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Issue link: https://read.dmtmag.com/i/89653
O PE RAT IO NA L I N S I G H T CNG: A Different Animal O Shane Sweet ver the past few issues we touched on expansion opportunities with traditional utility fuels (electric- ity and natural gas) where regulatory environments have been deregulated, as well profit opportunities with liquefied natural gas, or LNG. While the afore- mentioned afford expansion opportu- nities for traditional fuel companies, compressed natural gas, or CNG, also offers opportunity, though CNG is a decidedly different animal. CNG is basically natural gas compressed to less than 1 percent of the volume it occu- pies at ambient atmospheric pressure. As a motor fuel, vehicles that log high daily mileage, including buses, garbage trucks, taxis, and airport shuttles, typically called "fleet vehicles," have taken particular inter- est in CNG as a motor fuel in recent years. Generally, CNG as a motor fuel this year has been running at half the cost of gaso- line, and a Vermont based company, with which I am familiar, is actively pursuing conversion of its fleet to CNG, citing CNG as "half the cost of diesel." So why hasn't CNG, given its relative costs savings, taken over the world as an automotive fuel globally? While not the entire answer, over the course of the last century the automotive industry was not built around gaseous fuels like CNG, but rather around liquid fuels such as gasoline and diesel. With this came the infrastruc- ture to support those fuels. Simply put: CNG has some catching up to do. Beyond motor fuel, the applications for CNG are very diverse. In the industrial and power-generation sectors, CNG applications include heat, electricity generation, incinera- 30 New approaches in CNG and its market development tion, drying, food processing, and chemical feedstock for manufacturing processes. Last month we talked about the challenge of the infrastructure costs associated with LNG; specifically, the on-site storage and associated "trim" necessary to allow for the delivery and storage of LNG to end-users. Fixed storage for use by CNG custom- ers is an option, as it is for LNG users, but in recent months I had the opportunity to engage a number of individuals and companies involved in CNG and its mar- ket development, and in doing so, learned about a new approach. Specifically, a recently founded start-up company from my state seeks to expand the use of CNG in areas where utility natural gas lines are not found, while simultaneously intending to displace other fuels including oils, diesel, propane, electricity and bio- mass (wood). The company in question is primarily promoting CNG to larger indus- trial-commercial users as an alternative fuel where the current customer consumes 150,000 gallons or more per year. This company is proposing a very different model from the LNG model described last issue in that the CNG com- pany is bringing the infrastructure to the customer and leaving the CNG trailer there, which really got my attention. Part of their pitch, other than cost- savings, is that their CNG model can do it with little or no infrastructure investment by the end-user. The CNG provider literally brings trailer loads of CNG to the end-user's location, con- nects the CNG trailer to the end-user's CNG-burning facility, and leaves the trailer at the customer's site until the NOVEMBER 2012 | FUEL OIL NEWS | www.fueloilnews.com end-user exhausts the CNG stored in the trailer. At a glance, it appears that having CNG trailers tied up at customer locations will eat up a lot of capital, and with the order cycle for new trailers on the order of four months, you don't just go to the store and pick up new ones on a whim. Loading times for trailers, which are either steel or composite in nature, run 2 to 3.5 hours respectively; though, the company plans to install a larger com- pressor at its loading facility, which will cut those loading times in half. Trailers hold the BTU equivalent of 1,800 gallons for steel trailers and twice that for com- posite trailers. As you might imagine, an end-user that would fuel switch to CNG must address the mechanical issues necessary for CNG to be consumed on site. That said, accord- ing to the company promoting this model, the cost to the end-user would be nominal as in this case, the CNG supplier is address- ing the on-site storage for the consumer, and the cost for the trailers used as revolv- ing on-site storage is included in the cost of CNG to the consumer. Think about it: Go to the terminal, load the trailer, drive it to your customer, connect the trailer to the customer's fuel burning facilities, and leave the trailer there until the customer uses the fuel. It's certainly a different—and cre- ative—approach. l FON Shane Sweet is in management with a major Northeast marketer of heating oil, propane and motor fuels. From 1993 to 2007 he served as executive VP and lobbyist for the Vermont Fuel Dealers Association and from 2007 thru 2010 was president & CEO of the New England Fuel Institute. He lives in Manchester, Vermont and can be reached at shanemsweet@gmail.com.