FILL LOVE S TRAVEL STOPS NATURAL GAS VEHICLES AND FUELING. Love s Travel Stops Natural Gas Vehicles and Fueling

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1 FAST LOVE S TRAVEL STOPS NATURAL GAS VEHICLES AND FUELING Love s Travel Stops Natural Gas Vehicles and Fueling

2 ...we typically use the following rule of thumb: CNG is roughly $2.00 cheaper than diesel, while LNG is $1.00 cheaper. FAST

3 KEY TAKEAWAYS FUEL COST DIFFERENCE Natural gas as a transportation fuel currently has a price advantage over diesel, however CNG and LNG have different cost structures. As a rule of thumb: CNG costs roughly $2.00 less than a gallon equivalent of diesel, while LNG costs $1.00 less than diesel. FINANCIAL CONSIDERATIONS While natural gas fuel holds a significant economic advantage over diesel, other CNG and LNG truck operating inefficiencies are rarely discussed: reduction in fuel economy; out-of-route miles; payload loss from additional truck weight; fuel loss from venting (LNG only); unknown risks in truck salvage value. FUEL TIMES Although neither CNG nor LNG fills at the speeds of diesel, both can accommodate a diesel-like fill experience at the pump. LNG typically has a fill time of 12 equivalent gallons or more per minute, making it easy to meet fill time expectations. Fill times for CNG can average 12 equivalent gallons per minute, if engineered correctly. RANGE CONSIDERATIONS Onboard fuel capacity dictates the range for both CNG and LNG vehicles. A saddle tank-equipped CNG vehicle can typically attain 450 miles of range. Additional storage can extend that range to approximately 750 miles. LNG can attain a range of up to 900 miles. CNG $2.00 less than Diesel WEIGHT CONSIDERATIONS CNG and LNG trucks will have a weight disadvantage versus a comparably equipped diesel truck. However, it is important to consider the incremental weight net of existing diesel and DEF fueling systems. MAINTENANCE CONSIDERATIONS Upgrading existing maintenance facilities to service natural gas vehicles is an expensive process. Until all areas of the country have sufficient availability of upgraded facilities, regional CNG truckers will have more reliable maintenance support than will over-the-road users. GALLON EQUIVALENTS Natural gas has different physical properties than traditional fuels. As such, unique units of measure, Gallon Equivalents, have been developed for consumers to accurately compare price and fuel economy between natural gas and diesel or gasoline. These units are measured in mass, but represent an assumed energy content and density from previous studies on the various fuels. FUELING STATION OVERVIEW Fueling stations for CNG and LNG have significant differences. CNG is created on-site and can be accessed in existing diesel bays, adjacent to diesel and DEF dispensers - a particular advantage for trucks with dual-fuels or for refrigerated units. Fueling with CNG does now require any protective equipment or clothing. LNG facilities must be located with a separation distance of at least 100 feet from public areas. LNG fueling also requires special training and protective equipment for drivers. Love s Travel Stops Natural Gas Vehicles and Fueling

4 ...In 2010, Love s began providing natural gas fueling solutions for light and medium duty vehicles. BACKGROUND INFORMATION Natural gas as a transportation fuel has gained popularity during the past several years, mainly due to its significant price advantage over diesel on a per-gallon basis. Advancements in new engine and fuel system technologies have also contributed to the trucking industry s growing interest in natural gas as a viable and accessible fueling option. In the rapidly changing fuels market, our company operates with our customers needs in mind by providing the lowest cost solutions for a wide range of fueling options. Love s began providing natural gas fueling solutions for light and medium duty vehicles in In 2012, Love s constructed its first heavy duty CNG station in Oklahoma City, specifically for Class 8 vehicles. In 2013, Love s announced plans to build nine new heavy duty CNG stations one in Oklahoma City and eight across San Antonio, Houston and Dallas. Love s private truck fleet, Gemini Motor Transport, which hauls fuel to 300 retail locations in 39 states, has purchased 25 new Freightliner and 25 new Peterbilt trucks equipped with the 400 HP Cummins Westport ISX G 11.9L Spark Ignited engine and CNG fuel system. This decision was made after beta testing the same engine for 12 months in a 350 HP application. In providing the fueling solutions our customers demand, Love s recognizes the new technology that works for Gemini may also work for fleets with a similar scope of operations. By implementing a CNG fleet with Gemini, Love s can better anticipate our customers fueling needs. FAST

5 50 NEW TRUCKS WITH CNG FUEL SYSTEMS GEMINI PURCHASED 25 NEW FREIGHTLINER AND 25 NEW PETERBILT TRUCKS EQUIPPED WITH THE 400 HP CUMMINS WESTPORT ISX G 11.9L SPARK IGNITED ENGINE AND CNG FUEL SYSTEMS, RANGING IN CAPACITY FROM 90 DGE TO 120 DGE. As Love s evaluated natural gas as a transportation fuel, we initially set out to determine how best to use natural gas for Gemini Motor Transport, our proprietary fleet responsible for hauling fuel to more than 300 Love s Travel Stops throughout the US. Many factors were considered in our analysis, including driver safety, maximum weight, truck range and fuel savings. Customer satisfaction has always been a primary motivator for the way we approach any service Love s looks to offer. We are in the business of meeting the needs of our customers for the long term. As we evaluated the viable natural gas options for Gemini s operations, our aim was to find solutions that also benefit the end user: our customer. Having affirmed that CNG is the right solution for Gemini, Love s has invested in 50 dedicated natural gas trucks that will operate throughout Texas and Oklahoma. In this, Love s feels it is stepping forward as a leader in both consuming and supplying the solution we are bringing to the market. Love s Travel Stops Natural Gas Vehicles and Fueling

6 FUEL COST DIFFERENCE The primary motivators for fleets to run natural gas are fuel cost relative to diesel and the assumed long-term price stability in natural gas. While both CNG and LNG have an economic edge over diesel, CNG has three distinct cost benefits over LNG: COMPRESSION VERSUS LIQUEFACTION ECONOMICS Both CNG and LNG begin as a gas and finish their life cycle in the combustion chamber in a gaseous state. Two methods are commonly used to make natural gas more efficient for transportation: compression and liquefaction. The question is, which method distributes natural gas into a truck cheaper and more efficiently? CNG uses multistage compressors that take natural gas at pipeline pressure, usually PSI, and condense volumes to approximately 3,600 PSI. LNG also takes natural gas off a pipeline at line pressure; however the process is much more complex. The liquefaction process also involves compression and a multistage heat exchanger, either using liquid nitrogen or newer methods involving methane, which adds significant costs relative to CNG. PIPELINE VERSUS TRUCKING ECONOMICS CNG arrives at a retail location via natural gas pipeline, which is the least expensive method of transportation available. LNG is transported via a tanker truck where the length of haul is typically 2 5x that of a traditional diesel haul. This is due to the fact liquefaction plants dedicated to transportation fuel are few and far between. Length of haul can be reduced with the construction of additional liquefaction plants. However capital costs for an LNG facility can range from $150-$300mm, depending on scale. STATE TAXES For current rates by state, visit www1.eere.energy.gov/cleancities or FEDERAL TAXES FTR FTC NET/ DIFF CNG GGE ($0.183) $0.500 DGE ($0.206) $0.564 $0.357 FTR FTC NET/ DIFF LNG GAL ($0.244) $0.500 DGE ($0.407) $0.835 $0.428 NORMAL TAX ENVIRONMENT: CNG HAS A $0.201 TAX EQUIVALENT ADVANTAGE. EXCISE TAX CREDIT ENVIRONMENT: LNG HAS A $0.071 TAX EQUIVALENT ADVANTAGE. FTR: Federal Tax Rate FTC: Federal Tax Credit CNG Conversion from GGE to DGE: LNG Liquid Gallon to DGE: 1.67 For the above reasons, we typically use the following rule of thumb: CNG is roughly $2.00 cheaper than diesel, while LNG is $1.00 cheaper. FAST

7 CNG/LNG SUPPLY CHAIN Pipeline Compression CNG Drying Piped Direct to Dispenser Pipeline Drying Compression LNG Purification Bulk Storage Refrigeration/ Liquification Transportation Retail Storage 9 Dispenser Love s Travel Stops Natural Gas Vehicles and Fueling

8 FINANCIAL CONSIDERATIONS While its price advantage over diesel has contributed to the growing popularity of natural gas, both CNG and LNG are associated with truck operating inefficiencies that are rarely discussed. Using the common $2.00 and $1.00 mean discount to diesel as a gross discount with a standard deviation of $0.25, we calculate the net discount by quantifying all inefficiencies on a per-unit basis. We then deduct the sum of inefficiencies from the gross discount. See example below. LNG, which can have a shelf life as short as four days, vents fuel into the atmosphere to avoid explosion as it gains heat in a vacuum tank. In addition, filling LNG trucks that are completely empty of fuel can allow rapid methane expansion once LNG enters a tank at ambient temperature. This rapid expansion can sometimes delay operations up to one day until a complete fill can be achieved. LNG fueling also raises valid concerns about training costs and workers compensation if a driver were to come in contact with the fuel. CNG vs. LNG Comparison CNG LNG Truck Comparison CNG LNG Diesel Price $4.000 $4.000 Miles Driven (Annual) 125, ,000 Natural Gas Retail Price $2.000 $3.000 Fuel Economy (Diesel) Gross Discount to Diesel $2.000 $1.000 Fuel Consumption 20,161 20,161 Truck Inefficiencies CNG LNG Truck Premium (CW 11.9L ) $55,000 $45,000 Fuel Economy Loss (12%) -$ $0.360 Net Discount to Diesel $1.505 $0.400 Out of Route Miles -$ $0.025 Fuel Savings (Annual) $30,343 $8,065 Payload Loss -$ $0.020 Payback (Years) Additional Maintenance -$ $0.120 Venting / Vapor Return Loss - -$0.015 Salvage Value Deduction -$ $0.060 Total Inefficiencies -$ $0.600 Net Discount to Diesel $1.505 $0.400 *Please note the above values are variable and should be tailored to each specific fleet application. FAST

9 FUEL TIMES While neither CNG nor LNG fills at the rate of diesel, both can achieve a diesel-like fill experience at the pump. For example, a truck should be capable of entering a CNG or LNG fueling lane, fill, perform all other normal procedures and exit within 10 minutes. Historically, CNG fill times have been roughly five gallons per minute, with natural gas flowing directly from storage tanks on-site to the dispenser. However, newer methods specifically designed for trucks with larger tank capacities have been engineered, allowing for shorter fill times. The most efficient method for heavy duty CNG fueling is called a direct fill application. A direct fill compressor system is engineered to meet expected volumes without utilizing storage. Fill times for CNG average 12 DGE per minute, if engineered correctly, eliminating the slower flow rates that result from fueling directly from storage. The minimum acceptable fill time at Love s Travel Stops is 10 GGE per minute, however Love s has accomplished significantly higher fill times at its first Fast-Fill CNG stations in Oklahoma City and is replicating it across an ongoing network expansion, which includes the Texas Triangle. Love s Travel Stops Natural Gas Vehicles and Fueling

10 RANGE CONSIDERATIONS There are also CNG fuel systems available with up to 200 DGE capacity which yield more than 880 miles of range. LNG has a fuel system design which allows a truck to use 100% of all fuel capacity; 75 DGE for a single tank or 200 DGE for dual saddle tanks. Using the same fuel economy as CNG above, LNG vehicles can achieve a range of up to 900 miles. WEIGHT CONSIDERATIONS The additional weight of a natural gas truck is often misrepresented by recognizing only the weight of storage tanks and mounting brackets, without subtracting the weight of components needed for diesel operations. An aluminum diesel tank with mounting kit can weigh pounds. In addition, depending on API gravity, diesel fuel can weigh between 6.95 and 7.05 pounds per gallon versus a natural gas DGE at 6.38 pounds per gallon, or a natural gas weight advantage of.62 pounds per gallon. Spark-ignited natural gas engines do not require SCR systems or a DEF tank, which also increases the weight delta. CNG TRUCK PREMIUMS When referring to truck premiums, it s important to remember each OEM will price natural gas trucks specific to the vendor/customer relationship. The engine itself can also make a huge difference. The most common CNG packages are illustrated in the infographic on the right, which gives an indication of CNG truck premiums, based on conversations held with every OEM offering a CNG product. New tank designs for both fuels are currently under development. Also, additional competition in the fuel system space, which accounts for the majority of the premium, should reduce overall truck premiums; however, the timelines are unknown at this point. FAST

11 CNG FUEL SYSTEMS CONSIDERATIONS 75 DGE INCREMENTAL WEIGHT lbs. USABLE CAPACITY60 RANGE 351mi. COST $25, DGE INCREMENTAL WEIGHT lbs. USABLE CAPACITY72 RANGE 421mi. COST $35, DGE INCREMENTAL WEIGHT lbs. USABLE CAPACITY80 RANGE 468mi. COST $34, DGE INCREMENTAL WEIGHT lbs. USABLE CAPACITY96 RANGE 562mi. COST $42, DGE INCREMENTAL WEIGHT lbs. RANGE 772mi. COST $61,050 USABLE CAPACITY132 *Based on information gathered during OEM conversations related to CNG packages on behalf of Gemini Motor Transport. Love s Travel Stops Natural Gas Vehicles and Fueling

12 MAINTENANCE CONSIDERATIONS With a limited number of natural gas trucks running today, over-the-road maintenance has yet to be developed on a large scale. Existing maintenance facilities ensure safety in instances of pooling liquid fuels on the ground, however, natural gas rises because it is lighter than air. This requires maintenance providers to upgrade their facilities in accordance with stringent industry and government safety standards. Upgrades include modifications to electrical lighting, air handling, space heaters and ventilation systems, as well as the addition of methane detection equipment. Natural gas trucks running regional lanes will have more maintenance availability than over-the-road trucks running across the country. Regional haulers with sizable repair needs can encourage their local truck dealerships and maintenance providers to modify truck bays. Over-the-road drivers represent a less consistent user in any one area, making it difficult for maintenance providers to justify costly shop upgrades. To reach a conservative estimate for maintenance costs for natural gas trucks, the industry currently adds $0.02 per mile. GALLON EQUIVALENTS Natural gas at standard temperature and pressure is a gas, and as such, cannot be measured in gallons like traditional transportation fuels. The three most common ways to measure natural gas are in volume (standard cubic feet), mass (pounds), and energy content (British thermal units). In 1994, the US National Institute of Standards and Technology (NIST), along with the National Conference of Weights and Measures (NCWM), formed a Compressed Natural Gas Working Group that defined a gasoline gallon equivalent as pounds of natural gas. The working group considered three issues: 1. How to provide the Natural Gas Vehicle (NGV) industry a method of sale that would be familiar and acceptable to consumers 2. How to provide weights and measures officials a verifiable and quantifiable means to determine the accuracy of natural gas dispensers 3. How to meet these requirements with a uniform, national standard The working group considered three proposals to establish a method of sale for CNG: 1. Joules, the unit of energy measurement in SI units 2. Mass 3. The Gasoline Gallon Equivalent (GGE) FAST

13 The energy content of a standard cubic foot (scf) of CNG and a gallon of gasoline can vary depending on temperature, pressure, and supply point. The proxy for gasoline was determined to be Indolene, the gasoline used by the EPA to certify emissions and fuel economy, with a low heating value of 114,118 BTU/gal. Work conducted by the Institute of Gas Technology and the Gas Research Institute surveyed 6,811 samples of natural gas nationwide and concluded that the average natural gas in the US had an energy content (lower heating value) of BTU/scf, and a density of lbs/scf. This translates to 20, BTU/lb. Dividing gasoline s BTU/gal by natural gas s 20, BTU/lb gives lbs of natural gas to equal 1 GGE. The working group, in cooperation with industry representatives, settled on the GGE. The GGE allows easy comparison for retail consumers between mainstream and alternative fuels, and easily allows retail consumers to compare their fuel economy to mainstream fuels. The GGE also established a traceable unit for weights and measure officials to verify retail dispensers, which is easier and less costly than verifying energy content. In 2014, the NCWM and NIST revisited the gallon equivalent with respect to diesel. A Natural Gas Steering Committee was established from a mix of NCWM and NIST officials and industry experts. Industry representatives, led by NGVAmerica and the Clean Vehicle Education Foundation, proposed two standards for a diesel gallon equivalent, both based on mass. For LNG, a diesel gallon equivalent (DGE) was proposed to be 6.06 pounds. For CNG, a DGE was proposed to be 6.38 pounds. The DGE followed very similar logic in establishing the definitions for each fuel. There is a difference in the standard for CNG and LNG, because, while both CNG and LNG go through processes to reduce moisture and other contaminants, LNG goes through extra processes to remove other natural gas liquids from the fuel stream. Essentially, LNG has a higher concentration of methane than CNG therefore a higher BTU content than pipeline natural gas used to make CNG. The standards for DGEs are scheduled for a vote in 2014 at the annual meeting of the NCWM. If passed, the standards will be published and made effective January 1, Sources: Report of the 78th National Conference on Weights and Measures, 1993, NIST Special Publication 854, pp Report of the 79th National Conference on Weights and Measures, 1994, NIST Special Publication 870, pp Program and Committee Reports for the National Conference on Weights and Measures, 79th Annual Meeting, July 17-21, 1994, NCWM Publication 16, pp Report of the 79th National Conference on Weights and Measures, 1994, NIST Special Publication 870, p 214. NIST handbook 130, 2006, Method of State Regulation, and Engine Fuels, Petroleum Products and Automotive Lubricants Regulation, 1.25 and Stacy C. Davis and Susan W. Diegel, Oak Ridge National Laboratory, Transportation Energy Data Book, Edition 31, 2012, ORNL Clean Vehicle Education Foundation, Love s Travel Stops Natural Gas Vehicles and Fueling

14 FUELING STATION OVERVIEW With the exception of space requirements, CNG and LNG stations are very different from each other and as such, should be described independently. Below is an overview of both fueling stations: CNG STATION CNG stations constructed for heavy duty fueling are designed to meet expected volumes over a certain period of time and are scalable when demand increases. The typical footprint for a CNG station is a 20 x60 rectangular piece of property for equipment. If an existing diesel bay is not present, more room is needed for dispensers and a canopy. Unlike diesel or LNG, CNG is created on-site, using large compressors after natural gas arrives via pipeline. CNG dispensers can be placed in existing diesel bays adjacent to diesel and DEF dispensers, enhancing the driver experience. CNG TRAVEL STOP LNG INTEGRATED IN-LANE FUELING DIESEL, DEF RFID CNG,DIESEL DEF, RFID LNG STATION LNG stations require less equipment at each location but take up an equivalent or greater footprint than CNG due to restrictions which prohibit LNG pumps existing in diesel bays. Due to the cryogenic nature of LNG, federal regulations require LNG facilities to be sited a safe distance from adjacent industrial properties, communities and other public areas. This is commonly referred to as the separation distance, as found in the US Code of Federal Regualtions (CFR) 49, Part 193. Most separation distances are greater than 50 feet from any area of public access, as defined by the local fire marshal. LNG stations are typically selfservice, meaning the driver will require special training and personal protection equipment. LNG stations have an above-ground, vertical tank for product storage which can also experience venting, much like a vacuum tank on LNG trucks. In the event an LNG station does not have ratable business, LNG will heat up, causing boil off. This problem can be reduced by delivering another load of cold LNG, however, that requires larger tanks and incurs additional cost. FAST TRAVEL STOP PUBLIC ACCESS AREA LNG LANES SEPARATION DISTANCE LONGER DISTANCE / EXTENDED WAIT TIMES DEF & DIESEL

15 WELCOME TO THE FAST LANE AN INTEGRATED, IN-LANE EXPERIENCE ONLY AT LOVE S Only Love s offers an integrated, in-lane fueling experience for heavy-duty vehicles with the convenience of DEF and cardless radio frequency identification (RFID) fueling in every lane of our travel stops nationwide. Throughout our expanding network of Fast-Fill CNG locations, Love s provides easy, in-lane access to CNG an industry first for convenient fueling from the diesel lane and proven, superior fill times that rival a diesel fueling experience. No other full-service travel stop combines better solutions for fleets and drivers than Love s: fast, easy on-and-off highway access, acceptance of most fleet fuel cards, multiple fuels in one lane and numerous on-site amenities, such as showers, restaurants and more. Love s is committed to meeting the growing needs of our customers in the transportation industry with solutions that save time and money. CELEBRATING 50 YEARS First location opened in Watonga, Oklahoma in Family-owned for 50 years Today, Love s employs more than 10,000 people, operating 300+ fast, clean, friendly locations in 39 states TRUCK TIRE CARE AND LIGHT MECHANICAL SERVICE Nearly 200 Truck Tire Care centers nationwide Extensive selection of the best names in tires, including Michelin, Bridgestone, Goodyear, Continental and Yokohama. Light Mechanical Service with certified technicians Reliable, 24-hour Emergency Roadside Service SECURE, CARDLESS RFID FUELING RFID technology available in every lane at every Love s location Automated ID saves time at the pump Eliminates fuel theft pump automatically shuts off when truck exits the lane Easy installation takes only seconds FAST- CNG Love s newest fueling option for fleets Fourteen CNG-equipped locations scheduled to open in 2014, including the Texas Triangle CNG pumps conveniently located in existing diesel bays Love s Fast-Fill CNG achieves a minimum 10 GGE per minute FAST. CLEAN. FRIENDLY. Love s Travel Stops Natural Gas Vehicles and Fueling

16 FAST FOR MORE INFORMATION CONTACT: FAST Love s Fleet Solutions North Pennsylvania Oklahoma City, OK fleetsolutions@loves.com Copyright 2014 Love s Travel Stops & Country Stores. All rights reserved. Not to be duplicated, copied or redistributed without permission.