While the United States has been slow to adopt natural gas for use in vehicles, there has been rapid growth in other countries. Over the past ten years the number of natural gas vehicles in other countries has grown from around 2 million to around 15 million, an increase of approximately 13 million vehicles.
Iran, India, Argentina and Brazil have been the countries where growth has been most pronounced. In Iran, the embargo and a need to reduce gasoline imports has precipitated rapid conversion to natural gas. China could also see rapid growth of natural gas vehicles in an effort to reduce smog in major cities.
The availability of fueling stations in the United States remains the major barrier to growth of natural gas usage in transportation.
There is a dearth of fueling stations for cars, with fewer than 1,000 CNG stations nationwide available for public use.
Growth in the use of natural gas is likely to occur in the long haul truck segment as LNG fueling stations become more available along major truck routes.
This map shows that LNG fueling stations can be concentrated along major transportation arteries in order to serve long haul trucks.
It also shows that river traffic along the Mississippi affords an opportunity for LNG to replace diesel fuel for barge traffic. Coal trains would also appear to be a logical, though limited use for LNG.
But, in the United States, the primary opportunity for increased natural gas usage over the next ten years is in the long haul truck industry, and in local fleets that return to a base location each day.
By one estimate for long haul trucks, around 1.5 million barrels per day of diesel fuel will be replaced with LNG by 2025, which is approximately 5% of diesel fuel used in transportation.
There is a possibility, however, that nearly all new long haul trucks sold by the end of the next ten years will be powered using LNG, essentially doubling the percentage of diesel fuel displaced by long haul trucks.
The economics are already favorable, and can become more so if the tax on LNG is lowered by basing it on BTU content, and if the price premium for new trucks is reduced. Both seem likely.
An important negative in this rosier scenario is that half of all long haul trucks are one truck operations, where individual owners are less inclined to make the necessary larger investment. They frequently buy used trucks.
Market penetration for trucks that return to base each day, such as delivery and refuse trucks, has already reached a market penetration of around 40%. For example, 80% of Waste Management’s new trucks in 2012 were natural gas powered. These “local” vehicles are likely to use CNG rather than LNG.
This table from the January 29 article provides cost information.
Incremental or Conversion Cost for Natural Gas
|Heavy-duty long distance trucks (18 wheelers)||3.8 million||1.25 mb/d||$70,000|
|Heavy-duty fleet trucks1||1.0 million (See note)||0.38 mb/d||$70,000|
|Medium-duty fleet trucks||3.9 million||0.4 mb/d||$32,000|
|Transit buses||0.07 million||0.04 mb/d||$50,000|
|School buses||0.7 million||0.6 mb/d||$32,000|
|Light vehicles||237 million||8.2 mb/d||$6,000 for cars
$11,000 for pick-up trucks2
1. Estimate 20% of 4.8 million 18 wheelers and 20% of 1.63 mb/d fuel used
2. Duel fueled gasoline and natural gas, vehicles.
Sources: Energy Information Administration and National Renewable Energy Laboratory
As noted in the earlier articles, the payback periods are satisfactory for long haul trucks, very attractive for local or fleet vehicles, but not for passenger vehicles.
A potential problem in adopting natural gas for transportation is the lack of natural gas pipelines in some areas, with LNG having to be trucked to fueling stations. Ideally, fueling stations would be built adjacent to, or near, natural gas pipelines.
The major threat to the use of natural gas for transportation is the war against natural gas by environmental organizations, such as the Sierra Club, if it results in curtailing fracking.
Major constraints on fracking would kill the goose that is laying the golden-egg of low-cost natural gas.
Assuming that fracking is allowed to continue without serious constraints, the adoption of natural gas in long haul trucks will follow the typical “S” curve, where adoption is initially slow (the current situation) and then reaches a tipping point where the elements are in place for rapid adoption, followed by rapid adoption and then a plateauing of usage at a high level of market penetration.
It’s highly likely that the tipping point for rapid adoption will occur in the next year or two.
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