American Oil and Gas Reporter - January 2015 - 79

Outlook 2015

CNG Winning Transportation Converts
By Bryan Luftglass
SOLITUDE, UT.-There are 20 million
vehicles globally that run on compressed
or liquefied natural gas. While only
100,000-200,000 of those are in the United
States, such diverse countries as Brazil,
Argentina, China, India, Iran and Pakistan
each have more than 1 million natural
gas vehicles, and Italy has more than
750,000. Our country accounts for 20
percent of all vehicles worldwide, but at
best has only 1 percent of NGVs.
The potential for a "natural gas fuels
revolution" in the American transportation
system probably is obvious only to those
who have been keeping a close watch on
it from inside the industry. Nevertheless,
there is a broad generational shift in
transportation fueling that will sweep in
natural gas fuels. It has been gaining
speed and momentum slowly and quietly,
and has reached a tipping point only in
the past few years because of several important developments, including:
* The introduction of high-horsepower
applications to the natural gas fuels demand mix (and growing interest there);
* The availability of a cost-effective
engine suitable for many Class 8 truck
fleets;
* The presence of more and more
fueling stations;
* Increased participation in the marketplace by gas utilities; and
* Greater availability of CNG-fueled
cars.
It is important to understand how these
five key developments will impact the
next great fuel wave-involving natural
gas.
High Horsepower Applications
Since the 1990s, industry insiders have
expected more and more taxis, buses and
trucks to eventually use CNG and LNG,
and for the market eventually to come
into its own, once there are enough appropriate engines, vehicle chasses and
fueling stations at a low enough cost to
spur consumer demand. This expectation
has been turned on its head by the actions
of a few natural gas operating companies-notably Encana Corp., Chesapeake
Energy, Noble Energy and Apache Corporation-which have tried LNG, CNG,

and field and pipeline gas as fuels for
drilling and completion (i.e., pressure
pumping equipment). This, in turn, has
led other oil and gas companies to follow
suit.
Efforts to use natural gas to fuel oil
and gas operations have propelled the
market by interesting some of the United
States' largest manufacturing companies
to take a closer look. Among these is
Caterpillar, which is the largest supplier
of diesel engines to the oil and gas drilling
and completions market.
When small startups began converting
engines to run on natural gas (generally
by combining diesel and natural gas in
the engine), they naturally turned first to
CAT engines as the most important market
to address. A few such companies, such
as American Power Group and GTI Altronics, have been quite successful at
making these conversions.
Watching this effort, Caterpillar realized
it should be able to convert its own
engines as well as seed the market for a

next generation of improved natural gasfueled engines. (CAT was a large player
already in large spark-ignited engines
and generator sets that used natural gas,
so the move to diesel engines was a
natural step-out.) While it was successful
in entering the drilling and completions
market niche by 2012, the more important
implication for Caterpillar was that it
was in a position to lead the transition
from diesel to natural gas in a wide range
of large engines.
Working with remarkable speed for a
large, multicentralized organization, CAT
executives decided the company would
be a major player in the natural gasfueled equipment business. At a trade
conference in September 2012 attended
by more than 1,000 industry officials,
CAT's head of the business announced
the company was "all-in" pursuing both
natural gas-fueled engines and the equipment they were used in.
This signaled an intent to lead in developing technology for LNG and CNG

Apache Corporation, along with
Encana Corp., Chesapeake Energy and Noble Energy, has
been among the leaders in
using liquefied and compressed
natural gas to fuel its drilling
and completion operations.

JANUARY 2015 79
American Oil and Gas Reporter - January 2015

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