REV UP CLEANER FUEL WITH

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1 REV UP WITH CLEANER FUEL Driving the adoption of natural gas as a vehicle fuel hasn t been easy. But with all its advantages, a different approach might accelerate this alternative fuel forward. With a network of more than 2 million miles of distribution pipes, the American Gas Association (AGA) reports that natural gas is delivered to 68 million residences and more than 5 million commercial businesses in the U.S. More than 30 states have proven natural gas reserves, which reduce greenhouse gas emissions and, when captured as a biogas from landfills, can be used as a renewable form of energy. Despite natural gas being embraced as a heating and energy source for homes, businesses and manufacturing, there is still a reluctance to adopt it as a vehicle fuel. Abundant, clean and domestically produced, natural gas might very well be a fuel of the future that is available today. Including undiscovered and unconventional natural gas, the U.S. Energy Information Administration (EIA) states that nearly 2,500 trillion cubic feet (Tcf) of recoverable natural gas exists in the nation. Used at a rate of about 26.6 Tcf per year, it is estimated that natural gas will last more than 90 years an extensive period of time, according to analysts. Capturing 24 BENCHMARK No

2 FROM WELLHEAD TO WHEELS, NATURAL GAS IS AN EFFICIENT AND CLEAN-BURNING FUEL. GREG CROW BURNS & McDONNELL 25

3 DID YOU KNOW? According to the U.S. Department of Energy's Alternative Fuels Data Center, almost 4 million hybrid electric vehicles (EV) were sold in the U.S. in Consumers can charge a vehicle using a home s regular 110/120-volt outlet in about seven hours. Rapid charging stations can be installed for about $1,000. More than 20 plug-in electric vehicle models are now available in the U.S., with the Toyota Prius the highest-selling brand. While EVs cost more upfront than their gasoline counterparts, financial rebates exist to reduce the difference in price. With state and federal initiatives to grow the EV charging station network, adoption of EVs will continue to be encouraged. this natural gas to make it accessible over the decades will depend on the economic motivation for natural gas companies. As environmental regulations tighten and potential emission penalties grow, natural gas serves as a cleaner resource compared to other fossil fuels. Composed of simple molecules, primarily methane, natural gas releases less carbon dioxide than other fossil fuels when burned. Additionally, natural gas releases only small amounts of sulfur dioxide and nitrogen oxides and burns almost completely, resulting in virtually no ash or air pollution. In the U.S., natural gas production increased 4 percent to a record level of more than 27,000 billion cubic feet (Bcf) in 2015, according to the EIA. Production, coupled with current low prices, offers economical advantages to domestic natural gas users and production incentives to manufacturers. The increase in natural gas exploration also can add new jobs and, as a result, boost local tax revenues. In 2015, the average price of oil dropped compared to the previous year, resulting in operators postponing or canceling current development plans. With improved discovery technologies, including satellites, GPS and remote sensing, new natural gas reserves are being discovered while drilling fewer wells. Use of natural gas as a fuel helps reduce the nation s dependence on international sources of oil. From wellhead to wheels, natural gas is an efficient and clean-burning fuel, says Greg Crow, a project manager at Burns & McDonnell. When it s time to change the oil at 10,000 miles, the oil from a natural gas engine looks like it just came out of the jug. Compared to other fuels, less soot finds its way to the oil pan. POWERING NATURAL GAS POSSIBILITIES According to the U.S. Department of Energy, natural gas powers more than 15 million vehicles around the world today. In the U.S., however, natural gas fuels only about 150,000 cars and trucks, or about half of 1 percent of all cars and trucks in the country, and most of these are fleet vehicles. Natural gas offers acceleration, power and cruising performance similar to gasoline, providing the possibility to increase adoption of natural gas as a vehicle fuel in the U.S. FLEET VEHICLE ADOPTION LEADING THE WAY Across the U.S., the number of public and private fleet operators using natural gas as a fuel is growing. The AGA states that 85 percent of new garbage collection vehicles and 25 percent of new city buses are being purchased as compressed natural gas (CNG) vehicles. Private companies, including Ryder, 26 BENCHMARK No

4 DISCOVERING THE MANY FORMS OF NATURAL GAS An odorless, gaseous mixture, natural gas predominately is made of methane, which is a fossil fuel resulting from millions of years of heat and pressure on organic materials in the earth. COMPRESSED NATURAL GAS In order to have a sufficient quantity for adequate driving range, natural gas must be compressed. Compressed natural gas (CNG) is stored in a compressed gaseous state, typically about 3,600 pounds per square inch, in a reinforced tank and in the cylinders of a vehicle for use. CNG provides about the same fuel economy as conventional gasoline. It also provides similar performance in terms of acceleration and power. LIQUEFIED NATURAL GAS Natural gas that is purified and super-cooled to a liquid form is liquefied natural gas (LNG). By compressing and cooling natural gas to -260 degrees Fahrenheit, it turns into a liquid state. This liquefaction process removes many compounds and increases its methane composition. Natural gas that is liquefied is typically for transportation of natural gas over long distances where pipelines aren t an option, such as overseas. Once at its receiving point, it is re-gasified and then delivered via pipelines. LNG requires higher production costs and is stored in expensive cryogenic tanks. RENEWABLE NATURAL GAS Also known as biomethane, renewable natural gas (RNG) is a biogas that emits from the decomposition of organic matter. Most landfills, livestock and wastewater treatment plants have the potential to produce RNG, usually from a biochemical process known as anaerobic digestion. With minor conditioning of the gas, RNG is completely interchangeable with conventional natural gas, CNG or LNG. RNG can be transported in the natural gas pipeline network and, once compressed, can be used as a transportation fuel. BURNS & McDONNELL 27

5 DEVELOPMENT OF ONBOARD COMPRESSION IS ALREADY UNDERWAY. THE POTENTIAL OF THIS GAME-CHANGING IDEA PAVES THE WAY FOR INCREASED NATURAL GAS ADOPTION BY EXPANDING CNG FOR ALL CARS, WITH MINIMAL COST. PATRICK HIRL UPS and AT&T, have invested in CNG fleets. While the numbers are growing, given the advantages for commercial use of CNG, fleet adoption is slower than might be expected. For companies looking to invest in natural gas vehicle fleets, there are more than 40 truck manufacturers and retrofit companies available. Commercial fleets are typically supported by a dedicated CNG filling depot or contracted network of filling stations on well-used transportation routes. For light-duty cars and trucks, the options to buy a dedicated natural gas vehicle in the U.S. are limited. The Honda Civic GX, first introduced in 1998, is available in 35 states. Although available to consumers, the Civic GX sells most popularly to taxi and commercial fleets. Chevrolet introduced its Impala bi-fuel CNG sedan in 2015 but is ceasing production this year. The Dodge Ram CNG pickup truck is currently available only to fleet and commercial customers. And, yes, the cost of dedicated CNG vehicles is more expensive than other cars. The Honda Civic GX costs about $8,000 more than the comparable gasoline version. It costs between $2,000 and $4,000 to convert an existing vehicle and engine to run on CNG. For light-duty vehicles, expect to forego trunk capacity and storage space to accommodate the larger tank. RESTRICTED REFUELING While the cost and availability of a CNG vehicle can be a challenge for consumers, the real problem is the available CNG filling infrastructure. Of the 1,700 CNG fueling stations in the country, only a third or so are open to the public, with most supporting fleets and commercial vehicles. Drivers have to plan their routes carefully, Crow says. Until more CNG stations are built that make it possible to travel from the West Coast to East Coast, it s difficult for a typical car owner to make the move to natural gas. In a convenience-oriented society, it s hard for many consumers to accept not having easy access to a CNG fill-up. Concentrations of CNG filling stations exist in California, New York and other eastern states, but the mountain states and northern U.S. offer limited filling opportunities. This lack of CNG filling station infrastructure on the roads makes it difficult to see how light-duty CNG vehicle adoption will change dramatically in the near future. CNG filling dispensers are available for drivers to install at home. The filling process taps into readily available natural gas, so a car can be filled up overnight. The dispenser compresses the natural gas to about 4,000 pounds per square inch. But, in addition to the CNG vehicle or engine conversion cost, owners need to spend more than $5,000 for the dispenser and installation. DRIVING POTENTIAL BEYOND EXPECTATIONS While natural gas fueling stations might be limited, the U.S. has an existing, stable network of more than 2 million miles of natural gas transportation pipelines. This proven pipeline infrastructure supports the millions of residential and commercial customers who have adopted natural gas for everyday heating and energy. To use natural gas to drive a car, the gas must be compressed. Historically, this compression has only been available via a dedicated CNG filling station or dispenser. Every brand of car, however, is equipped with an air conditioning system. This closed system uses R134 liquid refrigerant from a storage tank, compresses it, and cycles it through a tank where it expands and cools the vehicle. The car s engine then compresses the coolant back into a liquid state for reuse. 28 BENCHMARK No

6 Modifying a vehicle s air conditioning system to be used as an onboard methane gas cycle compressor creates an integrated natural gas vehicle (NGV) from any car or truck, no matter the brand or type of vehicle. The fuel tank would require replacement to store the natural gas, but the existing air conditioning system would still work for the vehicle. The cost for conversion would be less than $2,000. With an integrated NGV, consumers can fill up wherever low-pressure natural gas is available, says Patrick Hirl, a senior project manager at Burns & McDonnell. Integrated compression means easy fill-ups at home, the grocery store, eating out, at the movies or while you re at work. The integrated NGV model means no need for dedicated CNG filling stations or high-pressure storage facilities. Filling dispensers could be simple and streamlined in design, not unlike electric vehicle hookups. Using a smartphone GPS, phone app and smart radio-frequency identification dispenser sensor, transactions would identify buyer and seller for easy, online CNG fueling payment. ONBOARD INNOVATION Southern California Gas Co. is a leader in uncovering ways to convert public transportation systems to cleaner-burning natural gas. The company hired Burns & McDonnell to work with them on developing a concept that would create an integrated NGV. Development of onboard compression is already underway, Hirl says. The potential of this gamechanging idea paves the way for increased natural gas adoption by expanding CNG for all cars, with minimal cost. Innovations in all aspects of transportation, from roads to railroads, have been occurring for a hundred years. Many have required time and gradual market acceptance to become mainstream while overcoming barriers, such as cost. Natural gas as a vehicular fuel source is still in its infancy when compared to its potential in this country, says Ben Biller, a vice president at Burns & McDonnell. However, as access to natural gas as a vehicular fuel source becomes easier for the consumer, we can look forward to less reliance on foreign countries for our transportation fuel needs. The development of new markets often comes from a disruptive idea. Re-examining how natural gas vehicles are designed, and embracing the existing infrastructure and fuel advantages, might be the right road forward to drive change. LEARN MORE To learn more about the opportunity to promote clean, abundant and affordable natural gas as transportation fuel, read our Next Gen Natural Gas Vehicle white paper at burnsmcd.com/ngv BURNS & McDONNELL 29