9:04 PM, Jul. 30, 2011 | 2Comments 



McCloskey's cows produced plenty of methane-producing manure, and his dairy farm had a digester to turn the manure's methane into natural gas.

Ruan, knowing his 3,000-truck fleet would have to meet new federal emission-control rules, was looking for a fuel cleaner than traditional diesel.

That meeting led to a three-year experiment that will have 42 Ruan milk trucks powered by a blend of natural gas and processed methane from McCloskey's cows rather than diesel. The trucks will travel in a 650-mile radius from McCloskey's Fair Oaks Farms in Indiana to dairies in the Upper Midwest.

The gas will be dispensed from two new pumping stations in Indiana built by Clean Energy Fuels Corp. of Seal Beach, Calif., whose founder and chief investor is none other than T. Boone Pickens Jr. of Dallas, the apostle of the natural gas revolution.

The pilot project is a step toward what might be a major shift in transportation fuel, from the diesel that has long dominated the fuel tanks of the nation's trucks, to natural gas that can come either from cows or, more traditionally, from underground rock formations.

Natural gas also could emerge as a formidable rival to biodiesel, which sprang from Iowa's soybean growers and now is produced for the truck market at 14 plants in the state.

Pickens and other boosters of natural gas tout what they say is a 200-year supply of natural gas within U.S. borders. They point to a vast expansion of drilling in newly discovered shale formations in Texas and the Southwest as well as far northeast as Pennsylvania and New York.

Natural gas, they say, could be the weapon that frees the United States from dependence on foreign crude oil for transportation. The answer, they argue, is to convert the nation's automobile and truck fleet from petroleum fuels to natural gas.

Companies like Ruan Transportation are exploring whether natural gas can really replace diesel.

If natural gas works as a consistent, economical fuel in trucks, Ruan and other truckers would avoid expensive additives and equipment adjustments needed to comply with new environmental rules that went into effect last year, said Benjamin McLean, Ruan's chief information officer.

"We're talking an expense of $8,000 to $10,000 per truck" to comply with the new rules, said McLean.

In addition to environmental concerns, the cost of diesel fuel has become an acute problem for Ruan and other truckers in the last decade.

Diesel fuel, historically cheaper than regular gasoline for cars, is now more expensive.

Last week diesel sold for about $3.95 per gallon at most Iowa stations and truck stops, some 40 cents per gallon more than unleaded gasoline used for cars. Three years ago this summer, diesel prices neared $5 per gallon.

Most semitrailer trucks get around 7 miles per gallon.

Natural gas has also been dogged by price volatility. In 2008 the price more than quadrupled. But annual increases of domestic production of natural gas of 5 percent or more in recent years has steadied the price to around $4 to $4.50 per thousand cubic feet.

Pickens' Clean Energy sees Ruan as a major bridge to converting the nation's 8 million-semitrailer-truck fleet to natural gas.

"Right now we have 1,300 truck tractors that can run on natural gas, and the Ruan experiment is a very important development for us," said James Harger, chief marketing officer for Clean Energy.

Harger said Clean Energy will build natural gas fueling sites at Pilot/Flying J truck stops in Iowa along interstate highways 80 and 35 within the next 24 months.

Most of the gas at the early stations will be dispensed in liquefied form, which is cheaper and easier to handle. The gas can be warmed to a vapor.

Pickens has aggressively lobbied for tax credits for retailers who will pay the $1.5 million to $2 million to install new natural gas-dispensing tanks and pumps.

"We see the truck fleet as the first step," said Harger. "It will take much longer to convert the nation's automobile system to natural gas."

And, he said, natural gas will have competition at the pumps.

Among the competitors will be biofuels such as ethanol and biodiesel, which have gained a tenuous foothold at service stations in the last decade.

Corn-fed ethanol has a 10 percent market share gain in the automobile fueling market, thanks to tax credits for blending with conventional unleaded gasoline.

But biodiesel, launched a decade ago as a way to use soybean oil as a motor fuel, has had a rockier road. In 2010, Congress allowed biodiesel's $1-per-gallon tax credit to lapse.

The result was the near-shutdown of the nation's biodiesel plants, including 14 in Iowa.

Congress has renewed the credit this year and has added an 800 million-gallon mandate, which has restarted the industry.

But the fate of the tax credits and mandates for all biofuels is now in the hands of a Congress bent on deficit reduction and stalled over the debt ceiling


Buck