Fueling The Future: An Introduction to CNG
Introduction As we examine new and innovative solutions for customers’ transportation fuels needs, compressed natural gas, or CNG, is proving to be an exciting and viable option for many fleets across the U.S. Mansfield has been supplying gasoline and diesel for more than fifty years and we know they will continue to be the transportation fuels of choice for many years to come. It’s important, however, to study our other options so we may best advise customers on what makes the most sense for their fleets. CNG, it turns out, will work for many customers but not all. So how do we make that decision? The following pages will take you through the basics of natural gas to the infrastructure and equipment involved in a CNG transition. You’ll read more about what I call the Big Three of natural gas – Supply, Cost and Emissions – and how a vast domestic supply, overall cost reduction and lower emissions make natural gas a very attractive option for your transportation fuel needs. I hope this material will start a dialog within your organization on the benefits and challenges of a transition to natural gas. While it is not for everyone, natural gas is providing an exciting opportunity for those of us who strive to deliver the most cost-effective and efficient solutions to our customers.
J. Alexander President & COO Mansfield Oil Company Gainesville, Georgia
U.S. Natural Gas Pipelines
What is Natural Gas? In simplest terms, natural gas is a fossil fuel like oil and coal. Unlike other fossil fuels, however, natural gas is clean burning and emits lower levels of potentially harmful pollutants into the air. Natural gas is a combustible blend of hydrocarbon gases. It is formed mainly from methane but can also include ethane, propane, butane and pentane. When natural gas is delivered to your home for cooking and heating, it is in its purest form and is comprised of almost pure methane. For transportation needs, natural gas can be used in the form of compressed natural gas (CNG) or liquefied natural gas (LNG). CNG is the most common form of natural gas used in transport vehicles. It is by far the most cost competitive when evaluating total cost, per gallon consumed. When natural gas is cooled to about -260 degrees Fahrenheit, the gas condenses into a liquid form, or liquefied natural gas (LNG). LNG is typically transported in a tanker containing insulated walls and refrigeration units.
Where Does Natural Gas Come From? There are many ways for natural gas to form. The most widely accepted theory explains that fossil fuels form when organic matter, remains of plants and animals, is under immense pressure for a long period of time. As you go deeper under the earth’s surface, temperatures and pressure increase. It is at these high temperatures and pressures that natural gas is able to form, usually one to two miles below the earth’s crust. Since natural gas has a low density, once formed it will rise toward the earth’s surface traveling through permeable rock and other materials. Eventually, a large amount of this gas will become trapped underneath a dome-shaped geological formation known as a reservoir. Once these reservoirs are discovered, production can begin.
Earth Rock Natural Gas Reservoir
Why CNG as a Transportation Fuel? You probably know natural gas as a fuel used in your home for heating, cooking and grilling. With recent advancements in infrastructure and technology, natural gas is receiving great attention as a transportation fuel. Significant price, supply and environmental considerations are making natural gas an exciting and realistic alternative to traditional sources of energy.
Domestic Supply As energy supply issues fill the daily headlines, more and more people are examining natural gas as a viable option for their transportation fuel needs. 98% of the natural gas consumed in the U.S. comes from North America. Known as “America’s Fuel,” natural gas provides greater energy security and independence from foreign markets. The Energy Information Administration (EIA) estimated in its 2010 Annual Energy Outlook that there are 2,119 Trillion cubic feet (Tcf) of recoverable natural gas resources in the U.S. This report echoed the findings of the Potential Gas Committee which reported in 2009 that the country has at least a 100-year supply of natural gas utilizing the technology we have now.
Fuel As Energy: 1 Therm of Natural Gas = 100,000 BTU’s 1 Therm of Natural Gas = 100 SCF 140 SCF Nat Gas = 1 Diesel Gallon Equivalent (DGE) 125 SCF Nat Gas = 1 Gasoline Gallon Equivalent (GGE) 3
Emissions Vehicles that utilize CNG produce significantly lower emissions than many traditional fuels. As we mentioned earlier, natural gas is comprised primarily of methane, a single-carbon molecule. More complex molecules contain numerous carbon molecules and release higher levels of harmful emissions. Meanwhile, the combustion of natural gas releases only small amounts of carbon monoxide and other complex hydrocarbons. Some consumers have concerns around the methane contained in CNG. However, numerous studies by the Environmental Protection Agency (EPA) and the Gas Research Institute (GTI) have concluded that the reduction in emissions from elevated natural gas use would dramatically outweigh any negative effects of methane.
Cost of the Commodity CNG typically costs 30% - 50% less at the pump while delivering similar power and performance as traditional fuels. Natural gas prices have gone up less than diesel or gasoline on an equivalent basis in the past 5 year. While CNG solutions are not right for everyone, the benefits afford users energy security, a reduction in carbon emissions as well as significant potential savings. The chart below reflects the spread between natural gas and heating oil over the next seven years as recently reflected in the futures markets. The price of natural gas has been converted to diesel gallon equivalents for comparison purposes. There is no guarantee that the disparity will stay the same over time but considering natural gas as a component of a transportation fuel portfolio appears prudent.
How Does Natural Gas Get to Me? Just as natural gas comes into our homes through a pipeline, an intricate network of pipelines deliver gas from production facilities to commercial and industrial sites throughout the U.S. Millions of miles of pipeline connect production areas with natural gas markets. With this extensive network already in place, we now need additional refueling sites to help meet growing demand for CNG and LNG.
U.S. Natural Gas Pipeline Compressor Stations
Infrastructure/Pipelines As mentioned previously, millions of miles of natural gas pipeline run throughout the United States. There are numerous steps, however, to deliver the end product to customers. A smaller, low-pressure pipeline system initially takes raw natural gas from the wellhead to a processing plant or into a larger pipeline. At the processing facility, any impurities will be removed from the natural gas before it enters the main distribution network. This network of high-pressure pipelines transports gas from production areas to market areas using compressor stations that are strategically located along the pipeline. While the majority of natural gas pipelines we use today were constructed during the 1950’s and 1960’s, construction of new pipelines and infrastructure boomed in the first decade of the twenty-first century, making natural gas even more accessible and readily available for commercial and industrial use.
Fueling Options There are several onsite and offsite fueling options for commercial and retail applications. CNG is typically dispensed in a fast fill, time fill or combination station. Time fill is the most common fueling option for CNG. Gas is dispensed unattended into a vehicles’ onboard storage tanks over a defined period of time. This is the most cost effective option for fleets as the fueling stations are easily expandable as your fleet grows. There are some drawbacks, however, to a time fill option. It is only ideal for fleets that return to a central lot and sit idle overnight or for an extended period of time. This option would not be suited for public refueling.
The second option is referred to as fast fill. Fast fill stations are similar to traditional liquid fueling stations and would be needed for any locations that offer public access. The fast fill station draws from a storage tank onsite that has been filled by a compressor. Fueling time is approximately three to ten minutes and dispenser speed would be similar to a gasoline or diesel fill. This option is preferred by larger fleets but will be more costly than a time fill station.
Some fleets opt for a combination of limited fast fill and time fill on site. This option offers flexibility to fleets that need an occasional top off or want the ability to provide public access. Inside/outside gate options, a consortium for cardlocks and retail/cardlock options are also available. So how do you choose what’s right for you? Here are a few things to consider when making the switch to natural gas:
• What is your fleet fueling pattern?
• Do all of your vehicles fuel at the same time of day, or at different times of day?
• How close will your fueling station be to your business?
• How much time and money will be spent going off site to refuel?
• What is your available electrical supply?
• Is the fuel system access to be public, private, or both?
• What type of CNG vehicles will you have?
Answering these simple questions will help determine what model of CNG fueling is right for your fleet.
Equipment The CNG fueling infrastructure will be one of the two biggest capital costs along with fleet conversions, therefore it is critically important to understand and install a CNG fueling system that matches your specific operational requirements. The following is a list of major system components and associated project-specific design variables that are paramount when designing your system.
Major System Components:
* Compressor * Fast Fill Dispenser
* Storage Vessel
* Time Fill Dispenser
• Inlet supply meter • Gas dryer • Compressor(s) • Motor(s) • Storage vessels
• PLC (control panel ) • Domeload & sequencing Panels • Time Fill / Fast Fill Dispensers
* PLC The combination of equipment installation and design variables must be considered when evaluating which CNG system is best for your specific site. Attention to detail up front will assure your system meets your fleet requirements in the most cost effective way. Most systems should be designed with dual compressors (duplex) to minimize the operational run time of each compressor and to create redundancy which would minimize down time.
CNG Flow Diagram
Design Variables: • Nat gas supply availability
• Fueling window requirements
• Nat gas inlet pressure and flow
• Total gallons (DGE or GGE) required per day
• Distance from inlet meter to CNG station
• Initial number of CNG vehicles to be fueled • Long term number of CNG vehicles to be fueled
• Fuel System access to be public, private or both
• Fuel dispensing to be Time Fill, Fast Fill or both
• Available electrical supply • Permitting and regulatory requirements
• Type of CNG vehicle • Average gallons of fuel consumed per day per vehicle
What’s the Cost? Cost is typically the biggest factor when contemplating a transition to CNG as a transportation fuel. We cannot stress strongly enough that cost should never be the initial focal point of any CNG discussion. The price range for a CNG station can range from less than $100,000 to over $1,000,000. It is too easy to end up with several quotes that aren’t really comparable. We suggest you first discuss and identify project-specific design variables previously outlined. Your cost discussions then should be combined with competitive pricing of apples to apples, total combined cost of a gallon of CNG fuel and evaluation of ROI. Below is an example ROI calculation widget:
To input your numbers, visit: http://mansfieldgasequipment.com
In addition to capital expense as a funding mechanism, there are a variety of other options such as finance via a fuel adder, leasing and third party owner operating arrangements. We also encourage you to consider participating in a co-op model with other fleet operators to minimize up front infrastructure costs.
What’s the Solution? As you’ve read many times throughout this document, natural gas is not for everyone. As a nation, we will continue to rely on a combination of traditional and alternative fuels for many years to come. A well thought out analysis and plan for potential transition of your fleet from gasoline and diesel to natural gas will help determine whether or not it’s a good investment for your organization. The three major advantages of natural gas to traditional transportation fuels – domestic supply, environmental considerations and cost – certainly make CNG and LNG attractive options for fleets looking to reduce dependence on foreign sources of energy, reduce carbon footprints and reduce overall fuel spend. There are hundreds of resources out there to research natural gas options; the Department of Energy’s Clean Cities coalitions and non-profit groups such as NGVAmerica,and America’s Natural Gas Alliance are dedicated to providing up-to-date information on available technology, supply issues and advancements in infrastructure. We encourage you to utilize the tools out there to determine if a transition to natural gas is right for your organization.
LINKS and RESOURCES U.S. Energy Information Administration: http://www.eia.gov/naturalgas/ U.S. Department of Energy Clean Cities Coalitions: http://www1.eere.energy.gov/cleancities/ Natural Gas Vehicles for America: http://www.ngvc.org/ America’s Natural Gas Alliance: www.anga.us/ American Gas Association: http://www.aga.org/Pages/default.aspx
Document Sources • California Energy Commission – http://www.consumerenergycenter.org • Clean Vehicle Education Foundation – http://cleanvehicle.org • CNG Now – http://www.cngnow.com • Natural Gas Supply Association – http://naturalgas.org • Natural Gas Vehicles for America – http://www.ngvc.org • U.S. Energy Information Administration – http://www.eia.gov
The Mansfield Gas Equipment Systems team has more than thirteen years of experience providing products and services for customers spanning the government, transit, industrial, and school transportation sectors. Our innovative solutions and services will continue to solve the infrastructure challenges that customers face in adopting CNG systems. When pairing our experience and service with Mansfield’s unmatched national network of fuel supply, the resulting solution allows customers to easily consider CNG as a realistic option to meet their fueling needs at any location across the country.
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