All along the millions of miles of highways that crisscross North America, wheels are in motion to remake the truck stop. Signs rise like palm trees from these oases for thirsty big rigs, shouting out $4-a-gallon diesel fuel. But this year will mark the first major deployment of service stations adapted to new energy realities; they'll offer 18-wheelers a place to pull in for a fill-up with natural gas.
Thanks largely to the hydraulic fracturing boom in the United States, it would be far cheaper today to run those heavy trucks on natural gas than diesel—and potentially cleaner, too. (See related: "Natural Gas Nation: EIA Sees Future Shaped By Fracking.") Those rumbling rigs are the fastest-growing contributors to the nation's greenhouse gas emissions from transportation, according to the U.S. Environmental Protection Agency. Widespread use of cleaner-burning natural gas is a step that could address climate change, although the environmental impact is complex and still under study. (See related quiz: "What You Don't Know About Natural Gas.")
There's no question that the trucking industry would present an enormous new market for natural gas: Heavy-duty trucks account for more than one-tenth of all U.S. oil consumption.
But there's at least one big stumbling block on the road to natural gas trucks: In most places, there's nowhere to fill up.
Oil and gas investor T. Boone Pickens is playing a pivotal role in trying to change that situation, as co-founder and largest shareholder of Clean Energy Fuels, which is building a far-reaching network of natural gas filling stations for long-haul trucks in the United States. Last week, Reuters reported that one of China's largest private companies, ENN Group, has a plan to invest millions in building natural gas filling stations in the United States, aiming to install 50 truck stops this year alone.
The chicken-and-egg question has stalled deployment of an oil alternative on the highways: Which will be built first—the filling stations or the vehicles with engines equipped to handle a different fuel?
Over the past year, Clean Energy Fuels opted to make the first move in this game, building 70 fueling stations in 33 states. Most of those are dormant, awaiting a major development that has been delayed, but is now expected later this year—the roll-out of the first generation of standard-size heavy-duty trucks specially equipped to run on natural gas. When those trucks hit the road, Clean Energy Fuels says, its new truck stops will open.
"At the end of this year, you are coast to coast and border to border," the company's president and chief executive officer, Andrew Littlefair, said recently. "You have a nice skeleton and the work has just started."
ENN has made its foray into the U.S. market quietly, partnering with a small Salt Lake City, Utah, company, CH4 Energy and operating under the name Blu. The company told Reuters it already has five stations in operation and is opening three more in the coming weeks. (See related: "Pictures: A Rare Look Inside China's Energy Machine.")
The mover behind Clean Energy Fuels has been Pickens, who chairs the private equity fund BP Capital Management, which has significant holdings in companies focused on natural gas fracking (as well as an array of other energy investments). Pickens has been one of the most vocal proponents of switching to natural gas for transportation. (See related story: "Natural Gas Stirs Hope and Fear in Pennsylvania" and interactive "Breaking Fuel From the Rock.")
Under the Pickens Plan, introduced in 2008 and refocused to emphasize natural gas rather than wind energy in 2010, Pickens has described the shift as a way to minimize U.S. reliance on imported oil, reduce pollution and fuel costs, generate jobs, and provide a "bridge" to greener fuels. "It's a helluva deal for the country," Pickens said in an interview with Bloomberg last year.
Swapping natural gas for diesel in the nation's heavy-duty trucks, Pickens said, is the most efficient way to create demand for the abundant natural gas now being extracted from North American shale. That's a big concern for the gas industry, because production is growing faster than consumption, and companies must keep producing to maintain their land-leasing agreements. Without new markets, natural gas prices will stay low—a boon to consumers, perhaps—but a threat to producers' bottom line.
From Compressed to Liquid
Clean Energy Fuels is already the largest supplier of natural gas for transportation in the United States. But most natural gas vehicles on U.S. roads today are cars, buses, and small trucks burning a form of natural gas known as CNG-compressed natural gas. In the U.S., these vehicles typically run "point-to-point" or round-trip routes in city bus systems, municipal car fleets, and local delivery services. (See related: "Trading Oil for Natural Gas in the Truck Lane.")
But CNG tends to be unsuitable for long trips because it has a relatively low energy density, a measure of how much energy can be stored in a given tank size. In practice, this means impossibly large volumes of the stuff would be required to power a vehicle for more than 150-300 miles (240-480 kilometers) between fill-ups. By contrast, a diesel truck of average efficiency can cover 900 miles (1,450 kilometers) on the fuel held in a single 150-gallon (570-liter) tank.
Enter liquefied natural gas. Known as LNG, this super-chilled and compressed form of natural gas has about 60 percent of diesel's energy content by volume, and it is significantly more energy dense than CNG. As a result, heavy trucks equipped with thermos-like cryogenic tanks can haul freight long distances—often 400 miles or more—between LNG fill-ups.
At today's energy prices, that mileage can be a lot cheaper with LNG than with diesel. In recent weeks, the U.S. diesel fuel price has been hovering around $4.16 per gallon. LNG is selling for about $2.92 per diesel gallon equivalent, 30 percent less, according to Clean Energy Fuels' current price report, which is updated weekly. Even after weighing in the fact that LNG trucks currently on the market are slightly less fuel-efficient than diesel-powered rigs, the disparity could add up to tens of thousands of dollars in annual fuel savings for a fleet when each truck covers 120,000 miles or more in the course of a year.
LNG trucks cost more than traditional diesel trucks, typically a $40,000 to $80,000 premium. But recent calculations by the energy-consulting firm IHS CERA found that LNG heavy-duty trucks would recoup the initial cost of investment within three years without government incentives.
Government energy analysts are convinced the switch makes sense for large segments of trucking. "You're seeing natural gas as a fuel being so cheap, or cheaper than other fuels, and it's starting to make people in the industry consider a switch to it," said Patricia Hutchins, a transportation energy analyst with U.S. Energy Information Administration. In its most recent annual energy outlook, the agency expressed enough confidence in the durability of the U.S. natural gas boom that it anticipates LNG prices will sit 40 percent below diesel for the next 30 years. (See related: "Natural Gas Nation: EIA Sees U.S. Future Shaped By Natural Gas.")
Over the next few decades, EIA predicts, LNG-powered freight trucks will lead burgeoning growth in natural gas for transportation. Although the agency does not expect the total amount of energy consumed for transportation in the United States to increase at all through 2040 (largely due to more efficient vehicles), it sees the use of natural gas for vehicle transport rising from less than one percent to 6 percent of that highway energy mix.
That may seem a small inroad for natural gas on highways where most vehicles will still be powered by oil, but even those projections are based in part on an assumption that LNG fueling infrastructure—both the filling stations and the trucks equipped to use it—will come into place, Hutchins said in an interview.
Until now, only a few heavy trucks that could run on LNG were on the highway, most of them custom-made for the southern California market, where stringent air pollution standards have required companies to find alternatives to diesel.
But next month, after some delay, big engine manufacturer Cummins Westport will begin production of an 11.9-liter natural gas engine. Analysts believe that because it will have the size and power of a standard heavy-duty truck engine, it will be a game-changer. Truck manufacturers Freightliner, Kenworth, Peterbilt, Volvo, and Navistar all plan to take deliveries, with the new LNG rigs hitting the road as early as August.
Right now, the few dozen LNG fueling stations in the United States represent 45 percent of the worldwide total, but visions of comprehensive LNG refueling networks are cropping up around the globe. (See related: "U.K. Dash for Gas a Test for Global Fracking.")
Earlier this year, the European Commission unveiled draft legislation that would require placement by 2020 of LNG fueling stations every 400 kilometers (about 250 miles) on the roads that make up the trans-European core network. If approved, the legislation would set binding targets for development of infrastructure for transportation fuels such as electricity, hydrogen, and natural gas.
In North America, Shell* has announced plans to supply LNG to trucks along a so-called "Green Corridor" spanning 900 miles (1,448 kilometers) of roadways in western Canada, and at 100 travel centers in the United States starting this year. Clean Energy aims ultimately to establish a network of LNG stations spaced every 250 miles (about 400 km) or so along major truck routes.
The natural gas producer Encana is also building LNG fueling stations in an effort to encourage adoption of LNG trucks—not least of all by its own partners in the fracking business. In April 2011, the company announced a deal to supply LNG for Heckmann Water Resources, which hauls water for Encana and has ordered at least 200 LNG trucks. To get started, Encana mounted insulated LNG tanks and dispensing equipment on trailers that could be moved around the Haynesville shale formation in Louisiana. The company now owns and operates ten of these mobile dispensers, plus a filling station near Frierson, Louisiana.
No Diesel Fumes, But Wear Gloves
For the driver, there's a lot to like about an LNG truck, said Allen Nielsen, director of fuels for C.R. England, a trucking company based in Salt Lake City, Utah, that has been leasing five LNG day cab tractors since October 2011. Coca-Cola was looking for green alternatives, Nielsen explained, and C.R. England agreed to take up the challenge with a dedicated fleet of LNG trucks based in Ontario, California, and Las Vegas, Nevada—important transport hubs located 250 miles apart. Capable of traveling approximately 350 miles on LNG, C.R. England's LNG trucks can hold fuel equivalent to 70 gallons of diesel, plus up to 45 gallons of actual diesel as a backup, and their fuel efficiency is equivalent to an average 5.86 miles per gallon on petroleum fuel, close to that of conventional trucks.
Drivers enjoy a quieter ride, many of them take pride in driving a greener vehicle, and they don't have to go home smelling like diesel, Nielsen said. For professional drivers, he added, those benefits tend to outweigh the inconvenience of having to wear insulated gloves and a face shield while tanking up on fuel that has been chilled to -260°F (-162°C).
In addition to the special training and safeguards required for refueling, LNG trucks can take longer to refuel. If the fuel "freezes up," Hutchins said, "you would have to go through a process to unfreeze it, and then wait for it to freeze again." Each additional step could result in lost time on the road, she said, which could result in cost.
Measuring the environmental benefit of the switch to natural gas is complicated, even though it's clear that burning of natural gas produces about 30 percent less carbon dioxide than diesel fuel. One of the primary issues is leakage of methane, the main component of natural gas, which is 25 times more potent than CO2 as a greenhouse gas over 100 years. The U.S. government says when methane leakage in the production process is accounted for, a switch from gasoline to natural gas as a vehicle fuel still cuts greenhouse gas emissions, but only 6 to 11 percent.
The issue is even more complex, however, because methane's global warming potential is far worse when examined over a shorter time frame; it is 72 times more potent than CO2 as a heat-trapping gas over 20 years. Many scientists say it is vital to consider this short-term impact. A study published last year in the Proceedings of the National Academy of Science concluded that based on estimated leak rates, the atmosphere would be worse off for 80 years before any climate benefit would be realized from a switch to natural gas for gasoline-powered cars. It could take even longer to see a benefit from a switch for heavy-duty trucks, the study said.
So the nonprofit Environmental Defense Fund, working with partners in industry, has begun a deeper study of methane leak rates when natural gas is used as a fuel for heavy-duty vehicles. Chief scientist Steve Hamberg said the group will gather data on methane leakage from incomplete combustion in trucks, leaks from fittings in the system for delivering and storing natural gas, and from the filling stations themselves. "If you are switching fuels in the transportation sector, you need to be especially careful about methane losses through the supply chain if you want to be sure you are not increasing climate effects," he said. "This is not to say it can't be done." But because the energy content of diesel and natural gas are relatively close, "it doesn't take a lot of leakage of methane to result in higher net emissions from methane," he said.
Meanwhile, it already is costly to install an LNG station, due to the safety precautions necessary for storing and dispensing a cryogenic fuel, and the fact that there is not yet an agreed-upon standard design for an LNG fill-up stop. While CNG stations require an estimated $10,000 to $2 million for setup, LNG station installation costs can approach $4 million, depending on the size and application, according to EIA and the U.S. Department of Energy. General Electric, which has estimated that LNG equipment could become a $1 billion market for the company over the next five years, has developed a modular system for liquefying natural gas along existing pipeline infrastructure. With $200 million in GE financing, Clean Energy has agreed to buy a pair of these MicroLNG plants, to begin operation in 2015.
Is Oil Still Too Cheap?
But then there is the sticker price of the trucks. C.R. England's trucks, which the company operates under a full-service lease, carried an $80,000 premium over the conventional diesel trucks that would normally be used for the Ontario-Vegas route, Nielsen said. "A lot of that expense is in the tank," he explained.
As it turns out, C.R. England chose to invest in LNG tractors based on overly optimistic forecasts for the gap between diesel and LNG prices. "We thought there would be $4 to $5 gallon diesel over the next few years," said Nielsen. In fact, after spiking to $5 per gallon in 2008, U.S. diesel fuel retail prices averaged only $3.97 per gallon in 2012. Although diesel prices currently are topping $4, the EIA projects diesel will fall to an average of $3.87 and $3.78 per gallon in the next two years. Lower-than-anticipated diesel prices mean it's taking C.R. England longer than it expected to recoup the $80,000 premium. "We still have a belief that it's a good way to go," Nielsen said. But so far, "The experience has not been great."
The company is now seeking public funds to subsidize CNG trucks. CNG fuel has been selling at about 20 percent less than LNG, meaning a company could recoup its upfront costs faster. "We like the spread between CNG and diesel better," said Nielsen. But if a grant comes through for natural gas trucks, the decision of which type to buy—CNG or LNG—will come down to available filling stations, he said. If Clean Energy and its LNG infrastructure "is the only game in town, we'll have to go with that.
"You don't want to be stranded on the road," said Nielsen, "without being able to fuel." (See related interactive: "World Electricity Mix.")
*Shell is sponsor of National Geographic's Great Energy Challenge initiative. National Geographic maintains autonomy over content.