed CNG infrastructure, such as California, New
compared to Europe, where many automakers,
York, Oklahoma, Texas, and Utah. In the near-term,
including Fiat, GM, Mercedes, Peugeot, Toyota and
there are other pockets where use of such vehicles
Volkswagen, offer CNG options. Honda is strongly
might catch on, especially in bi-fuel options, which
committed to develop the US NGV market and has
can reduce fuelling and range anxiety.
offered a CNG automobile option since 1998 in the
US.


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INDUSTRY OVERVIEW

One looming technological innovation might
promote popularity of NG as a transportation fuel
for passenger vehicles: the development of a cheap,
widely available home refuelling option. At present,
consumers are making a switch in how they view
fuelling options. Outside of remote rural areas,
drivers are not accustomed to considering refuelling
possibilities when they drive passenger cars. But this is
changing, with the hybrids such as Toyota’s Prius and
Chevrolet’s Volt.

of the NGV passenger automobile market, one which
the federal government has devoted part of $30
million in research funds to finance proposals to
create such appliances. The Drive Natural Gas Initiative
(DNGI), a major industry trade association launched
its Home Fueling Appliance Task Force determine
specifications for such a product. The appliance
should be able to provide a fuelling rate of 1 GGE
per hour, should provide for 6,000 hours of service,
and should cost less than $1,500. This translates to a
fuelling cost per GGE of CNG of $0.25 (in addition with
Wider use of such vehicles may promote a shift in
the cost of the fuel itself and the cost of the electricity
how drivers think about fuelling their cars.
to run the compressor). The task force decided that
Electric vehicles have limited range, and are generally the cost of the appliance, plus the premium paid for
most useful for commuting short distances.
the CNG vehicle (compared to the same non-CNG
Drivers are able to charge their batteries when the
model), must payout in 3 years or less, in order to
vehicle returns home.
support a sustainable market. Several utilities, and
manufacturers, are joining to develop products that
The lack of a cost-effective home fuelling appliance
meet these specifications. The timeframe for launch
is seen as a major impediment to the development
remains at least eighteen months away.
Table 5 Home fuelling specifications
TCO
Base Case

Miles

% CNG

NGV Cost

HFA Cost

Actual miles

13,476

26,583

18,719

Daily miles

37

73

51

CNG percent

55%

NGV Premium

$4,000

HFA (installed)

$2,000

Simple Payout (yrs)

8.0

106%

80%
723

3.0

3.0

High-Miles /
High CNG %

-$1,277

3.0

3.0

3.0
Market of 10 million
commuters

Source: America’s Natural Gas Alliance

3.2 Light and medium duty trucking vehicle options
The major OEMs have responded to demand for
CNG-fuelled vehicles, and either now offer, or plan to
offer for model year 2014, a mix of vans, and light and
heavy duty pick-up trucks.

of similar vehicles. Beginning with model year 2014,
Ford intends to extend its product range and offer
its F-150 truck with a gaseous-fuel prep option on
the 3.7-liter V6 engine, enabling the vehicle to run on
CNG or LPG. This prep package includes hardened
valves, valve seats, pistons and rings so it can operate
Ford
Ford expects to sell 15,000 CNG/LPG-prepped vehicles on either CNG/LPG or gasoline through separate fuel
in 2013, representing a 25% increase on its 2012 sales systems, and from the factory costs approximately


| 29

INDUSTRY OVERVIEW

$315 before the customer chooses a Ford Qualified
Vehicle Modifier to supply fuel tanks, fuel lines and
unique fuel injectors. Upfits run approximately $7,500
to $9,500, depending on fuel tank capacity.
So equipped, F-150s would be able to run more than
750 miles on one tank of gas, depending on the tank
size selected. The Ford F-150 averages 23 mpg on the
highway. Ford expects that CNG versions of the F-150
will qualify for California HOV lane status certification,
thus providing its commercial customers with a
significant time advantage, in addition to the cost
savings they can expect to achieve on fuel.
With the addition of the F-150, Ford will have eight
commercial vehicles available to run on CNG/LPG.
Table 6 Ford CNG model options (as of model
year 2014)
Model

Type

F-150

Light-duty pick up

Transit Connect

van and wagon

Transit

van, wagon, cutaway, and
stripped chassis

E-Series

van, wagon, cutaway, and
stripped chassis

F-Series Super Duty

pick-up

F350

chassis cab

F-Series Super Duty (F-450,
F-550)

chassis cab

F-650

medium-duty truck

F53 and F59

stripped chassis

Source: Ford September 19, 2013 press release
Chrysler

Chrysler launched the Ram 2500 CNG pick-up in
2012 and sold its first vehicles in 2013. This is a bifuel vehicle that uses CNG as its primary fuel source,
but automatically switches to gasoline when the
CNG tanks are emptied. Using its two CNG tanks, the
vehicle’s range exceeds 250 miles, and its back-up
gasoline tank extends this range to nearly 370
miles. The Ram 2500 is available to fleet and retail
customers, and is powered by a Hemi 5.7 liter V8
engine.
Of the three major US OEMs, Chrysler offers the
smallest range of CNG products, offering a pick-up
only for model year 2014.


Table 7 Chrysler CNG model options (as of model
year 2014)
Model

Type

Dodge Ram 2500 Bi-fuel

pick up

Source: Chrysler March 6, 2013 press release
GM

In 2013, GMC introduced its bi-fuel CNG Silverado
2500 HD extended cab pick-up truck (the equivalent
Chevrolet model is called the Sierra 2500 HD), and
expects to sell 1300 of these vehicles during the 2013
model year. The vehicle incorporates factory-installed
hardened exhaust valves and intake/exhaust valve
seats, both of which are engineered to GM durability
standards for gaseous fuel use.
The bi-fuel CNG option is available on long- or
standard-bed models in either 2WD or 4WD. The fuel
system automatically switches to gasoline when the
CNG tank is empty, or the driver may manually switch
between fuel sources while driving. The combined 17
GGE CNG tank and 36-gallon gasoline tank allow for a
total range of about 650 miles.
GMC and Chevrolet expect to offer a range of several
truck and cargo van options for the 2014 model year.
Chevrolet has also announced plans to offer its Impala
automobile in a CNG configuration (see section 3.1
above.)
Table 8 GMC and Chevrolet CNG model options
(as of model year 2014)
Model

Type

Bi-Fuel CNG Chevrolet Silverado
2500HD extended cab

pick-up

Bi-Fuel CNG GMC Sierra 2500HD
extended cab

pick-up

Chevrolet Express 3500

cut-away

GMC Savana 3500

cut-away

Chevrolet Express Cargo 2500

cargo van

GMC Savana Cargo 2500

cargo van

Chevrolet Express Cutaway 4500

cut-away

Chevrolet Express Cargo 2500

cargo van

Source: GM website http://www.gmfleet.com/vehicle-overviews/
fuel-efficiency/bi-fuel.html


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INDUSTRY OVERVIEW

Payback: Bottom line

Assessing the conditions under which switching to
NG may be a commercially viable strategy for light
and medium-duty LGVs relies on a careful assessment
of over what timespan the additional premium for
purchasing differential vehicle can be recouped
by the cost savings for CNG fuel—which currently
average between $1.50 and $2 per DGE or GGE (as
discussed more fully in section 1.1 above).
Leaving aside access to fuelling infrastructure—which
will be discussed more fully in chapter 4 below—a
fleet operator must consider how many miles can
be driven fuelled by CNG alone, since most OEM bifuel options actually are currently configured with a
much higher gasoline capacity compared to CNG. In
general, payback calculations are a less certain value
proposition, since vehicles in these classes already
have higher fuel economy, and travel fewer models.

Many states offer significant incentives in switching
to CNG, but these vary widely among states, and
many of them are time-bound. These factors may tip
the balance toward CNG significantly beyond what
market factors alone would dictate.

3.3 State subsidies for lightduty NGVS
As of September 2013, 27 states offer some form
of incentives for converting fleets to light-duty
NGVs, according to VNG.CO, a company that offers a
nationwide CNG retail-centric fuelling facility program
to owners and operators of light-duty NGVs. Thirteen
states offer grants or rebates, eight states offer tax
credits, and six offer loan financing at concessionary
rates. Several states offer various combinations of
these incentives.

Table 9 Summary of state incentives for lightFigure 16 Calculation of light-duty truck payback, duty CNG vehicles
based on various fuel price and truck premium
Type of Incentive Number of
Description
assumptions
states

$10.00

Grants or rebates

13

$2500 to $25,000 per
vehicle

$8.00

Loans

6

Rates from 0% to 5%

$7.00

State tax credits

8

$500 to $7500 per
vehicle

$9.00

$6.00
$5.00

Source: VNG.CO website

$4.00
$3.00
$2.00
$1.00
$0.00
$16,000

$8,000

$0

12,000 miles per yr - 3 yr Payback

Source: Paul Armstrong, GTI Director of Business Development,
to Guild of Gas Managers, April 3, 2012.



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INDUSTRY OVERVIEW

Figure 17 Map of states offering various incentives for light-duty CNG vehicles

Tax Credit
Rebate/Grant
Loan

■Arkansas Up to $5,000 (<8,501 lbs)
■
or up to $8,000 (8,501-14,000 lbs)
■California $3,000 (<8,501 lbs) or
■
$8,000 (8,501-14,000 lbs)
■Colorado 10.5% of total vehicle
■
costs, up to $6,000 per vehicle
■Connecticut Unspecified funding
■
for public fleet NGVs only
■Florida 50% of incremental costs,
■
up to $25,000
■Georgia 10% of total vehicle costs,
■
up to $2,500
■Illinois 80% of incremental costs,
■
up to $4,000
■Indiana Up to $150,000 per fleet
■
conversion project (max for all vehicles purchased)

■Louisiana 50% of incremental costs
■
■Maryland $3,000 (<8,501 lbs) or
■
$5,000 (8,501-14,000 lbs)
■Mississippi Zero-interest loans for
■
municipal vehicle NGV fleets only
■Montana 50% of conversion costs,
■
up to $500
■Nebraska 5% interest loans, up to
■
$750,000 per borrower
■North Carolina Up to 80% of incre■
mental costs
Oklahoma Tax credits of 50%
■■
of incremental costs, 3% interest
loans
■Oregon Low-interest loans (terms
■
not specified)

■Pennsylvania 50% of incremental
■
costs, up to $25,000
■Texas $2,500 rebates (up to 9,600
■
lbs), grants up to 90% of total costs
(8,501+ lbs)
Utah Tax credits of 35% of total
■■
cost up to $2,500, grants of 50%
incremental costs
■■ Virginia Unspecified grants and
loans for public fleets only
■Washington Exemption from 6.8%
■
state sales tax on vehicle purchase
■West Virginia 35% of new vehicle
■
purchase price or 50% of conversion costs, up to $7,500

VNG.go provides details on these state programmes, as of September 2013, at the following link:
http://vng.co/wp-content/uploads/2013/09/VNG-State-Incentive-Summary-September-2013.pdf

This information is presented in a more user-friendly summary form than the more comprehensive
information available at the DoE’s AFDC site, which includes links to relevant state statutory and regulatory
information. http://www.afdc.energy.gov/laws/matrix/tech.



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INDUSTRY OVERVIEW

3.4 Heavy duty trucking
Fleets operating heavy-duty trucks now have the
option to consider both CNG or LNG options. All
major truck manufacturers currently offer NG engine
options, including Freightliner, Isuzu, Kenworth,
Navistar, Peterbilt, and Volvo/Mack. These are based
around engines offered & manufactured by Westport
Innovations, in a 15 liter LNG option only, and in a
joint venture between Westport and Cummins, in
both CNG and LNG versions, and 8.9 liter and 11.9 liter
sizes. Volvo has announced plans to launch its own 13
liter LNG engine sometime in 2015.

Figure 18 Natural gas engine comparison-- power
(hp)
CWI ISL G

250

CWI ISX12 G

375

400

Westport 15L

475

500

Source: http://www.westport.com/products/engines/15

Figure 19 Natural gas engine comparison –
torque (ft-lb)

CWI ISX12 G
CWI ISL G
Westport 15L
Technological innovation should over the longer term
reduce these premiums. Manufacturers are currently 600
1,000
1,200 1,400
1,600
1,800
developing new tank designs for both CNG and LNG.
Additionally, innovations in the fuel system space-Source: http://www.westport.com/products/engines/15
which accounts for the majority of the premium,
should reduce overall truck premiums as well.

CNG to LNG compared

For heavy-duty trucks, both CNG and LNG options are
available, and fleets looking to switch must carefully
consider which option better suits their needs. CNG
trucks are heavier—due largely to tank design, and
LNG has fuel-economy advantages in long-haul
situations. The additional weight required for its tanks
disadvantages CNG, but since 75% of heavy-duty
trucks cube out before they weigh out, this is not
necessarily dispositive, particularly given the currently
more extensive CNG filling station network. (See
section 4.2 below, and especially Table 12, for more
LNG engine discussion of these considerations.)

Some idea of the current premium for heavy duty
CNG or LNG rigs can be derived from Table 10, which
compares a CNG truck equipped with saddle tanks
with 90 DGE of storage capacity to a single tank LNG
truck with 75 DGE of storage capacity. All of these
figures are provisional, and are highly dependent
on the relationships between suppliers and fleet
managers.
Table 10 Heavy-Duty engine options
Manufacturer

Model

CNG engine
price
premium

price
premium

Cummins/
Westport

ISL G 8.9 L

$32,000$40,000

$35,000$58,000

Cummins/
Westport

ISX G 11.9 L

$47,000$80,000

$60,000$98,000

Westport
Innovations

HPDI 15 L

LNG option
only

$75,000$120,000

Source: Love’s Travel Stops, August 3, 2013 presentation



| 33

INDUSTRY OVERVIEW

3.5 Factors to consider in HD
fleet conversions
Assuming access to adequate fuelling infrastructure,
without the need to construct or secure access to
a private fuelling network, many calculations of
expected payback on conversion from diesel to either
CNG or LNG rely only on the average differential in
fuel price—currently about $2 for CNG, and $1 for
LNG. Yet there are other inefficiencies necessary
to consider when running heavy-duty trucks, and
these should be quantified on a per unit basis and
deducting the sum of inefficiencies from the gross
discount.
LNG Filling issues

Figure 20 Sample calculation of expected
payback for HD fleet conversion
CNG vs. LNG Comparison

CNG

LNG

Diesel Price

$4.000

$4.000

Natural Gas Retail Price

$2.000

$3.000

Gross Discount to Diesel

$2.000

$1.000

Fuel Economy Loss (12%)

-0.240

-0.360

Out of Route Miles

-0.025

-0.025

Payload Loss

-0.050

-0.020

Additional Maintenance

-0.030

-0.030

Fuel Loss from Venting

-

-0.015

Salvage Value Deduction

-0.060

-0.060

Total Inefficiencies

-0.405

-0.510

Net Discount to Diesel

$1.595

$0.490

Truck Inefficiencies

LNG may vent fuel into the atmosphere to avoid
explosion in a vacuum tank, and it may have a shelf
Truck Comparison
CNG
LNG
life as short as four days. Filling completely empty
Miles Driven (Annual)
125,000
125,000
methane tanks can be problematic, as methane
Fuel Economy
6.20
6.20
may expand rapidly as LNG enters a tank at ambient
Fuel Consumption
20,161
20,161
temperature, sometimes delaying operations by up to
Truck Premium (CW 11.9L)
60,000
60,000
one day until a complete fill can be achieved.
$1.60
$0.49
Dealing with low temperature LNG raises some safety Net Discount to Diesel
$32,157
$9,879
concerns; dealing with these imposes certain training Fuel Savings (Annual)
costs and also raises possible workers’ compensation
Payback (Years)
1.87
6.07
concerns.
Range considerations

Onboard fuel capacity dictates the range for both
CNG and LNG trucks. Standard CNG fuel systems
come equipped with the option of either 90 DGE
saddle tanks or 120 DGE behind-the-cab tanks. Only
about 90% of this capacity is considered usable,
since a CNG truck also experiences a shortfall when
filling at rates higher than ten DGEs per minute.
Although fuel is not lost, the rapid fuelling produces
heat which expands the hydrocarbons, thus taking
up more space, and resulting in a capacity loss of
approximately 5%, leaving total range for a CNG
vehicle with saddle tanks at about 450 miles of
range.



| 34

INDUSTRY OVERVIEW

Figure 21 Sample CNG range calculation
90 DGE Storage Capacity –
(9 DGE Unusable + 4.5 DGE Heat Expansion)
= 76.5 DGE Useable Capacity

Table 11 Weight diesel truck compared to CNG
truck and LNG truck (full tanks in lbs)
CNG 80 DGE LNG 75 DGE
NG tank weight

1600

1200

Diesel tank weight (75
gallon)

665

665

SCR System and DEF
weight

458

458

Net additional NG weight

477

77

Less

76.5 DGE Useable Capacity * 6 Miles Per Gallon
Fuel Economy = 459 Miles of Range



CNG fuel systems are currently available with up to
150 DGE capacity that yield over 750 miles of range.

* Note, however, that trucks that use HPDI technology,
such as the Westport 15 Liter Engine, are compression
ignited and require an SCR system under current
emissions standards.

LNG has a fuel system design which allows a truck to
use one hundred 100% of all fuel capacity, usually 75
DGE for a single tank or one 150 DGE for dual saddle
tanks. Using the same fuel economy calculations as for
CNG above, LNG vehicles can achieve a range of up to
900 miles.

Payback: Bottom Line

When all these factors are carefully considered-and once again, emphasising that all necessary
costs for any infrastructural construction are left to
chapter 4 to discuss, payback for fleet conversion,
assuming 125,000 miles driven annually, can be fewer
Truck Weight
The additional weight differential for an NGV truck is than 2 years for CNG vehicles using a Cummins/
often overstated since it considers only the additional Westport 11.9 liter engine, and just over 6 years
for an equivalent LNG rig. These calculations do
weight of needed storage tanks and mounting
not consider possible state subsidies, which are
brackets, without subtracting the weight of parallel
components required by diesel trucks, or the weight summarised in the next section.
advantage of CNG itself compared to an equivalent
The preceding analysis is based on calculations done
energy output of diesel. An aluminium diesel tank
by Love’s Travel Stores, but others have made similar
with mounting kit can weigh between 100 and 200
calculations—on slightly different assumptions.
pounds. Also, depending on API gravity, diesel fuel
can weigh between 6.95 and 7.05 pounds per gallon
versus a natural gas DGE at 6.50 pounds per gallon,
giving NG a weight advantage of .50 pounds per
gallon. Neither do spark ignited NG engines require
SCR systems or a DEF tank.



| 35

INDUSTRY OVERVIEW

Diesel to NG Price Spread For Economic Payback

Figure 22 Calculation of Heavy-duty truck payback, based on various fuel price and truck premium
assumptions
$2.50

High fuel price
differential

$2.00

Lower cost NGV
options (as volume
grows)

$1.50
$1.00
$0.50
$0.00
$100,000

$90,000

$80,000

$70,000

$60,000

$50,000

$40,000

$30,000

$20,000

NG Truck Price Premium
2 yr Payback

4 yr Payback

Source: Paul Armstrong, GTI Director of Business Development, to Guild of Gas Managers, April 3, 2012. http://www.northeastgas.org/
pdf/p_armstrong_gti_040412.pdf

Gemini, Love’s private truck fleet that hauls fuel
to its 300 retail locations in 39 states has opted to
purchase 50 Freightliner 400 HP trucks equipped
with the Cummins Westport ISX G 11.9 liter engine.

Robert Transport, a Canadian long-distance
trucking firm has opted to begin converting to LNG,
using Westport 15 Liter HPDI engines in Peterbilt
and Kenworth Trucks, driven by price, energy
security, and emissions concerns.

3.6 State subsidies for heavy-duty fleet conversion
The DoE’s AFDC is the best source for current
subsidies for heavy-duty fleets. http://www.afdc.
energy.gov/laws/matrix/tech.


As of September 2013, Cummins-Westport has
summarized some of the principal incentives available
for heavy-duty vehicles in Canada and the US in a
more user-friendly framework.


| 36

INDUSTRY OVERVIEW

Figure 23 Heavy-duty incentives, Canada and US (as of August 2013)
QUEBEC
BRITISH COLUMBIA
FORTIS Natural Gas for Transport
(NGT) Incentive Program for LNG
• Covers up to 70% of incremental
• LNG only:HD Class 8 (11,793kg
+) MD Vocational (incl. waste,
transit, marine)

COLORADO
Alternative Fuel Income Tax Credit

Accelerated Capital Cost
Allowance

• 35% tax creditcapped at $6,000
for vehicles under 26,000lbs

• 60% depreciation for
LNG trucks

• CNG and bi-fuel

WEST VIRGINIA

• Until 2016

• AFV Tax credit of 35%

FORTIS Light Duty Vehicle
Incentive Program

• $7500 < 26,000lbs

• Bi-fuel WiNG 250-550 eligible up
to $10,000 per vehicle

• Dedicated or bi fuel
CNG/LNG

• $25,000 > 26,000lbs

• No close date

OKLAHOMA
• One-time income tax
credit for 50% of the
incremental costs

CALIFORNIA

• Until Sept. 10, 2013

SJVAD Drive Clean Rebate
Program

NORTH CAROLINA

• Rebate up to $3,000

• Reimbursement
program, up to 80% of
incremental costs

• BAF products on eligibility list
• Ongoing

• Until Sept. 10, 2013

TEXAS
H-GAC Clean Vehicles Grant
Program

ARKANSAS

• $20 - $40,000 for HD
• CNG/ LNG/ bi-fuel
• Open until funds exhaust

New

Existing

LOUISIANA

• 50% rebates for CNG
and LNG conversions,
up to $4500

• Income tax credit up to
50% of the incremental
cost up to $3,000
• Dedicated CNG/LNG
only

Source: http://www.cumminswestport.com/pdfs/general/Aug%20-%20Sept%202013%20NA%20On-Road%20Incentives.pdf

3.7 Conclusion
Manufacturers have stepped up their offerings of
NGVs, across vehicle classes, especially in the heavyduty truck sector, where customers are responding to
the potential significant fuel costs savings.
The value proposition for passenger cars is less
certain, outside certain regions already well-served
by adequate fuelling infrastructure, in the absence
of a home refuelling option. In the light-duty sector,
the value proposition is also at present somewhat


ambiguous, but should improve, once technological
improvements and economies of scale drive the
premiums for NGVs downward. At the moment, many
of the NGVs on offer are not fully configured by the
OEM, but involce conversion elements. Costs should
fall when OEMs commit to fully configuring NGVS
themselves, rather than relying on outsourcing and
conversions.


| 37

INDUSTRY OVERVIEW

Chapter 4: Building Dedicated Fuelling
Infrastructure, CNG and LNG
4.1 Introduction
Infrastructural considerations continue to loom large
in decisions to convert all or part of a fleet’s vehicles
to NGV, and with the increasing availability of various
types of NGVs, are the largest consideration in fleet
conversion decisions. Although more infrastructure,
both CNG and LNG, is continually coming on-line,
as described in (sections 1.3 and 1.4 above), at
present, fleets located in most regions — with the
exception of California, New York, Oklahoma, Texas,
and Utah — still need to construct or secure access to
independent fuelling infrastructure, as existing public
access infrastructure alone cannot support fleet
range needs. Companies have sometimes found that
they may enter into access arrangements with other
companies or utilities that have already constructed
their own NG infrastructure.
Yet the time is coming when more fleets will be able
to rely on either public networks, or arrangements
negotiated with other private stations, for either
CNG or LNG refuelling needs. Development of CNG
infrastructure to date has been largely locally or
regionally concentrated— although major initiatives
announced by Trillium and Love’s Travel Stops are
somewhat shifting this pattern. Separate initiatives
are also underway, announced by Clean Energy, ENN/
Blu LNG, and Shell, to connect up these regional
CNG hubs, via long-distance orientated LNG or LCNG
fuelling networks.

a much more complex liquefaction process, involving
compression and a multistage heat exchanger either
using liquid nitrogen or newer methods involving
methane, at significantly greater cost than applies to
CNG.
Pipeline compared to trucking

CNG is transported to a retail location via an existing
NG pipeline. Although significant variations exist in
delivered costs— due to existing load on the pipeline,
and distance from NG sources of supply-- delivery via
a NG pipeline remains the cheapest available method
of NG transportation. LNG, by contrast, is delivered via
a tanker truck, and the length of such hauls is typically
two to five times that of a traditional diesel haul. To
be sure, the construction of additional liquefaction
plants can reduce the average length of such hauls,
but this construction comes at a cost, as the average
capital costs of new liquefaction facilities currently
exceeds a minimum of 150,000,000 dollars (although
development of simpler and modular solutions, such
as GE’s LNG in A Box system, and Micro LNG facilities,
are reducing such capital and operational costs).
Differential tax treatment

CNG currently enjoys three significant cost benefits
compared to LNG.

CNG and LNG are taxed differently, and CNG is
currently taxed more favourably, based on energy
content sold, per DGE. LNG is taxed on the basis of
an LNG gallon (as discussed more fully in section 2.2
above). The net result is a $0.15-$0.25 cost advantage
for CNG. This cost differential should be taken into
account when choosing between CNG and LNG, yet
since this cost difference is caused by government
policy, it could more easily be erased than the
previous two cost differentials.

Compression compared to liquefaction

Total cost differential

4.2 Basic cost considerations,
CNG compared to LNG

CNG uses multistage compressors, which take NG at
pipeline pressure and condense it to volumes. LNG
also takes NG off a pipeline at line pressure, but uses

The net result of these cost differences is that CNG
is roughly $2.00 cheaper than diesel, for energy
equivalent amounts, while LNG is $1.00 cheaper.

| 38

Natural Gas Vehicle Market Whitepaper USA 2013-2014

Natural Gas Vehicle Market Whitepaper USA 2013-2014

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