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Future of Natural Gas Markets: LNG & CNG
1. The Future of Natural Gas:
Expanding Markets - LNG,
CNG
Gifford Briggs
Louisiana Oil & Gas Association
2. NORTH AMERICAN NATURAL
GAS LANDSCAPE
Years of
Supply
125 3,000
Resource 110
102
RLI @ 65 Bcf/d (years)
Reserves 92 2,500
100
85
75 2,000
75
1,500
50
1,000
25
500
0 0
07
09
06
09
11
20
20
20
20
20
EB
EB
EB
EB
EB
N
N
/N
/N
/N
A/
A/
C
C
C
EI
EI
PG
PG
PG
2,600 Tcf of Total Resource
100+ Year Supply at 70 Bcf/d
70+ Year Supply at 100 Bcf/d
3. US & LOUISIANA
TRANSPORTATION FUEL
0.2%
0.1%
24.0%
Gasoline
34.4%
Diesel
Alternative Fuel
65.6%
75.8%
U.S. Louisiana
Gasoline – 140.6 Billion GGE Gasoline – 2.1 Billion GGE (65.6%)
Diesel – 44.5 Billion GGE Diesel – 1.1 Billion GGE (27.9%)
Alt. Fuels – .4 Billion GGE Alt. Fuels – .002 Billion GGE (0.1%)
Equivalent to 376.7 Bcf or 1.03 Bcfd
Equivalent to 21.5 Tcf or 58.9 Bcfd
4. US TRANSPORTATION SECTOR
Fuel Consumption by Market Segment
45
69%
Largest Opportunity
40
42.4 Bcf/
d
35
30
Most Commercially Industry’s Early
25 Ready Opportunity
20
15 18%
10 10.8 Bcf/
d
5 5% 5%
2% (1.3 Bcf/d) 1% (0.7 Bcf/d)
3.2 Bcf/d 3.2 Bcf/d
0
Light Duty Heavy Duty Medium Duty Marine Rail Upstream
5. Natural Gas Value Proposition
Four Core Value Proposition Areas
Environmental Benefits Social Benefits
Reduced GHG emissions (20-30%) Natural gas production related revenues
Reduced associative emissions Royalties, taxes, job creation
CO, SO2, NOX Natural gas fueling infrastructure revenues
Lower engine noise Job creation, taxes, economic spin-off
Economic Benefits Energy Security Benefits
Lower fuel price than diesel / gasoline Domestic energy source
Reduced maintenance costs Economic benefits through value chain
Technology is proven and improved Displaces foreign oil
Jurisdiction dependent grants / credits 49% US petroleum is imported
40% CDN petroleum is imported
7. On average, CNG costs
44% less than gasoline
Seattle
CNG - $1.72
Gas - $3.93 Bismarck
CNG - $1.95
Gas - $3.84 Detroit
CNG - $1.94
San Francisco Gas - $4.04
CNG - $2.45
Gas - $4.19 New York
Salt Lake City
CNG - $2.60
CNG - $1.27
Gas - $3.99
Gas - $3.63
Los Angeles Wash., DC
Denver
CNG - $2.70 Nashville CNG - $2.40
CNG - $2.50
Gas - $4.31 CNG - $1.63 Gas - $3.88
Gas - $3.67 Little Rock Gas - $3.74
CNG - $1.60
Gas - $3.59
San Diego
CNG - $2.90
Atlanta
Gas - $3.97
CNG - $2.60
Gas - $3.89
Dallas
CNG - $2.40
Gas - $3.59
Baton Rouge, LA Ft. Lauderdale
CNG - $1.69 CNG - $2.19
Gas - $3.53 Gas - $3.83
Source: CNG prices captured in June 2011 by CNGPrices.com
Gas prices reflect city average on June 2, 2011 from GasBuddy.com
8. MARKET SEGMENTATION
GREEN CITIES
CNG
• Municipal government fleets, light duty and medium duty vehicles
• Commercial fleets and personal light and medium duty vehicles
• Airport and port authorities
GREEN CORRIDORS
• Heavy duty vehicle freight and goods transportation
• Home base and mid-point fueling patterns
• Transient and varied fueling patterns
LNG
GREEN GAS OPERATIONS
• Drilling rigs and frac equipment
• Service company light duty vehicle fleets
• Field storage and fuel deployment solutions required
GREEN COMMERCIAL
• Extra heavy duty “off-road” vehicles
• Rail, mining, marine, military, and construction services
• Heavy duty engine solutions required
10. WHY LOUISIANA
• Leading natural gas producing state
• Largest natural gas producing state
in the U.S.
• Fourth largest natural gas reserves in
U.S.
• Henry Hub which provides access to
major markets throughout the country
• Interstate corridors (I-10, I-20, I-49)
• Expanding natural gas infrastructure
along corridors
12. 2011 Natural Gas Infrastructure Growth
3.60% overall growth in U.S. year to date
200%
200%
14%
13%
20%
200%
16%
12%
50% 31%
26% 50%
80%
27%
50%
12%
13. Natural Gas Fueling in Louisiana
10 Existing CNG Stations
6 Public (Baton Rouge (3),
Bossier City (2), Coushatta
4 Private (Baton Rouge (2),
Chatham, Shreveport)
11 Planned CNG Stations
Alexandria, Frierson,
Haughton, Kenner, Lafayette
(2), Mansfield, Shreveport (4)
14. SAMPLE PAYBACK
Pickup Truck School Bus Refuse Truck Transit Bus
Incremental Cost $10,000 $36,000 $52,000 $50,000
Incentives $5,000 $18,000 $26,000 $25,000
Net Incremental
$5,000 $18,000 $26,000 $25,000
Cost
Annual Mileage 25,000 20,000 20,000 40,000
Annual Mileage Fuel
14 7.7 3.1 3.6
Efficiency (mpg)
Gallons of Fuel /
1,786 2,597 6,452 11,111
Year
Petroleum Fuel Cost
$3.60 $3.99 $3.99 $3.99
per Gallon
Natural Gas Cost per
$2.11 $2.11 $2.11 $2.11
GGE
Annual Fuel
2,611 4,883 12,129 20,889
Savings
Simple Payback
1.88 3.69 1.20 1.04
(years)
15.
16. Light Duty Vehicles
Honda Civic Natural Gas (NG)
Chevrolet – Impala, Silverado, Tahoe, Malibu, Tahoe
Ford – Focus, Fusion, F150, Milan, Transit Connect
Dodge – Ram
Medium Duty Vehicles
Chevrolet –W4500, C4500 / 5500, Express, Savana
Ford – F250, F350, E450, F450, F550, F53 / F59
Transit Bus – Blue Bird, Thomas Built, El Dorado, Foton
America, NABI, New Flyer, Orion, Motor Coach Industries
Work Trucks – Workhorse, Sterling, International, MaxxForce
Refuse – American LaFrance, Mack, AutoCar, Crane Carrier,
Freightliner, Kenworth, McNeilus
Street Sweeper – Elgin, Freightliner, Schwarze
Heavy Duty Vehicles
Short-Haul – Freightliner, Kenworth, Peterbilt, Volvo Trucks N.A.
Long-Haul – Kenworth, Peterbilt, Volvo Trucks N.A.,
International Transtar
Heavy Duty Engine Manufacturers
Cummins Westport 8.9L ISL G
Westport 15L
17. Chevy Silverado
GM Sierra
April 2012
Westport
WiNG-Powered
Ford Truck
March 2012
Dodge Ram
2500
2012
Now to the economics. \n\nNatural gas costs, on average, one-third less than conventional gasoline at the pump. \n\nNGVs are proving to have lower operating and maintenance costs, generating significant vehicle life-cycle savings. Because natural gas burns so cleanly, it results in less wear and tear on the engine and extends the time between tune-ups and oil changes. Many fleets report 15-28% savings compared to diesel fleets.\n\nAnd right now with gasoline prices climbing again, the lower price of CNG becomes even more appealing. \n\nThese prices are from late-March at stations around the country.\n
