American Oil and Gas Reporter - January 2015 - 81

Outlook 2015
at distribution and manufacturing centers.
CNG customers will either buy and
own fueling stations, absorbing the capital,
operating, and maintenance costs into
their own cost structures (in which case,
they aren't buying CNG, but rather pipeline
gas that they upgrade to CNG), or pull
up to a third-party fueling station. Consumers of LNG can either buy and own
stations, which allows them to buy LNG
at wholesale, or they can refuel at a thirdparty station.
The marketplace is seeing a combination of both new fleet-owned and retail
stations. Fuel supply companies such as
Clean Energy, KwikTrip, Love's, OnCue
Express, Transfuels and Trillium own
CNG and LNG stations and sell finished
CNG and LNG to end-users, while companies such as Waste Management, UPS,
and some oil and gas producers generally
own natural gas fueling stations themselves, figuring they would rather internalize all the cost and pocket any difference
compared with retail. Companies that
own their own equipment can buy CNG
or LNG stations from many sources.
Role Of Gas Utilities
Utilities offer some of the best and
brightest prospects in the natural gas fuel
area. These companies offer a great opportunity to grow the market with new
fuel supplies and refueling infrastructure.
For example, AGL Resources has entered both the CNG and LNG businesses
from this base. AGL's CNG business has
grown from its regulated subsidiary, which
received approval from the Georgia Public
Service Commission in 2011 to build
and own CNG stations.
AGL's utility business also is blessed
with ownership of four legacy LNG peakshaving plants, which stretch from Chattanooga, Tn., to central Georgia and are
being pressed into service by the unregulated side of the business to use in
natural gas fueling. AGL established a
subsidiary, Pivotal LNG, which has started
to develop the merchant LNG business
serving heavy-duty trucks owned by companies such as UPS and the oil and gas
industry.
More recently, Pivotal has leveraged
its ownership of the LNG in peak-shaving
plant tanks to win the opportunity to
supply LNG to marine vessels in Jack-

A 12-liter, 400 horsepower Cummins Westport engine introduced in 2013 has been hailed
as a game changer for natural gas-fueled heavy-duty trucks, and has encouraged companies such as Ryder to convert both their 18-wheeler and smaller box truck fleets to
compressed natural gas.

sonville, Fl. This is a strikingly important
development; many companies bid to
supply marine services company TOTE's
Sea Star Line, an early adopter of LNG
for marine fueling. But Pivotal was the
only company that had sufficient LNG
already available, close enough to Jacksonville to be able to truck product to
meet TOTE's dockside needs while also
preparing to build a plant close by.
The broader importance of Pivotal's
efforts is that they indicate to other gas
utilities that owning these plants can provide a competitive advantage in the
CNG/LNG business, and numerous other
utilities have followed. Among these are
Reading, Pa.,-based UGI Corporation,
Indianapolis utility Citizen's Energy
(through a new subsidiary, Kinetrix),
Philadelphia Gas Works, and Memphis
Gas Light & Water. More undoubtedly
will follow.
Utilities are suited naturally to locate
CNG stations on their pipelines, and
many got into the CNG market in the
early to mid 1990s, only to divest those
assets or let them sit idle. Many utilities
now are entering or re-entering the CNG
market, including the holding company
Integrys Energy Group (which bought
Trillium), Oklahoma Natural Gas, Questar
(which is expanding its footprint nationwide from its Utah base), and NW Natural
in Oregon. It appears utility companies
are here to stay in the CNG market.

CNG Cars
For the first time, consumers can
choose among an extensive range of natural gas-fueled cars and pickup trucks.
The Honda Civic has been the mainstay
CNG car for some time, and as of early
2014, was available in 37 states.
Since 2012, Chevrolet has supplied
Savana cargo and passenger vans configured for CNG. In 2013, General Motors
added the CNG fuel-equipped Chevy Silverado and GMC Sierra with six-liter V8
engines. These are bifuel models that
have both CNG and gasoline tanks, which
together give the trucks ranges of 650
miles.
A CNG version of the Chevy Impala
is being released as well, and this has the
potential to be important for individual
consumers and taxicab fleets. Ford has
CNG F-250 pickups and Transit vans,
and Chrysler introduced a CNG Dodge
Ram truck.
Ford sold approximately 15,000 CNG
cars in 2013, which is a drop in the
overall automobile population bucket,
but is a clear signal that we have passed
an inflection point and CNG vehicles
have gained market traction. However,
the market still is not at the point where
car companies are willing to devote production lines to CNG vehicles.
The OEMs are taking a more conservative approach for now, and in some
cases are simply preparing their cars at
JANUARY 2015 81

American Oil and Gas Reporter - January 2015

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