Natural Gas Support a Mixed Bag, Study Says

 

Natural Gas Support a Mixed Bag, Study Says

Natural gas in the trucking industry has a high level of awareness, but carriers still recognize obstacles, says a new study from PLS Logistics Services.

"The survey results appear to be a mixed bag for natural gas supporters," says PLS Chairman and CEO Greg Burns. "On the one hand, LNG (liquified natural gas) is clearly on the radar and is being actively evaluated by some of the largest trucking companies in the industrial sector. On the other hand, less than 10% of senior executives currently believe LNG will be widely adopted of over-the-road trucking."

To determine the potential of LNG vehicle use for industrial freight (any type of heavy load for the industrial manufacturing sector, including industries such as metals, oil and gas, mining, building/construction materials and automotive), PLS Logistics surveyed senior executives at 100 industrial freight carriers. Most carriers surveyed had a fleet size over 50 power units.

Although respondents were generally aware of LNG-powered vehicles, 72% felt that the technology had limited adoption potential for industrial freight.

Survey results also indicated that carriers are under no pressure from customers to move toward cleaner LNG vehicles. Just 3% of carriers say that their customers are actively promoting adoption by their carrier base.

With predicted adoption rates low, survey respondents were asked about the primary barriers to adoption. Topping the list, at 53.6%, was the inadequacy of the LNG refueling infrastructure. As of February 2012, there were just 46 public LNG stations across the U.S., according to the U.S. Department of Energy.

Clean Energy Fuels has raised $450 million and plans to build 150 LNG stations along what it calls "America's natural gas highway" - a pre-defined corridor of heavy volume freight traffic. The goal of the project, done in partnership with Pilot Flying J travel centers, is to establish stations 250-300 miles apart.

The next biggest barrier to adoption (23.2%) was the higher cost of LNG vehicles, currently $30,000-$50,000 more than diesel.

Incentives are being discussed to mitigate this increased capital expense. In January, Clean Energy and Navistar announced a partnership to provide leases that effectively eliminate the equipment cost differential if the carrier signs a long-term fuel agreement with Clean Energy. The fuel would be purchased at a guaranteed minimum discount to diesel.

Currently, there are bills in both the House and Senate that promote tax incentives for the purchase of LNG vehicles, and President Obama has announced his support for the legislation.

The U.S. is producing natural gas at record rates. Production from shale alone is expected to increase 41% by 2020. This supply increase, combined with lower demand due to the warm winter in 2012, has driven natural gas prices to a 10-year low.

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