Operators Weigh Costs and Benefits of Natural Gas Infrastructure Investments

Motor carriers nationwide are beginning to run natural gas vehicles in small quantities and many say the fuel holds promise for over-the-road trucking. However, for truckstop and travel plaza operators, knowing when or if to invest in natural gas infrastructure can be difficult.

“It is the chicken and the egg theory. You have to get the infrastructure in there so you can get the trucking company,” said Bill Mulligan, vice president of development, facilities and environmental, Pilot-Flying J.

To help operators better determine the level of investment they should make in natural gas infrastructure, a panel of natural gas experts will discuss the future of the fuel and how to best take advantage of it.

Natural gas fueling infrastructure is expensive, and there are limited incentives for travel plazas looking to install it. Just as LNG and CNG are two very different fuels, the infrastructure to dispense them and the costs associated with each is different as well.

LNG stations can cost anywhere from $1.5 million to $4.5 million. LNG mobile fueling stations, which can be installed by those looking to build their customer base prior to building permanent infrastructure cost around $500,000.

The price for a CNG station where vehicles can fuel overnight can range from $300,000 to $700,000. One challenge with CNG is that it takes up more space on the vehicle than LNG, so it takes longer to fill the tanks. Fast-fill stations that and emulate diesel fill rates start at $750,000 and go to $3 million.

Some travel plaza operators, including Pilot-Flying J and Love’s Travel Stops, are already beginning to invest in natural gas fueling capabilities even though demand is small.

Norman Herrera, director of market development for Chesapeake Energy, a large natural gas producer based in Oklahoma City, Okla., said, “The first few years in this market may be lean, but demand is going to develop.”

Earlier this year Clean Energy unveiled the route plan for the first phase of 150 new liquefied natural gas (LNG) fueling stations for America’s Natural Gas Highway. Many of the fueling stations will be co-located at Pilot-Flying J Travel Centers. The company anticipates having 70 stations open by the end of 2012 in 33 states and has strategically placed them along major interstate shipping lanes every 250-350 miles.

Love’s Travel Stops & Country Stores, is focusing its efforts on compressed natural gas (CNG) fueling stations in its home state of Oklahoma. Love’s already operates one CNG facility and is adding ten more in the state. The stations will be built and operated in cooperation with Chesapeake Energy Corporation.

“The thing we’re seeing right now is not only the dynamic growth with Clean Energy, but also local and regional players that are coming into that space,” said Andy Douglas, national sales manager for specialty markets for Kenworth. “I think it will take a few years, but the build out is pretty rampant.”

To learn more about the natural gas session planned for The NATSO Show, click here.

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