Debating the potential for natural gas in trucking
While the price of natural gas relative to diesel may be low – and drastically so – the cost to acquire and maintain trucks configured to operate on natural gas is high; creating a significant fiscal hurdle for fleets to surmount before their bottom lines can benefit from the cheaper gaseous fuel.
How to solve this particular conundrum, along with the need to develop far broader refueling infrastructure to support natural gas-powered trucks in the field, comprised a good deal of the discussion at the 2013 Mid America Trucking Show (MATS) in Louisville, KY, last week – part of an ongoing debate within the trucking industry about whether natural gas can supplant diesel as its primary fuel source.
During the second annual Fleet Forum hosted by MATS, Fleet Owner Editor-in-Chief Jim Mele hosted a panel entitled “The Blue Fleet” that explored both the drawbacks and opportunities natural gas presents trucking companies large and small.
[To view video from this event, click here and here.]
Robert Carrick, sales manager-natural gas for Freightliner Trucks, noted the higher up-front sticker price and ongoing maintenance costs for natural gas-powered trucks pose the most immediate fiscal challenge for fleets.
On average, he said, a Freightliner truck equipped with a Cummins ISL 9-liter compressed natural gas (CNG) configured engine and requisite fuel storage system comes with a $40,000 to $45,000 premium, which rises to $55,000 to $65,000 for a vehicle spec’d with a Cummins ISX 12-liter model. Additionally, if a fleet wants to boost vehicle range out to 800 or 900 miles, that premium jumps to $75,000 for the extra fuel storage capacity.
On top of that, Carrick noted that the oil change interval for naturals gas engines right now is about half of that for a comparable diesel – 15,000 miles compared to 30,000 miles – and as the ISX 12 G and ISL 9 G engines are spark-ignited models, money needs to be added to cover spark plug maintenance.
Jim Gambill, commercial and industrial brand manager for Chevron, added that it’s vital to use natural gas engine-specific motor oils as well. “It’s a mistake to use diesel-spec’d motor oil in a spark-ignited engine,” he said.
On average, Freightliner’s Carrick suggests fleets add 2 cents per mile to cover the maintenance costs of a natural gas truck; one cent per mile for the spark plugs and another penny for the additional preventive maintenance or “PM” costs such as more frequent oil changes.
Yet Roe East, president and GM of Cummins Westport said switching to natural gas also offers fleets a “spec’ing opportunity” to gain some savings as well.
“First, remember with spark-ignited natural gas, there’s no diesel and thus no DPF [diesel particulate filter] or SCR [selective catalytic reduction] system to contend with,” he pointed out. “Removing those two items is a big cost, weight, and maintenance saver alone.”
East also noted that about 80% of the parts in a natural gas-fired Cummins engine are exactly the same as in a diesel engine; only the ignition system is different and maintaining spark plugs is no more complicated than what occurs for gasoline-powered passenger cars.
Further, Freightliner’s Carrick added that if a fleet’s vehicles average about 80,000 miles per year and they return to a central location every night – and thus can be refueling by one fleet-owned natural gas filling station – the cost savings can accrue quickly.
“Having a station selling natural gas at about half the cost of diesel with those mileage characteristics means a fleet can pay off its incremental up-front costs in a about a year to a year and a half,” he said. “After that, a fleet is putting roughly $25,000 to $30,000 per year in the bank per truck. That’s the formula we see for success.”
Indeed, Carrick pointed out that many fleets seem to be making similar calculations as Freightliner has experienced a major ramp up in natural gas truck orders over the last year. After selling just 2,000 natural gas trucks between 2008 and 2012, orders for such vehicles jumped to 722 in 2012 alone, with a backlog of 550 natural gas-fired units on Freightliner’s books at this point in 2013.
Samuel Thomas, president, CEO and chairman of Charts Industries, added that as more natural gas refueling infrastructure and more natural gas vehicles are built, more opportunities will be created through higher volumes to reduce costs for both.
That will be key for fleets that own their own refueling facilities as they can acquire natural gas on a pure cost basis, whereas relying on a public filling station means paying market prices, he said.
“The commodity cost of natural gas right now is about 1/7thto 1/8th the price for diesel so the major cost factor in natural gas as a fuel is the refueling infrastructure,” he said. “Thus if a fleet puts that [refueling infrastructure] in, they control the price of natural gas. A public [refueling] site, however, will charge what the market will bear.”
