Compressed Natural Gas: A Transportation Fuel for Waste Fleet Vehicles. Chris Turner, Florida Natural Gas July 28, 2014

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1 Compressed Natural Gas: A Transportation Fuel for Waste Fleet Vehicles Chris Turner, Florida Natural Gas July 28,

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3 WHO AND HOW WE SERVE Residential, Small and Medium Businesses, Multifamily, Large Commercial and Industrial and Compressed Natural Gas (CNG) Customers 3

4 EVOLUTION OF CNG IN THE MARKETPLACE 4

5 Physical Stability of Natural Gas Source: the Energy Information Administration, Office of Oil & Gas

6 Physical Stability of Natural Gas

7 What is a Natural Gas Vehicle? (NGV) NGVs use the same internal combustion engines as gasoline/diesel Inherently cleaner because it is 97% Methane, or CH 4 Compared to other fuels with higher carbon content: Gasoline C 8 H 18 (x 8) Diesel C 14 H 30 (x 14) Two types of NGVs: 1. Compressed Natural Gas (CNG) still in gas state, dispensed at 3,600 psig 2. Liquefied Natural Gas (LNG) Refrigerated to 260 degrees F to convert to liquid, 1/600 of volume

8 CNG vs. LNG ADVANTAGES: - Lowest price - Lowest emissions - More infrastructure already exists - 9 and 12 Liter engines available, 6.7 and 15 L coming soon? CHALLENGES: - Fuel tanks add additional weight - Range limitations - Existing stations often have limited capacity/access for heavy duty ADVANTAGES: - LNG is more dense than CNG; allows more fuel storage/longer range - Faster fueling times than CNG CHALLENGES: - Higher production and distribution costs - Limited national infrastructure, but growing - Boils off (vents) if parked for several days - Typically engineered for high HP engines - Cryogenic fuel, safety gear required - Additional Shop requirements/regulations - Considered hazardous material 8

9 Heavy Duty Natural Gas Engines Manufacturer Engine HP & Torque Fuel Source Availability Cummins Westport ISL-G 8.9L 320 HP 1000 #/ft Natural Gas Available Cummins Westport ISX-G 11.9L 400 HP 1400 #/ft Natural Gas Available Cummins ISX 15L TBD Natural Gas Paused Cummins Westport ISL-G 8.9L Cummins Westport ISX-G 11.9L

10 Simple Refuse Payback Example Factors for consideration: Incremental Engine Cost Annual Mileage/Fuel Consumption Price spread Diesel vs. Natural Gas Station build, or retail CNG purchase Time Fill vs. Fast Fill Inlet Pressures/Compression Electricity Costs Typical refuse paybacks range from 2-4 years, excluding any rebates, grants, incentives, etc. Many different high level payback models available

11 Station Size and Design Considerations What s needed? Time-Fill or Fast-Fill Number of vehicles per day, fueling patterns, maximum daily flow, maximum hourly flow Available back-up fueling or need for redundancy? Dispensing/Metering/Data/Payment needs? Modular approach adds capacity as fleet grows Station Location Options Offsite use existing public access station if available, convenient and of sufficient capacity. Onsite - private access only CNG Station Options Onsite - with public access outside the fence

12 CNG Station Partners SouthStar Station Partners Sampling:

13 Federal and State Incentives Federal Tax Credits Installation of new NGV fueling equipment Vary based upon year, size, etc. but expired at the end of 2013 Excise Tax Credit of $.50 per gallon Also part of American Taxpayer Relief Act of 2012 expired 12/2013 Possibility for extension again - doubtful State of Florida Incentives Department of Agriculture and Consumer Services Rebates for 50% of the incremental cost for NGV OEM $25,000 max per vehicle annually $250,000 max per applicant annually 40% reserved for government applicants Money is still available Grants/Rebates DOE Clean Cities Coalitions

14 Everything We Do Is Centered On One Thing: SUPPLYING NATURAL GAS! Our true CNG start was all due to our customers In , our customers started reaching out to us and asking questions about CNG. We educated ourselves so we could better serve our customers Attended conferences and supported trade groups Met and aligned with numerous companies in the CNG space 14

15 What services do we provide? Asset and risk management proactively manage our larger customer s transportation capacity to ensure all supply requirements are met and all assets are optimized while mitigating risk Transportation and supply services responsible for delivering natural gas to the pipeline networks that serve our customers Ownership of the customer experience pricing options, acquisition, retention, billing, marketing (advertising, event, partnership, etc.) and customer care

16 Natural Gas vs. Diesel Pricing (Long-Term)

17 Natural Gas vs. Diesel Pricing (Short-Term)

18 Pricing Components of Diesel vs. CNG

19 Supply Management I m building a station, now what do I do? Pricing and Natural Gas Delivery Options Fixed, Variable or Combination, or other hedging strategies Analysis of market conditions and impact on pricing Logistics management of physical natural gas supplies from the wellhead to the burnertip Contract Flexibility Direct with Client, Via 3rd party relationships, or Hybrid structures Unique Positioning for CNG applications Experience in understanding relevant tax related matters Complex billing capability including LDC bundling charge option Understanding of telemetry issues and ability to manage with LDC Experience with multiple station configurations Appreciation for equipment issues and maintenance requirements Strategic relationships with numerous station builders Start-up experience with a wide variety of customer verticals

20 Our Florida Utility Partners

21 Good Sources of Information SWANA and NGV America AGA American Gas Association ANGA American s Natural Gas Alliance FNGA Florida Natural Gas Association Florida NGV Coalition Clean Cities Central Florida Southeast Florida

22 Chris W. Turner (404) Kevin Lievsay (404)