Given gasoline prices are getting close to record highs while natural gas prices plunder to further new 10-year lows, natural gas vehicles (NGVs) are not surprisingly receiving a lot of attention in the media at the moment. Both General Motors (GM) and Chrysler have recently announced plans to sell pickup trucks that can run on compressed natural gas (CNG), while Chesapeake Energy (CHK) and General Electric (GE) are collaborating to develop natural gas infrastructure through developing 250 new filling stations.
The focus for NGVs is seemingly more on CNG, however, than LNG (liquefied natural gas), because its system design lends itself to the everyday consumer, who uses their vehicle for relatively short journeys. Gasoline or diesel vehicles can also be retrofitted with CNG to run as a dual-fuel or bi-fuel vehicle.
So where does LNG come into play? The benefit of LNG is that it is a better option where load size and mileage is more critical. LNG vehicles can store up to 2.5 times the volume of fuel that CNG can in the same space, although its system is more complex given the temperature LNG needs to be stored at (-260°F). But the range makes it much more appealing to fleet carriers.
To gain some further insight into the matter, I have managed to get my hands on an advanced copy of a white paper by PLS Logistics, one of the nation's leading logistics providers focused on heavy industrial shipping. The results are based predominantly on the responses of owners, executives, and presidents of fleet carriers, and PLS Logistics has kindly agreed to let me share some of these results prior to its release. Last week there was an interesting article on Fuelfix (entitled "Natural gas sub for vehicles will likely stay a dream for now") which highlighted that natural gas vehicles are not taking off because of a lack of infrastructure. As you will see, the PLS study follows a similar theme.
The best place to start is with the current adoption level of LNG vehicles from a fleet carrier perspective. The results illustrate the hugely huge negative situation that not a single respondent reports a commitment to purchase an LNG vehicle in 2012. Perhaps the only positive to take from the below response is that at least there is broad awareness about LNG technologies at 75% (but this is scant solace).
This second response pinpoints this negativity, which is overwhelmingly due to a lack of infrastructure in place and the up-front costs involved:
That said, there is some hope for the future of LNG vehicles, although this will likely depend on improvement in the above two issues:
Finally, and somewhat surprisingly, over a quarter of respondents believe there is no difference in cost between LNG and diesel. Based on various published numbers, however, the difference is up to $1.50 per diesel equivalent gallon. This misconception may well be the biggest psychological barrier to entry for LNG vehicles:
These four responses serve to indicate that NGVs on a grand scale is indeed a dream, as the Fuelfix article stated - a lack of infrastructure and investment is leading to a lack of confidence in its viability. It is hard to dispute the conclusions that both of the these pieces come to; with the best will in the world, we are stuck in a chicken and egg situation. Without the infrastructure in place, carriers are unwilling to invest in LNG vehicles, while without demand for filling stations there is little impetus to develop the infrastructure. Perhaps the onus rests on a consistently high gasoline price - as much as it is on a low-cost natural gas environment - to push on development going forward.