The Natural Gas Conversion Is Accelerating
Posted 9:55PM 02/06/12
There's an energy revolution taking place, and the pace of the revolution is accelerating. It's entirely possible that the way our world is powered 10 years from now will be vastly different from the way it's powered today.
As our energy expert Travis Hoium has pointed out, the price of natural gas is rigged to stay low for the foreseeable future. That's bad news for natural gas extractors.
Just last month,Chesapeake Energy (NYS:CHK) , one of the country's largest natural gas players, announced that it will cut back on production. By doing so, it's hoping to minimize the supply glut that's plunged prices to record lows.
But one sector's pain is often another's gain, and that's certainly the case right now. With the cost of natural gas falling and the price of oil rising, the financial incentive to develop machines that can run solely on natural gas has increased exponentially.
That's great news for a couple of companies that made some huge announcements last week. All of these companies stand to benefit from a conversion from petroleum-based fuel to natural gas.
First announcement: Feb. 1
Last Wednesday,Navistar (NYS:NAV) CEO Dan Houston appeared on CNBC'sSquawk Box with Clean Energy Fuels (NAS:CLNE) board member and energy guru T. Boone Pickens. Navistar is an international trucking company, while Clean Energy is focused on building out the infrastructure of natural gas filling stations in North America.
The two announced a partnership whose goal is to "provide customers with a sustainable, commercially viable solution for adding natural gas-powered trucks to their fleets." In other words, Navistar wants to start pumping out natural gas trucks, and Clean Energy is going to help it get there.
Citing incredible demand for such trucks, Houston said he hoped to ramp up production and start offering them up in as little as six months. Pickens was quick to point out that the switchover would have three huge advantages over standard diesel trucks: Natural gas is $1.50 per gallon cheaper -- and 30% cleaner -- than petroleum-based fuel, and it doesn't have to be sourced from the Middle East.
Time will tell whether this partnership is able to bear fruit as quickly as they claim, but such confidence is a clear indicator that the financial benefits of natural gas are at a tipping point.
Second announcement: Feb. 3
While many may have cheered the Navistar/Clean Energy partnership, investors in Westport Innovations (NAS:WPRT) weren't happy at all. Before Wednesday, shareholders of Westport felt safe knowing their company was one of the few that had been able to engineer a practical engine that could run solely on natural gas.
With Navistar's announcement, it seemed like other industry players were going to be ganging up and moving in on their turf, and fast. The market took notice and sent Westport's shares plunging on Thursday afternoon.
But after the market closed on Friday, the story got interesting. Instead of developing its own natural gas engines, Navistar announced that it "will offer the Cummins Westport ISL G [engine] in the International TranStar and WorkStar trucks."
In other words, Navistar's not developing a new engine at all. It'll be offering the engines that Westport engineers and Cummins (NYS:CMI) manufactures -- as part of the Cummins Westport partnership -- in its trucking fleet.
What it all means
As I said, it remains to be seen exactly how this will all pan out, but this news is certainly a boon for all four companies involved.
If demand really is as high as Houston made it sound, that could mean a lot of new purchases for Navistar. New purchases for Navistar necessarily equates to a steep increase in engine orders for Cummins and Westport. It also means that there will undoubtedly be more natural gas trucks out on the road that rely on Clean Energy's fueling stations to help them move their products from coast to coast.
See full article from DailyFinance:http://srph.it/yaDSAs
Tags: Chesapeake, Clean Energy Fuels, Cummins, Dan Houston, Natural Gas, Navistar, T. Boone Pickens, Westport Innovations
Views: 1655
Replies to This Discussion
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Permalink Reply by Louzanne on -
Seems like this is what we have all been waiting for.....Lets hope it ramps forward!
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Permalink Reply by Sarah on
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Thank you for sharing some good news with us today. :) I saw that map that someone posted recenlty of the the skelton of infrastructure for CNG stations. It all sounds very hopeful. Here is is. http://www.gohaynesvilleshale.com/forum/topics/clean-energy-unveils...
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Permalink Reply by Antiqued Rose on
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Love me some TBoone!
He has been such a fighter for the use of NG but appeared weary and somewhat discouraged to me (on a news program) a year or so ago. Talked about trying to move a mountain, so to speak, and the short sightedness of many. The grinding away of the freaking' mountain and the hamstringing of layer upon layer of lawmaking.
These continued efforts will be a good legacy to leave behind.
Will be looking for him on the news circuit talking about this article.
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Permalink Reply by Dry Hole on
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thanks jffree,
Natural Gas Engine Technology has been around for a CENTURY and it is used often on stationary engines such as electric generators and water/oil well pumps etc. that are located near a well or pipeline.
The real challenge will be infrastructure to refill vehicles traveling beyond the range of the vehicle.
I had several friends working for a company in the mid 1990's that had a fleet of CNG pickups ---- they all had heavy cyl tanks in the bed that consumed about 1/4 of the bed and also had a standard fuel tank for dual fuel use. The company Headquarters had a CNG Compressor Station and the trucks left Hq full of CNG every morning but had to return in the evening on gasoline/diesel as the CNG had been emptied ------- the people I talked to said the vehicles were underpowered on CNG and had less mpg and range as well as the loss of payload carrying capacity ------ The company I am refering to had FREE natural gas available out of their 100% owned wells ----- the "experiment" only lasted 5 or 6 years and was abandoned and they renewed their fleet with standard vehicles.
I have often wondered WHY someone with a fleet of 20+ vehicles would opt out of free fuel ?
Has anyone checked to see where insurance companies stand on these CNG issues from a liable point of view for vehicles ?
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Permalink Reply by Charles Haggard on
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The only answer is fuel economy. A lot of the well servicing trucks spend a lot of engine hours at a well location offloading chemical, etc. These drivers are paid by the hour for the most part and if they can't go a whole day without refueling, they are not going to do it. Down time is money and most companies would have to allow for the limited amout of engine run time between refueling. Just my opinion.
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Antiqued Rose, May I suggest that you read book by TBP entitled "The First Billion is the Hardest."? A great read. Published by Crown Publishing.
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Permalink Reply by Frank Weathersby on
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What about trains? With thousands of miles of rail in place and the thousands of miles of gas pipelines in place, I would think that they intersect more than a few times. Construct a siding at a pipeline / rail intersection, a hot tap, and you have refueling station. The tank cars for gas are already in use. The engines on trains are first cousins to stationary engines especially so if hooked to four or five gas filled tanker cars.
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Permalink Reply by Skip Peel - Mineral Consultant on -
Let's not forget that T. Boone stumbled out of the gate in his publicity drive to increase our reliance on natural gas. In the beginning he gave equal weight to wind energy for electrical generation with natural gas replacing gasoline as the prime fuel for vehiciles. He had thousands of acres in W. Texas with plans for a wind farm. The original nay sayers pointed to that portion of the Pickens Plan as Boone looking for subsidies in a number of area but particularly on grid connections and requirements for utilities to buy the generated electricity. After a year he realized the wind component was dead on arrival and changed his plan to focus on natural gas. I would wager that T. Boone isn't the only capitalist to seek such public assistance. In fact I expect that many are behind the alternative energy companies that tend to get characterized as Enviro-Democratic political favors.
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Permalink Reply by Donna Thornton on
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To keep up with where cng fueling stations are located and to continue to look for more as they are built, cngprices.com.
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Permalink Reply by Jed Clampett Bn2 on
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Permalink Reply by dbob on
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Note that it is not EPA/Carb certified - while if operating correctly, it may be cleaner than gasoline, its technically a violation of the air laws....
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Permalink Reply by Dry Hole on
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dbob,--Now we are getting to the real reason that new inventions and tech are expensive and frustratingly slow --------- not saying that clean air is not important just that the certification process is not efficient ---- and after compliance is satisfied for all 49 states they will still have to deal with California emissions standards.
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