Back to $1 a gallon gas? It’s possible with natural gas

BY ALEX MILLS
August 03, 2009


How does filling your tank for $1 per gallon sound?

Well, if you were using compressed natural gas, better known as CNG, that’s about what you would be paying today.

The economic benefits of CNG are so beautiful that many natural gas exploration and production companies are shouting these benefits from the highest rooftops.

Chesapeake Energy, one of the nation’s leading producers of natural gas, has been convinced of the value of CNG as a transportation fuel. It has built a fueling station near its headquarters in Oklahoma City, and it is converting its fleet of vehicles to CNG.

Chesapeake also held a Natural Gas Vehicle Summit in Oklahoma City on July 29 that brought together many large companies similar to Chesapeake in hopes of convincing them to convert their transportation fleets to CNG, to install CNG terminals for private and public use, and to get on the CNG bandwagon.

Representatives from about 30 companies and trade associations heard from Rich Kolodziej and Stephe Yborra from NGV America that the economic and environmental benefits make CNG vehicles very attractive. They said CNG has one-sixth the NOX of the best available diesel engine, and 29 percent fewer greenhouse gases than gasoline.

“On average, CNG costs 40 percent less than gasoline or diesel,” Yborra said.

There are about 120,000 natural gas vehicles in the U.S. out of 220 million vehicles. “The total vehicle count has been growing, but slowly,” he said.

However, he noted that because most of the CNG vehicles have been fleet vehicles (garbage trucks, street sweepers, city buses and trucks, etc.) volumes grew by about 25 percent last year.

Tim Tomlinson of Apache, Corp. in Houston said Apache converted 40 vehicles at their Elk City, Okla. facility at a cost of $10,000 but Apache received a 50 percent ($5,000) incentive from the State of Oklahoma. He also noted that the cost of operation per gallon included capital recovery ($0.24), electricity ($0.05), maintenance and repair ($0.30), natural gas cost ($0.44), transportation ($0.06), and excise tax ($0.18) for a subtotal of $1.27 per gallon. However, Apache received a $0.50 per gallon excise tax credit that made the net cost $0.77 per gallon.

Tomlinson pointed out that at that rate, the $5,000 vehicle conversion paid out in 1.5 years.

Refueling stations can cost several million dollars, but Apache’s Elk City station cost $450,000 less $50,000 federal incentive and $225,000 state incentive for a net cost of $175,000.

Obviously, the lack of refueling stations is a major disadvantage of CNG vehicles for the family car. That’s why sales have remained slow for passenger automobiles. But, at less than a $1 a gallon the future of CNG vehicles looks as bright as a blue natural gas flame.

Alex Mills is president of the Texas Alliance of Energy Producers. The opinions expressed are solely of the author.


Buck