AT&T to invest up to $565M in natural gas, hybrid vehicles

10:37 PM CDT on Wednesday, March 11, 2009
By DAVE MICHAELS / The Dallas Morning News
dmichaels@dallasnews.com

WASHINGTON – AT&T Inc. said Wednesday it would spend up to $565 million to replace more than 15,000 gasoline-powered vehicles with a fleet powered by compressed natural gas and hybrid engines.

The decision is a boon for the movement to move American vehicles off traditional gasoline, a campaign that has been headlined by Dallas energy investor T. Boone Pickens. AT&T said it would work with one of Pickens' companies, Clean Energy Fuels, to provide natural-gas fueling infrastructure.

"It's obviously going to reduce our reliance on foreign oil," AT&T chairman and chief executive Randall L. Stephenson told the Economic Club of Washington on Wednesday. "My new neighbor, Boone Pickens, and I have talked a lot about that equation."

In an interview, Pickens said he met with AT&T leaders a month ago and pressed them to make the investment.

"It's a big move," Pickens said. "It didn't take them long to see the merit to it and the opportunity."

Stephenson said the switch to a natural-gas and hybrid fleet would significantly lower AT&T's fuel costs and reduce its greenhouse gas emissions 25 percent.

The Dallas-based company's plans would be the largest corporate purchase of natural-gas vehicles. It plans to buy 8,000 Ford trucks and vans and convert them to natural gas engines.

The company also plans to replace 7,100 passenger vehicles with hybrids over the next 10 years.

AT&T would benefit from federal incentives that encourage the purchase of alternative-fuel vehicles, including trucks that run on compressed natural gas. A company spokeswoman said the company would probably benefit from a tax credit of $8,000 per vehicle.

Pickens has lobbied for $28 billion in federal funds to help convert 380,000 18-wheel trucks to run on compressed natural gas.

Tim Harden, AT&T's president of supply chain management and fleet operations, said AT&T would initially focus its effort on a limited number of states, including California, Oklahoma and Texas, where there are more natural-gas fueling stations.

Harden said AT&T would work with Clean Energy and Chesapeake Energy to create more fueling stations.

Clean Energy spent $365,000 lobbying Congress for natural-gas incentives and other subjects during the fourth quarter of 2008. Chesapeake, a major producer of natural gas in North Texas' Barnett Shale field, spent $160,000 on fourth-quarter lobbying, according to Senate records.

"There are not a lot of fueling stations today," Harden said.

"We are going to have to develop those with the compressed natural gas companies so it's readily available."

In his speech to the economic club, Stephenson also said the current recession "really isn't much different" from the recession of 2001-02, "when our industry was in a crisis mode."

Asked whether AT&T would consider cutting its dividend to preserve capital, Stephenson didn't respond directly but referred to the earlier recession.

"During that time frame, we continued to increase our dividend," he said.

Buck