Repost: Trucking Industry Is Set to Expand Its Use of Natural Gas

The New York Times recently reported that the trucking industry is set on switching from petroleum to cleaner burning natural gas - a move which may also benefit consumers if prices remain low:


The natural gas boom has already upended the American power industry, displacing coal and bringing consumers cheaper electricity.

Now the trucking industry, with its millions of 18-wheelers moving products like potato chips, underarm deodorant and copy paper around the country, is taking a leap forward in switching from petroleum to cleaner-burning natural gas. And if natural gas remains cheap, consumers may benefit again.

This month, Cummins, a leading engine manufacturer, began shipping big, new engines that make long runs on natural gas possible. A skeletal network of refueling stations at dozens of truck stops stands ready. Major shippers like Procter & Gamble, mindful of both fuel costs and green credentials, are turning to companies with natural gas trucks in their fleets.

And in the latest sign of how the momentum for natural gas in transportation is accelerating, United Parcel Service plans to announce in the next few days that it will expand its fleet of heavy 18-wheel vehicles running on liquefied natural gas, or L.N.G., to 800 by the end of 2014, from 112. The vehicles will use the new Cummins engines, produced under a joint venture with Westport Innovations.

U.P.S., like the rest of the industry, still has a long way to go in the conversion, but the company hopes to make natural gas vehicles a majority of its new heavy truck acquisitions in two years.

The company is benefiting from incentives provided by various states and the federal government, which offer tax credits and grants for installing natural gas fuel stations and using vehicles fueled by natural gas.

“By us doing this it will help pave the way and others will follow,” said Scott Wicker, chief sustainability officer at U.P.S.

“Moving into L.N.G. is a means to get us onto what we see as the bridging fuel of the future and off of oil,” he said. “It’s the right step for us, for our customers and for our planet.”

The move could also cut the country’s oil import bill. There are currently about eight million heavy and medium-weight trucks consuming three million barrels of oil a day while traveling the nation’s highways. That is nearly 15 percent of the total national daily consumption and the equivalent of three-fourths of the amount of oil imported from members of the Organization of the Petroleum Exporting Countries. Roughly two-thirds of the diesel used as transportation fuel nationwide feeds three million 18-wheelers, the main trucks hauling goods over long distances.

In the last four years, the natural gas shale drilling boom has produced a glut of inexpensive fuel, leading producers to argue that the country should wean its commercial and municipal transportation systems from a dependence on imported oil to domestically produced natural gas.

It is cheaper, saving truckers as much as $1.50 a gallon, and it burns cleaner, making it easier to meet emissions standards. The domestic fuel also provides some insulation from the volatile geopolitics that can drive up petroleum prices.

Still, manufacturers and fleet owners have been slow to switch, partly because natural gas vehicles can cost almost twice as much as conventional trucks and because only a few gasoline stations have the specialized equipment needed to dispense the fuel.

Now, as name-brand manufacturers and chains like Nike and Walmart have pressed for transportation of their goods by natural gas vehicles and companies like U.P.S., FedEx and Ryder System have started exploring the option, truck makers have begun bringing natural gas vehicles to the market. Major manufacturers, including Navistar and Volvo, have plans to offer long-haul natural gas vehicles.

Clean Energy Fuels — a company backed by the financier T. Boone Pickens and Chesapeake Energy — has peppered major routes with 70 stations, many at truck stops operated by Pilot Flying J. (The truck-stop company, whose chief executive is Jimmy Haslam, owner of the Cleveland Browns, is separately under investigation for potential rebate fraud.)

Clean Energy has plans to complete 30 to 50 more by the end of the year. Shell has an agreement to build refueling stations at as many as 100 TravelCenters of America and Petro Stopping Centers while ENN, a privately held Chinese company, hopes to build 500 filling stations as well.

That emerging network “really has changed the interplay between the shippers and the contracted carriers,” said Andrew J. Littlefair, Clean Energy’s chief executive. “The whole deal’s beginning to change.”

Though the network is growing rapidly, it has a long way to go. As of May 2012, only 53 L.N.G. fueling stations were in the United States, more than two-thirds concentrated in California, along with 1,047 compressed natural gas stations around the country, according to the Energy Department. In comparison, there were 157,000 fueling stations selling gasoline.

Vehicle use of natural gas in the United States is still negligible but it has been growing. Among fleets whose vehicles travel shorter routes, like transit buses, refuse haulers and delivery trucks, use of compressed natural gas is much further along. Last year, more than half of newly purchased garbage trucks ran on compressed natural gas.

The federal Energy Information Administration last year projected that if enough L.N.G. filling stations were built and economic conditions were right, sales of heavy-duty natural gas vehicles could increase to 275,000 in 2035, equivalent to 34 percent of new vehicle sales, from 860 in 2010. But estimates vary. Citigroup recently forecast that 30 percent of the heavy truck fleet would shift to natural gas by the end of the decade, but some in the transportation industry put that figure much lower.

L.N.G. trucking is slowly gaining traction internationally as well — especially in Canada and Europe — although conversion in the United States, where gas is relatively inexpensive, is expected to be faster. Trucking industry experts project that 5 percent of the European heavy trucking fleet could run on natural gas by 2015, rising to as much as 15 percent by 2020.

“Natural gas will be a part of that play in commercial vehicles, but our view is, it’s not going to replace diesel,” said Roe C. East, general manager of the natural gas business at Cummins. He added that natural gas could capture as much as 10 percent of the heavy-duty truck market in North America in the next five years.

One obstacle is cost. There are some tax incentives, and the Obama administration funneled stimulus money to various projects. ENN, the Chinese company, for instance, has teamed up with a small company now operating as Blu in Utah that used federal stimulus money to help open a natural gas fueling station in Salt Lake City in 2011.

But industry executives say that the incentives are not enough to get the system going and solve what Bill Logue, chief executive of the FedEx Freight Corporation, called the “chicken-and-egg dilemma” of which comes first, the trucks or the stations.

“We believe that public policy supporting the development of natural gas infrastructure is critical and should be prioritized,” he said in an e-mail message. “Individual drivers and private companies cannot realistically be expected to resolve the dilemma themselves.”

Another issue arises alongside the very appeal of the fuel: its low price.

Because natural gas is now in demand to meet so many different energy needs — including industrial electricity and home heating — prices could rise, as they have in recent months, especially if the Obama administration begins approving the fuel for export to countries where gas commands a much higher price, as some producers and lawmakers are pressing the Energy Department to do.

As U.P.S. executives explain it, the economics for the switch to natural gas are complex.

Prices for L.N.G. and diesel fuel vary around the country, so the company matches its L.N.G. trucks with states where it can get the lowest-cost gas on long-term contracts and the most generous grants. The rule of thumb, according to U.P.S., is that truck operators save 30 to 40 percent per mile driven on gas over diesel.

A big part of the equation is a 50-cent-per-gallon tax credit the federal government offers to companies that use L.N.G., but that is scheduled to expire at the end of the year.

(There are also federal taxes that work against gas use, including a 12.5 percent federal excise tax on new heavy trucks that is more onerous on L.N.G. vehicles because they are far more expensive.)

“The economics are getting better and better to where it’s less of a leap of faith than it used to be,” said Kurt Kuehn, chief financial officer of U.P.S., although there is still risk because the upfront cost is so high. It still takes seven or eight years for the savings from replacing diesel with the cheaper fuel to cover that cost, he said. For many companies, that may prove too long to wait.

But Clean Energy executives say that the margin between the fuel prices is so wide that the time for recouping the investment is shortening — perhaps to as little as one to three years.

Mr. Pickens, a Clean Energy board member who has been an advocate for switching the national trucking fleet to natural gas, said that even if the price of natural gas rose by roughly 50 percent, to $6 per thousand cubic feet, truck fleets would most likely still save money.

“Natural gas will always be less than diesel,” he said, “because the price of oil is set globally by OPEC and they have to have a price high enough to keep their social commitments and stay in power.”

Mr. Pickens predicted that a majority of the nation’s long-haul truck fleet would be fueled by natural gas in seven years because 70 percent of the 18-wheelers operate in defined regional areas, and a natural gas truck can drive 600 miles on a single fill-up.

“I promise you it will all fit together and the stations will be there,” he said.



Dr. Ali Ghalambor is an internationally recognized expert on petroleum engineering. Find more news on the affected industries and updates on developments in the natural gas boom by liking this Facebook page.

The great reduction on Iran oil imports

The oil importation relationship between Iran and other countries is usually subject to seasonal fluctuations. Sometimes it spikes, sometimes it goes down. In foresight, however, it seems that the current reduction on oil importation from Iran will carry on. As a matter of fact, the US State Department is expecting that many importers of Iranian crude oil will make further significant cuts in their purchases.

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This is pursuant to US laws which urge all countries to make “significant reductions,” or reductions as stipulated by the US government, in the volume of their crude oil imports coming from Iran. Those who do not conform to this rule may run the risk of having their banks being cut off from the US financial system under US sanctions.

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Amidst these talks of importation reduction, however, is an alleged political underpinning which touches on Iran’s long-standing nuclear issue. The above US sanctions apparently aim to cut off Iran’s funding sources for the Tehran nuclear program. Iran, however, denies these claims and states that its nuclear program is not for anything other than for civilian purposes.

Iran has the world’s second largest natural gas reserves, and is currently one of the world’s largest importer of crude oil.

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Dr. Ali Ghalambor is one of the country’s foremost experts in natural gas and petroleum engineering. He is also a respected professor, consultant, and textbook author. Catch the latest in the oil and gas industry by visiting this Facebook page.

REPOST: 'Wake-up call' sounded on stalled renewable energy initiatives

This article published in Los Angeles Times reports the need for a rapid expansion in low-carbon energy technologies to avoid producing green house gases that drives climate change. 

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WASHINGTON -- The push to produce more energy from renewable sources has stalled, and “the average unit of energy produced today is basically as dirty as it was 20 years ago,” according to Maria van der Hoeven, executive director of the International Energy Agency, a Paris-based intergovernmental organization that researches the energy sector and holds reserves of oil in case of supply disruptions.

Van der Hoeven’s statement pointed to the amount of carbon dioxide emitted by the world’s power plants, the greatest source of the greenhouse gases driving climate change. To track greenhouse gas output over time, the IEA has developed a new gauge, the Energy Sector Carbon Intensity Index (ESCII), to show how much carbon dioxide is emitted, on average, to provide a particular unit of energy. The index measured 2.37 metric tons of carbon dioxide per metric ton of oil-equivalent in 2010, compared with a ratio of 2.39 metric tons of carbon dioxide per metric ton of oil-equivalent in 1990.

Countries are installing ever-greater amounts of solar and wind energy, the IEA noted, even during tough economic times. But “growth of coal-fired power is actually outpacing the increase in generation from non-fossil energy sources,” van der Hoeven wrote in an op-ed in the Huffington Post.

The United States, for instance, is burning less coal but is exporting more of it to fuel power plants in Asia. Overall, the world consumes about 50% more energy than it did in 1990, mainly due to the growth of emerging economies, van der Hoeven said. And with carbon dioxide emissions the same from each unit of energy over the last 20 years, record amounts of greenhouse gases are pumped into the atmosphere annually, she said.

The vast majority of climate scientists say that the world needs to keep global average temperatures from rising more than 2 degrees Celsius, or 3.6 degrees Fahrenheit, above average temperatures in the mid- to late 19th century. At this rate of burning coal and installing renweables, “the world is on track to have global temperatures rise by 6 degrees Celsius,” or 10.8 degrees Fahrenheit, by the end of this century.

“The overall lack of progress should serve as a wake-up call. We cannot afford another 20 years of listlessness,” van der Hoeven wrots. “We need a rapid expansion in low-carbon energy technologies if we are to avoid a potentially catastrophic warming of the planet but we must also accelerate the shift away from dirtier fossil fuels.”

Van der Hoeven made the comments in the run-up to a meeting this week in New Delhi at the Clean Energy Ministerial, a group of ministers representing countries responsible for 80% of global greenhouse-gas emissions.

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The road to clean air and energy self-sufficiency

So much has been said about the development of the energy industry in the US, particularly with the growth of the shale gas industry. The boom in natural gas supplies could usher in accelerated growth of the economy as the industries that heavily use the resource could benefit greatly from lower costs.

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Meanwhile, protests from environmentalists have also been trying to block further efforts to take advantage of the shale gas revolution as there are dangers present in the haphazard growth of the industry, which could reverse whatever progress the nation has had in environmental protection and battling climate change.

President Obama has made it clear that he wants to pursue an ‘all of the above’ energy strategy – a strategy that focuses on both the growth of clean energy and the development of domestic oil and gas resources.

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The problem is that such strategy does not seem to be feasible. Sacrifices will have to be made in favor of one agenda over another. If clean air is the priority, then efforts made for the development of the shale gas could be hindered.

Experts and analysts, however, have noted that there may still be an option that takes both sides of the debate into account and will result in better outcomes. Good regulation seems to be the key to the conundrum, and it will take high standards and regulation, the participation of environmental groups in policy-making, and the strict compliance of those involved in the energy industry to ensure that shale gas development remains sustainable.

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Tightening the rules on the operations of companies in the shale gas industry may be seen as a hindrance but, ultimately, it is necessary to ensure upward development that is safe and non-hazardous to the environment.

This Twitter account for Dr. Ali Ghalambor shares the latest developments in the shale gas industry.

Repost: China Must Exploit Its Shale Gas

Elizabeth Muller from New York Times reports on the importance of recognizing hydraulic fracturing to the broader effort to contain climate change as shown in the situation faced by China:




IF the Senate confirms the nomination of the M.I.T. scientist Ernest J. Moniz as the next energy secretary, as expected, he must use his new position to consider the energy situation not only in the United States, but in China as well.

Mr. Moniz, a professor of physics and engineering systems and the director of M.I.T.’s Energy Initiative, sailed through a confirmation hearing Tuesday before the Senate Energy and Natural Resources Committee.

But some environmentalists are skeptical of Mr. Moniz. He is known for advocating natural gas and nuclear power as cleaner sources of energy than coal and for his support of hydraulic fracturing to extract natural gas from shale deposits. The environmental group Food and Water Watch has warned that as energy secretary, he “could set renewable energy development back years.”

The criticism is misplaced. Instead of fighting hydraulic fracturing, environmental activists should recognize that the technique is vital to the broader effort to contain climate change and should be pushing for stronger standards and controls over the process.

Nowhere is this challenge and opportunity more pressing than in China. Exploiting its vast resources of shale gas is the only short-term way for China, the world’s second-largest economy, to avoid huge increases in greenhouse gas emissions from burning coal.

China’s greenhouse gas emissions are twice those of the United States and growing at 8 percent to 10 percent per year. Last year, China increased its coal-fired generating capacity by 50 gigawatts, enough to power a city that uses seven times the energy of New York City. By 2020, an analysis by Berkeley Earth shows, China will emit greenhouse gases at four times the rate of the United States, and even if American emissions were to suddenly disappear tomorrow, world emissions would be back at the same level within four years as a result of China’s growth alone.

The only way to offset such an enormous increase in energy use is to help China switch from coal to natural gas. A modern natural gas plant emits between one-third and one-half of the carbon dioxide released by coal for the same amount of electric energy produced. China has the potential to unearth large amounts of shale gas through hydraulic fracturing. In 2011, the United States Energy Information Administration estimated that China had “technically recoverable” reserves of 1.3 quadrillion cubic feet, nearly 50 percent more than the United States.

The risk is that what is now a nascent Chinese shale gas industry may take off in a way that leads to ecological disaster. Many of the purchasers of drilling rights in recent Chinese auctions are inexperienced.

Opponents of this drilling method point to cases in which gas wells have polluted groundwater or released “fugitive” methane gas emissions. The groundwater issue is worrisome, of course, and weight for weight, methane has a global warming potential 25 to 70 times higher than carbon dioxide, the principal greenhouse gas that results from the burning of coal.

Moving away from fossil fuels entirely may make sense in the United States, where we can potentially afford to pay for more expensive renewable sources of energy. But developing countries have other priorities, like improving the education and health of their people. Given the dangers that hydraulic fracturing poses for groundwater pollution and gas leaks, we must help China develop an approach that is environmentally sound.

Mr. Moniz has warned of the need to curb environmental damage from the process. But he has also stressed the value of natural gas as a “bridging” source of energy as we strive to move from largely dirty energy to clean energy. Extracting shale gas in an environmentally responsible way is technically achievable, according to engineering experts. Accomplishing that goal is primarily a matter of engineering and regulation.

That is where we need the engagement of environmental activists. At home, they can push the United States to set verifiable standards for clean hydraulic fracturing and enforce those standards through careful monitoring. Internationally, American industry can lead by showing that clean production can be profitable.

We need a solution for energy production that can displace the rapid growth of coal use today. Switching from coal to natural gas could reduce the growth of China’s emissions by more than 50 percent and give the world more time to bring down the cost of solar and wind energy to levels that are affordable for poorer countries.


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Regulation and the growth of the shale gas industry

There are two sides to the coin in the development and growth of the shale gas industry. On one side, there are plenty opportunities for the growth of the economy, ushered in by the boons granted by an upsurge in the nation’s supplies for natural gas. As covered in previous entries, this advantage may give the US enough leverage to influence the global oil market and promote free-market principles.

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On the other side, there are the protests against the extraction of natural gas as the process used could do more harm to the environment than continued dependence on fossil fuels. Environmentalists argue that, because natural gas is mostly methane, if a lot of it escapes into the atmosphere, then it could trap much more heat in.

Fracking wells are known to leak and there are no conclusive studies yet that prove that the leakage amount is small enough not to affect the atmosphere and the climate. But even if it is indeed a small amount, the speedy growth of the industry could change the situation drastically.

Image Source: csmonitor.com

This is why experts argue that the shale gas industry could do much more with strict regulations in place. As shown by a pact made for fuel drilling in Pennsylvania, environmentalists have some conditions for the energy industry, and a cooperative relationship can indeed be achieved.

With the growth of the industry, it is important to put certain restrictions in place to direct the movement toward positive outcomes instead of continuing to do things haphazardly. The difference between the rules currently in place and better regulation isn’t very large, however, and with combined efforts of the industry, the government, and the citizens, better outcomes for the natural gas boom can be achieved.

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The issue on fuel purity

Just recently, New York heating oil businesses were put under the scrutiny of state and federal authorities for allegedly cheating tens of thousands of customers for many years by selling adulterated oil.

Image Source: nepalitimes.com

The dirty facts: why adulterated fuel is harmful

On a narrow perspective, impure oil can greatly affect the efficiency of an engine it is used in. As Carzy.com notes, “these adulterated substances severely impact the functioning of engine leading to motor knocking” and “can damage the vehicle to an extent of complete engine seizure.” This eventually results to a great inconvenience on the consumer’s part, as the resulting damages greatly overshadow the measly amount paid for the impure fuel’s purchase.

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On a more universal standpoint, moreover, the use of adulterated fuel poses a grave environmental threat, as burning waste oil in furnaces would result to an unrestrained release of toxic pollutants into the atmosphere. It can also contribute to soot pollution, further resulting to hundreds of asthma-related hospital visits per year. This reason concerns public welfare, thus making the sale of adulterated fuel grave enough to be criminalized.

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With over 30 years of experience in the petroleum engineering industry, Dr. Ali Ghalambor is an important figure in the oil and gas sector and is widely respected for his valuable contributions as a writer and practitioner. Catch more updates on the oil and gas sector by following this Twitter page.