Major Trucking Companies Driving Conversion to Natural Gasby Jana Ritter - Published: 6/05/2013
As shale gas production in the United States is having a profound economic and infrastructural impact on the country, many are reaping the benefits and adapting to the higher rate of natural gas production. As low prices and high supplies of fuel are obvious advantages for the transportation industry, many trucking companies are getting serious with the idea of converting from diesel to natural gas.
While some have doubted the ability to transfer over, the likelihood of shale-fueled tractor fleets is becoming increasingly promising. In fact, Nevada based NevCal Trucking predicts that entire transportation fleets across the country will be fueled by natural gas within this decade. Not only is natural gas about 25 percent cheaper than conventional diesel fuel, this doesn't seem like that bad of an idea, it is far less volatile than diesel and converting to natural gas would be a great way for companies to hedge against fluctuating diesel prices.
Trucks running on natural gas would require additional tanks to store either compressed (CNG) or liquefied (LNG) natural gas due to lower density properties. LNG is about 60 percent as dense as diesel, while CNG is only 25 percent as dense. In other words, natural gas takes up to four times the physical space as diesel fuel. The cost of conversion per truck hovers around $30,000, with the addition of storage tanks accounting for most of the expense.
The good news is that the trucking industry's conversion to natural gas requires less change in fueling infrastructure than passenger vehicles converting to electric cars. Fueling stations for trucking fleets only need to be placed along key highways, while electric charging stations need to infiltrate a vast array of residential locations. Larger companies are also willing to make the capital expenditures worthwhile in the long-term.
The White House recently proposed a 50 percent tax cut towards alternative fuel trucks and these subsidies may also work to increase incentive for conversion. Another positive fact to consider is that as more manufacturers begin to produce an increased number of storage tanks, the price of conversion is expected to decline. In fact, industry representatives believe that it is “in the process of changing over” and expect to see increased production of tanks starting this year.
Many major companies have already made investments in natural gas vehicles. Walmart is currently testing five CNG-powered trucks and would potentially save more than $250 million in fuel costs each year if it converted its entire fleet. Halliburton recently added 100 CNG powered trucks as a pilot program for future fleet conversion and the company already expects annual fuel savings of $5.1 thousand for each truck. Ryder has already produced 300 natural gas powered trucks and plans to increase this number in order to penetrate the market.
With larger companies beginning to lead the way, the development of natural gas infrastructure for trucking fleets is a promising reality. As long as natural gas prices remain low, we can expect to see natural gas-vested companies like Ryder benefit greatly as conversion efforts become increasingly more cost-effective.