Compressed natural gas is gaining popularity among commercial truck customers, particularly when the trucks operate in localized markets. Roughly half of refuse trucks are powered by compressed natural gas, according to Dave Lynch, technical product advisor for ACT Research.

ACT webinar touts cost-cutting, emissions-friendly advantages of natural gas

Jan. 1, 2014
  A switch to natural-gas-powered vehicles is not as radical or problematic as it might appear. We have experienced this scenario before—in the 1930s, when a diesel engine was proposed for line-haul trucks to replace gasoline engines.

A switch to natural-gas-powered vehicles is not as radical or problematic as it might appear. We have experienced this scenario before—in the 1930s, when a diesel engine was proposed for line-haul trucks to replace gasoline engines.

“Can you imagine that meeting when somebody says, ‘I’ve got an idea—we’ll take an oil engine and put it in trucks’?” said Dave Lynch, technical product advisor for ACT Research. “And the comments would be made: ‘Well, there is no fuel available.’ ‘No OEMs are going to offer it.’ ‘There are no trained dealer mechanics.’ ‘There are no parts outlets.’ ‘There are no engine options.’ ‘It’s not going to work.’

“Well, it did work. Today, heavy duty is 100% diesel. Medium-duty trucks are essentially all diesel. Passenger cars and pickup trucks have them. We have seen this transition before—a move from one fuel to another. There’s nothing sacred about hanging onto one particular fuel. It has to prove its way to lowest total cost.”

Lynch was part of an ACT webinar: “Natural Gas Options: What’s the Difference?”

He said that trucking is high risk, with a low profit margin. It’s highly regulated and highly competitive, and cost control is essential for success.

Lynch said that since deregulation, lowest total cost wins. He said that after deregulation went away around 1980, the top 100 carriers in North America were essentially gone or had changed dramatically, because cost control was everything.

“Out of left field comes this curveball called natural gas,” he said. “Some are going to hit that curveball out of the park, and some will be a swing and a miss. But the fuel is here. Natural gas fuel is domestically produced, it’s emission-friendly, and there are risks to change.”

He said there is a potential cost savings, with compressed natural gas (CNG) at $2.29, liquefied natural gas (LNG) at $2.92 and diesel at $4.00, in terms of Diesel Gallon Equivalent (DGE) energy.

“A diesel engine is nothing more than an energy converter, so the more energy you can put in, the more energy you can get out,” he said, “and natural gas is sold on the equivalent energy. I get the same BTUs as I get on gallon of diesel, and I get the equivalent in the amount of natural gas I buy, which physically is more than a gallon. This is not selling ethanol, where ethanol costs less but there is lot less energy in it.

“Two million units on the road at 75,000 miles per year equals 150 billion miles. At six mpg, that’s 25 billion gallons of fuel. There’s a potential for $38 billion in fuel cost savings. It’s a tremendous cost reduction to our system. It far outweighs what you’re going to change to go with super singles, single axle, lower horsepower—all the things you think about.”

Why consider change?

•  ACT calculators outline the payback. “You can look at the numbers and what it would mean to your fleet.”

•  Competitive advantage. “Switching to natural gas means you could end up with lower cost than your competitor.”

•  Obtain new business with a lower cost structure.

•  Retain current business.

“There are other alternatives to consider,” he said. “It’s not natural gas or nothing. Each one has a cost and potential payback and a risk of adoption. You could be looking at hybrids, dimethyl ether (DME), synthetic fuels, or a whole list of options. But in each case, what is the potential payback and risk of adoption, and what kind of cost do I need to get into the game?”

“Savings are not automatic. There is a whole series of decisions you have to make? Are we going to switch to natural gas? Are we going to use spark-ignited engines (SING) or high-pressure, direct-injection engines, or pilot-injection? Then you have to decide on a type of fuel? LNG or CNG? What kind of tanks? One? Multiple? Am I going to rely on a commercial site or put my refueling on site? So optimize the outcome of those decisions. You really need a clear understanding of the basics. But the goal is to optimize all the options for lowest total cost.”

He said there have been multiple attempts to move to natural gas, with public and private money spent. Success was achieved with school buses and refuse vehicles because they came home every night.

The emissions mandates of 2007 and 2010 leveled the playing field, but he said nobody understood at the time the cost ramifications for the diesel engine.

“Some people assumed incorrectly that we could fix everything in the combustion chamber,” he said. “Later on, we found out we couldn’t. We had external particulate traps and then diesel exhaust fluid. All that added cost per mile to diesel engines, and also added weight. Those systems account for about 700 pounds of additional weight on a chassis.

“Today, approximately 50% of all new refuse trucks are natural gas-fueled because people have proven to themselves that natural gas is the way to go. But there never was a line-haul option for people to consider in the past. We had an 8.9-liter engine that was really stretched in line haul. We had perfectly adequate natural gas 15-liter engines that were technical marvels but there was nothing in between. But then came the game-changer of fracking that got us more natural gas than we knew what to do with.”

He said natural gas is a game-changer as a commercial vehicle fuel because it’s plentiful (there is a 100-year supply); it’s inexpensive (and will stay that way); it’s environmentally friendlier; infrastructure and product rollouts are accelerating; and shippers and truckers understand natural gas, so we’re moving from the theoretical to implementation time frame.

And there’s another game-changer: Cummins Westport has just come out with a 400 hp spark-ignited natural gas engine.

“You can use a manual transmission behind it,” Lynch said. “Before, all engines had to use an automatic transmission, which was more expensive. And you can now use a compression brake.”

Innovations continue:

•  CNG hydraulic intensifiers. “You can fill a CNG tank faster than thought possible.”

•  CNG/LNG fueling in a box. “You’re no longer piecemeal building your natural gas station.”

•  Fuel tank innovation. “They’re lighter, smaller, less costly.”

•  Retrofit of used trucks. “Old diesel trucks are not obsolete. We can go with a diesel/natural gas package and retrofit those trucks.”

•  Absorbed natural gas. “That’s where we can absorb natural gas and hold it in a tank that doesn’t have to be a traditional round cylinder and we can get lower refueling pressures.”

“So it’s no longer a stagnant industry,” he said. “Innovation is coming very fast. What’s interesting is that private capital is making the investment. Numerous companies and individuals are bidding their money that natural gas will come to fruition this time for the heavy-truck segment after a lot of false starts. We have success stories and repeat buyers. There are still some unknowns, but solutions are being found.

“There will be more fuel storage and market expansion. It will be just like what you saw for cell phones—how the price dropped and how a number of potential products came out. Then we’re going to see cost reductions. 2019 is the next emission hurdle, and natural gas will play a key role in hitting some of those fuel mileage standards.”

Steve Tam, vice president, Commercial
   Vehicle Sector

ACT Research

Tam said people should start thinking about what’s going to happen as NG-powered trucks start hitting the used market. Is there a market there? What will residual values do?

He said that in 2012, NG-powered Class 8 trucks had a market share in the single digits, but there is an improving market and “lots of room to increase the share.”

“We’re in a phase where diesel is dominating, and we’re putting all the building blocks that are necessary for natural gas to become a more significant part of the industry,” Tam said. “Up to this point, we’ve had a limited number of engines available in a limited number of trucks. They’ve been predominantly specialty applications, such as refuse. But we’re seeing the introduction of more and more equipment and infrastructure. When we get near the end of the technology adoption curve, we’re going to be neck-and-neck with diesel-powered trucks from a natural gas perspective.

“In 2009 the Energy Information Administration came out and said we have a 100-plus-year supply of natural gas. That had the almost immediate impact of stabilizing prices within the natural-gas space. More important, we have something the country has been seeking for a long time—and that is a domestic or secure supply.”

He said that since 2009, the stability and price of natural gas has been basically a flat line at 50 cents per diesel gallon equivalent.

Jennifer McNealy, research analyst

ACT Research

McNealy said that before decisions are made, some homework will need to be done.

The customer needs to consider gross vehicle weight, cab configuration, engine specifications (size and horsepower), and lease/buy options.

The choices:

•  Fuel form: CNG or LNG.

•  Fuel supply: “At home or on the road or partnering with a neighbor—a local municipality, school, corporation, or transit authority?”

•  Engine type.

She said CNG tanks currently are at 3,600 psi and CNG is used in spark-ignited Engines (SI), with the option of fast or slow fill. LNG is cryogenically cooled, stored at -260 degrees F, and used in spark-ignited or High Pressure Direct Injection (HPDI) engines. Venting and Personal Protective Equipment (PPE) are required.

She said Diesel Natural Gas (DNG) is not true dual natural gas. Older

diesels can be retrofitted, if legal, and DNG is available as “new” glider kits.

“You have to ask yourself questions,” she said. “Is NG available in my area? What about where my fleet travels? Could ‘Fuel in a Box’ be considered? There are fuel-use options and engine fuel efficiency: SI versus HPDI. Other considerations are financing, leasing/rental, government incentives and legislation, partnerships, and maintenance and training.”

Ken Vieth, senior partner and GM

ACT Research

He said that on the diesel side, today’s freight rates are negotiated or bid depending on the source, and include a diesel fuel surcharge.

“That reflects the variability and high cost of diesel over the years,” he said. “Recent fuel surcharges probably ranged from 44 to 55 cents. When you look at natural gas, all of sudden you have the lower cost of fuel, so a diesel gallon equivalent cost. We are assuming $2.50, or $1.50 less than diesel. If you run a fuel-charge calculation the same as diesel, the fuel surcharge drops to 20 to 30 cents. How do truckers and shippers handle this lower surcharge? Who gains and who loses? Ultimately, it will have to be a negotiated and timed event.”

Vieth said the other variable is the cost of the Class 8 tractor.

“The added cost of natural-gas trucks is substantial, but with a likely long-term declining pricing bias,” he said. “Today, a Class 8 tractor with a 12-liter spark-ignited engine will add plus or minus $50,000 over the comparable diesel unit. For early adopters operating over variable routes, freight rates and fuel surcharges are expected to be treated as if they were diesel, and priced the same. In this situation, reasonable ROIs are possible for the trucker but with a freight-pricing advantage as an early adopter. This is one of the benefits. Will the early bird get the worm?

“Sharing the green comes from not paying the higher price for the truck but of course the fuel cost. Some shippers already want their carriers to use natural-gas-powered equipment as a going-green image booster for their business. Many of these companies possess an I-care attitude about the environment. This is resulting in longer term freight contracts, and with volume guarantees paving the way for payback.

“Ultimately, it is expected that such shippers will want to share in the fuel cost savings. Of course, that will happen over time. But how long is the big question. Procter & Gamble announced that 20% of freight in the next couple of years will move on natural-gas-powered vehicles. There was no mention, though, if surcharges or freight rates will be altered to help pay for that.”

Vieth said that ACT can help companies reduce their learning curve through ACT’s reports and supporting analytical tool. ACT has a Fuel Payback Calculator and NG DGE Fuel Cost and Engine Type ROI Calculator that provide unbiased comparisons of costs associated with engine selections. They’re available at http://calc.actresearch.net/.

About the Author

Rick Weber | Associate Editor

Rick Weber has been an associate editor for Trailer/Body Builders since February 2000. A national award-winning sportswriter, he covered the Miami Dolphins for the Fort Myers News-Press following service with publications in California and Australia. He is a graduate of Penn State University.