SCRANTON, Pa. If the trash truck or bus rolling down your street seems a little quieter these days, youre not imagining things. Its probably running on natural gas.
Surging natural-gas production has led the drilling industry to seek out new markets for its product, and energy companies, increasingly, are setting their sights on the transportation sector.
Touting natural gas as a cheaper, cleaner-burning alternative to gasoline and diesel, drillers, public utilities and government officials are trying to boost demand for natural-gas buses, taxis, shuttles, delivery trucks and heavy-duty work vehicles of all sorts, while simultaneously encouraging development of the fueling infrastructure that will be needed to keep them running.
The economics are compelling. Natural gas costs about $1.50 to $2 per gallon equivalent less than gasoline and diesel. That can add up to tens of thousands of dollars in savings for vehicles that guzzle the most fuel.
Fleet managers are taking notice. Companies as diverse as AT&T, Waste Management and UPS are converting all or parts of their fleets to natural gas, as are transit agencies, municipalities and state governments.
Now that you can save a dollar or two dollars a gallon, theres huge interest in the market, especially in those fleets that use a lot of fuel, said Richard Kolodziej, president of the trade group Natural Gas Vehicles for America.
Waste Management, the nations largest trash hauler, has committed to replacing 80 percent of its fleet with trucks powered by natural gas. Rich Mogan, the companys district manager in southwestern Pennsylvania, said about half of his fleet of 100 trucks now run on the cheaper fuel. They are quieter and less expensive to maintain, he said, and we are looking at a 50 percent reduction in our (fuel) cost.
Driller EQT Corp. opened its own natural-gas filling station outside Pittsburgh in summer 2011, using it to refuel its trucks while also making it available to the public. Its now doing about 1,000 fill-ups a month and only half involve EQT vehicles. Other users include city of Pittsburgh trash trucks, shuttles run by the University of Pittsburgh Medical Center, a taxi service and a handful of consumers.
EQT wasnt sure how the station would be received.
We didnt have commitments at all beyond our own vehicles. It was really a guess of what we think we could do, said David Ross, an EQT vice president focused on market development. We had people who, at the beginning, said, No, were not interested. Today, they actually own a vehicle thats natural gas. I think having the physical asset sitting there has helped it become real for people.
Natural-gas vehicles arent new. But the drilling boom, spurred by new technology that unlocked vast reserves of natural gas in deep-rock formations like the Marcellus Shale underneath parts of New York, Pennsylvania, West Virginia and Ohio created a gas glut that depressed prices. That, in turn, has made natural gas more attractive as a transportation fuel.
Partly because of a lack of fueling infrastructure, gas isnt expected to grab significant market share from petroleum anytime soon. Only a tenth of 1 percent of the natural gas consumed in the Unites States last year was used as vehicle fuel, according to the U.S. Department of Energy. Of more than 250 million vehicles on the road today, perhaps 125,000 are powered by natural gas.
But energy companies see potential.
Chesapeake Energy Corp., the nations No. 2 producer, has been especially aggressive about targeting transportation. The Oklahoma City-based driller invested $150 million in Clean Energy, a company backed by Texas investor T. Boone Pickens thats building a nationwide network of liquefied natural-gas refueling stations for long-haul truckers. Chesapeake also teamed up with General Electric on CNG In A Box, a compressed natural-gas fueling system for retailers; announced a partnership with GE and Whirlpool to develop a $500 appliance that would allow consumers to refuel their natural gas-powered cars at home; and has been working with 3M to design less expensive tanks.
Its simply a matter of time before the U.S. meaningfully shifts from transportation systems built around consuming high-priced oil to consuming low-priced domestic natural gas, Chesapeake CEO Aubrey McClendon wrote to investors this year.