Natural Gas Natural Gas as a Transportation Fuel Overview and Opportunity Sherrie Merrow National Conference of State Legislatures February 2, 2012
America s Natural Gas Alliance Members Highlighting the Benefits of Natural Gas
Why Natural Gas? ABUNDANT CLEAN ABUNDANT DOMESTIC JOBS The United States is now the largest producer of natural gas in the world!
Stable Supplies = Stable Prices New Projections for Natural Gas Price Stability ($ per million BTU) U.S. Average Retail Fuel Prices $5.00 U.S. Average Retail Fuel Prices Natural Gas is consistently the lowest price < $1.00 in 2000 to about $2.00 in 2011 $4.50 $4.00 $3.50 Source for NG Prices: EIA Annual Energy Outlook 2011 Henry Hub Spot prices (actual prices included for years prior to annual projections) $3.00 $2.50 $2.00 $1.50 $1.00 Source for Fuel Prices: US DOE Alternative Fuels & Advanced Vehicles Data Center $0.50 $0.00 Propane E85 B99/B100 B20 Gasoline Diesel CNG 4/1/00 7/1/00 10/1/00 1/1/01 4/1/01 7/1/01 10/1/01 1/1/02 4/1/02 7/1/02 10/1/02 1/1/03 4/1/03 7/1/03 10/1/03 1/1/04 4/1/04 7/1/04 10/1/04 1/1/05 4/1/05 7/1/05 10/1/05 1/1/06 4/1/06 7/1/06 10/1/06 1/1/07 4/1/07 7/1/07 10/1/07 1/1/08 4/1/08 7/1/08 10/1/08 1/1/09 4/1/09 7/1/09 10/1/09 1/1/10 4/1/10 7/1/10 10/1/10 1/1/11 4/1/11 7/1/11 Cost per GGE
U.S. Transportation Fuel Portfolio America currently relies on one primary fuel for transportation Petroleum 0.2% 0.1 Bcfe/d 28.7% 17.7 Bcfe/d 71.1% 43.8 Bcfe/d How much foreign oil do we use? 4.250 billion barrels imported in 2010 How much does foreign oil cost? $337 billion for imported oil in 2010 $1,091 for each person in America In 2009, energy imports made up nearly 60% of our trade deficit Gasoline Diesel Alternative Fuel U.S. Gasoline 137.9 B GGE Diesel 55.6 B GGE Alt. Fuels.4 B GGE Equivalent to 22.4 Tcf or 61.6 Bcfd Source: Energy Information Administration (EIA), 2009, Excludes Oxygenates
Taking Action: U.S. Transportation Sector Displacement 45 40 35 69% 42.4 Bcf/d Fuel Consumption by Market Segment Displaceable Market Volume: 61.6 Bcfe/d Largest Opportunity 30 25 20 Most Commercially Ready Industry s Early Opportunity 15 10 5 0 18% 10.8 Bcf/d 5% 5% 3.2 Bcf/d 3.2 Bcf/d 2% (1.3 Bcf/d) Light Duty Heavy Duty Medium Duty Marine Rail Upstream 1% (0.7 Bcf/d) Source: Data and forecast from EIA, Encana, 2010 Displacement opportunities exclude Air, International Shipping, Military, Pipeline Fuel
Natural Gas Value Proposition: Four Core Value Propositions Environmental Benefits Reduced CO2 emissions (20-30%) Reduced associative emissions CO, SO2, NOX Lower engine noise Economic Benefits Lower fuel price than diesel / gasoline Reduced maintenance costs Technology is proven and improved Jurisdiction dependent grants / credits Social Benefits Natural gas production related revenues Royalties, taxes, job creation Natural gas fueling infrastructure revenues Job creation, taxes, economic spin-off Energy Security Benefits Domestic energy source Economic benefits through value chain Displaces foreign oil 63% petroleum is imported
Natural Gas Fuels Compressed Natural Gas (CNG) Source: Pipeline Compressed to 3,600 psi Primarily for light and medium duty vehicles Ideal for return to base fleets or fleets that require fast filling Time fill and fast fill capability / stored in pressurized tanks Liquefied Natural Gas (LNG) Source: Liquefaction Plant Converted to liquid form for ease of storage and transport (Cooled to 260 F and 40 psi) Ideal for medium to heavy duty fleets Fast fill / stored in tanks (similar to diesel size)
Vehicle Categories Choices Already Exist Light Duty CNG Medium to Heavy Duty CNG Heavy Duty On Road LNG Heavy Duty Off Road LNG
U.S. Interstate Highway System Linking Green Corridors RMC ICTC I-75 I-75 Interstate 75 Corridor TT Texas Triangle RMC Rocky Mountain Corridor ICTC Interstate Clean Transportation Corridor TT
USA CNG and LNG Stations As of December 31, 2011 975 CNG stations and 46 LNG stations 1,600 Top States for NGV Stations California: 260 New York: 103 Utah: 78 Oklahoma; 63 Texas: 38 Annual Fuel Dispensed per Station, GGE 1,400 1,200 1,000 800 600 400 200 0 1992 1993 Source: US DOE Alternative Fuels & Advanced Vehicles Data Center CNG Stations 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 LNG Stations 10% CAGR
OEMs Deliver Light-Duty NGVs Dodge to Introduce CNG-Powered Bi-Fuel Pickup Trucks in March 2012 Ford and Westport LD Announce New Natural Gas System for Super Duty Pickups Spring 2012 Honda Civic Natural Gas Unveils New Name, New Features GM to Launch New CNG Bi- Fuel Pickup Truck in Late 2012
Types of NGV Legislation CNG/LNG Fuel Tax Incentives Vehicle Purchase/Conversion Funding Infrastructure/Station Funding Fleet Purchase Requirements Other Use of HOV lanes Use of carpool parking areas Access to State alternative fueling stations Emissions inspection exemption AFV insurance discounts Airport incentives (preferential taxi lanes) Reduction in license / state fees Source: US DOE Alternative Fuels & Advanced Vehicles Data Center
NGV Incentive Comparisons Federal Texas West Virginia Oklahoma Oregon Colorado Louisiana Natural Gas Vehicle Count Natural Gas Stations (E/P) 117,446 10,440 22 2,932 1,675 1,197 361 960 / 115 41 / 13 0 62 / 5 12 / 0 29 / 5 8 / 12 Infrastructure / Home fuel Texas Clean Transportation Triangle funds up to $2MM 50% of the construction costs up to $250,000 ($312,500 if allows public access) Expires: 01/01/21 75% of infrastructure Expires: 01/01/14 25% of the incremental cost or $750 for residents / 35% for businesses 50% of the cost of constructing an alternative fueling station No expiration Vehicle Incentives Accelerated depreciation in 2012 Texas Gas Services offers $2,000 rebate for the purchase of a NGV / $3,000 for the conversion Texas Clean Transportation Triangle funds 60-90% of cost up to $8MM 35% of the purchase price or 50% of the conversion cost up to $7,500 for < 26,000 GVWR and up to $25,000 for > 26,000 GVWR Expires: 01/01/21 50% of the incremental cost Expires: 01/01/14 25% of the incremental cost or $750 for residents / 35% for businesses 55% of incremental cost in 2012 Decreases: 35% : 2013 25% : 2014 and 2015 50% of the incremental cost, or 10% of the cost of the motor vehicle or up to $3,000 No expiration Fuel Credits Preferential NG Fuel rates Deregulation of CNG as a Motor Fuel Mandates/Goals Acquisition Requirements Acquisition Requirements Acquisition Requirements Acquisition Requirements CNG highway/station every 100 miles by 2015 Acquisition Requirements Acquisition Requirements Acquisition Requirements Funding Grants / Loans Grants / Loans Grants / Loans Infrastructure Loans Loans Grants Loans Source: AFDC as of 1/27/2012
NGV MOU Led by CO, OK, PA and WY, states are joining together to use NGVs in state fleets Aggregate vehicle purchase numbers for Detroit joint RFP Commit to converting state fleets (county, municipal, and other government) ME, UT, NM, WV, KY have joined CO, OK, PA and WY with other states in progress
Leading the Way NGVs in fleets across America 16 % of all transit buses in U.S. Airports use NGVs for transit and taxis Waste trucks are fastest growing segment Medium and heavy duty trucks used by large fleets like UPS, AT&T, Comcast, Sysco, Ryder, and many others First CNG powered fire trucks and ambulances are coming into the market
Completed Picture for Market Growth HOME FUELING FUELING STATIONS FLEETS & CONSUMERS OEMs & MULTIPLE PLATFORMS COMPETITIVE PRICING MAINTAIN INDUSTRY SAFETY & COMPLIANCE North America
Additional Information
Natural Gas Vehicle Growth by Continent Great North American Opportunity 6.0 5.0 4.0 3.0 2.0 1.0 Natural Gas Vehicles by Continent Natural Gas Vehicles (Millions) Italy as an Example ~600,000 NGVs 37% growth since 2007 NGVs have 7% market share of all new vehicles purchased Cost of CNG is 50% to 60% less expensive than gasoline Government incentives Imports 89% of natural gas 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Fiat Qubo Natural Power Asia Europe N. America S. America Africa Source: IANGV, NGVA Europe, Fiat
North American Natural Gas Landscape Increased Reserve and Resource Base Location of Shale Plays Canada and U.S. Resource Estimates Years of Supply Tcf RLI @ 65 Bcf/d (years) 125 100 75 50 25 Resource Reserves 75 85 92 102 110 3,000 2,500 2,000 1,500 1,000 500 Total Resource Potential (Tcf) Gas Shale Plays are an Industry Changing Breakthrough 0 PGC/NEB 2006 EIA/NEB 2007 EIA/NEB 2009 PGC/NEB 2009 PGC/NEB 2011 2,600 Tcf of Total Resource 100+ Year Supply at 70 Bcf/d 70+ Year Supply at 100 Bcf/d 0 Source: EIA, CSUG, IHS Energy
Natural Gas Usage by Sector How Natural Gas is Used Today 3% Transportation 14% Commercial 30% Electric Power 32% Industrial 21% Residential Source: EIA, Natural Gas Year In Review, 2009
Petroleum Fuel By Vehicle Per Year Vehicle # Gallons Per Year Today s Premium* Freight Truck 12,000 $60,000 Transit Bus 12,000 $50,000 Garbage Truck 9,000 $52,000 Airport Shuttle 5,800-7,200 $30,000 Taxi Cab 5,000 $10,000 Delivery Truck 4,500-5,500 $30,000 School Bus 2,200 2,800 $36,000 Light Duty Truck 2,000 $10,000 Consumer Vehicle 1,000 $7,000 *Premium is today s price without subsidies or additional volume
Natural Gas Vehicle Option Examples Light Duty Vehicles Honda Civic Natural Gas (NG) Chevrolet Impala, Silverado, Tahoe, Malibu, Tahoe Ford Focus, Fusion, F150, Milan, Transit Connect Dodge Ram Medium Duty Vehicles Chevrolet W4500, C4500 / 5500, Express, Savana Ford F250, F350, E450, F450, F550, F53 / F59 Transit Bus Blue Bird, Thomas Built, El Dorado, Foton America, NABI, New Flyer, Orion, Motor Coach Industries Work Trucks Workhorse, Sterling, International, MaxxForce Refuse American LaFrance, Mack, AutoCar, Crane Carrier, Freightliner, Kenworth, McNeilus Street Sweeper Elgin, Freightliner, Schwarze Heavy Duty Vehicles Short Haul Freightliner, Kenworth, Peterbilt, Volvo Trucks N.A. Long Haul Kenworth, Peterbilt, Volvo Trucks N.A., International Transtar Heavy Duty Engine Manufacturers Cummins Westport 8.9L ISL G Westport 15L
Grant Funding Options Federal Grants DOT Congestion Mitigation and Air Quality Improvement Program (CMAQ) Generally limited to projects in non-attainment areas DOE State Energy Program (SEP) EPA Supplemental Environment Project and DERA Grants Repower: 75% of cost Vehicle replacements: 25% of cost Federal Transit Administration (FTA) Clean Fuels Grants Federal Aviation Administration (FAA) Voluntary Airport Low Emissions (VALE) Program Clean Cities program which supports alternative fuel vehicle and infrastructure. Diesel Emissions Reduction Program (DERP): EPA program which assists government agencies, school districts and other parties to replace older diesel engines. Diesel Truck Retrofit and Fleet Modernization Program: EPA program provides grants to states to fund fleet modernization programs, with preference to be given to ports and other major hauling operations. Clean School Bus Program: EPA program provides grants to school districts and related organizations for the replacement, repower or retrofit of school buses, the purchase of alternative fuels for school buses and alternative fuel infrastructure. Funds transit projects such as purchasing or leasing clean fuel buses and/or constructing or leasing clean fuel bus facilities. National program to reduce airport ground emissions at commercial service airports located in designated air quality nonattainment and maintenance areas,
Resources American Natural Gas Alliance (ANGA) http://www.anga.us/ Alternative Fuel Stations and Prices http://www.afdc.energy.gov/afdc/stations/advanced.php/ http://www.altfuelprices.com/ http://www.cngprices.com/ http://www.fueleconomy.gov/ Clean Vehicle Foundation http://www.cleanvehicle.org/index.shtml/ Natural Gas Vehicle Institute http://www.ngvi.com/ Natural Gas Vehicles for America http://www.ngvc.org/index.html/ US DOE Alternative Fuels & Advanced Vehicles Data Center http://www.afdc.energy.gov/afdc/ Weld County Smart Energy http://www.weldsmartenergy.org/
Natural Gas is Abundant Affordable Clean Reliable Domestic Solution