Moving the Future on Natural G S William Freeman Energy Consultant wfreeman4@gmail.com 717-418-7484
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Global Competition Increasing 2009 to 2015 CHINA 2.2 up to 10.1 Bbl/Person INDIA 0.9 up to 5.4 Bbl/Person cvfvf Chinese vehicle ownership per capita is estimated to be where the U.S. was in 1925. Source: U.S. Energy Information Administration, Annual Energy Review, 2009
America on the Bottle US consumes 23% of the world s Petroleum. By 2020, the IEA predicts world oil consumption will increase 60% This does not take production decreases into account This means we will need 4 more Saudi Arabias Where will they be? To keep pace with demand and depletion, the world must add 64 million barrels of production per day until 2020: This growth will require $350 billion per year on new projects OPEC only spent $390 billion in total on new projects from 2000-2007 Price inputs based upon historical operating information
GLOBAL COMPETITION INCREASING Source: ExxonMobil The 2013 Outlook for Energy: A view to 2040
Cody Gammon Bakken Baxter/Mancos Mowry Niobrara Antrim Utica Marcellus Mulky Lewis Fayetteville Woodford Barnett/Woodford Barnett Haynesville Eagle Ford/Pearsall Floyd-Neal 90% Supply from U.S. 99% Supply is from N. America Natural gas producing states (32) Non-producing state (18)
Natural Gas is An Answer To Rising Fuel Prices $/bbl Price of Oil vs. Natural Gas $/mcf *(Energy Feedstock Ratio: CNG 8:1, LNG 7:1) If NYMEX is $4.00/mcf CNG will be $1.50/dge ($0.50) LNG will be $2.00/dge ($0.57) If NYMEX is $8.00/mcf CNG will be $2.00/dge ($1.00) LNG will be $2.50/dge ($1.14) If NYMEX is $12.00/mcf CNG will be $2.50/dge ($1.50) LNG will be $3.00/dge ($1.71)
Commercial development of shale resources will provide predictable, sustainable price environments for Shale Production Era Old Sustainable Price Level Sustainable Price Band Encourages and Enables Long- Term Capital Investment Environment; Sustainability Will Benefit Both Producers and Consumers Unsustainable Price Band Inhibits Long- Term Capital Investment and Development; Rigs Lay Down Price Volatility Increases Due to Supply Declines. Consumers Are Impacted Detrimentally
Natural Gas Vehicles Are An Answer To Rising Fuel Prices Gasoline Shaded Area Propane Natural Gas (GGE) Source: DOE Clean Cities Alternative Fuel Price Report - January 2013
Price Stability Example Natural Gas @ $4.00 per MCF Natural Gas @ $8.00 per MCF INPUT COST INPUT COST Natural Gas (divide by 8) $0.50 Transport Costs & Fees $0.20 Electricity Costs per GGE $0.10 Maintenance per GGE $0.20 Federal and State Taxes $0.25 Fuel Card Fees per GGE $0.05 Retailer Profit Margin $0.40 CNG at the Pump $1.70 Natural Gas (divide 8) $1.00 Transport Costs & Fees $0.20 Electricity Costs per GGE $0.10 Maintenance per GGE $0.20 Federal and State Taxes $0.25 Fuel Card Fees per GGE $0.05 Retailer Profit Margin $0.40 CNG at the Pump $2.20 The Price per MCF on August 21, 2013 was $3.54 Using these same numbers, the price per gge would be $1.64
FUEL PRICE DIFFERENTIAL FORECAST Source: TIAX Report : U.S. and Canadian Natural Gas Vehicle Market Analysis, May 2, 2011
Today s Objectives 1. World Competition for Energy Resources 2. Domestic Natural Gas Abundance a) Natural Gas Price Stability 3. Global NGV s a) Why the world is converting to Natural Gas b) Natural Gas Vehicle Options 4. Fleet Owner s Dream 5. Detroit s NGV Plans 6. Conversion Cost 7. Break-Even Analysis a) Don t Forget the Residual! 8. Chesapeake Fleet Example 9. What s Inside an NGV? 10. Infrastructure a) Retail vs Private
WHERE IN THE WORLD? Original Source: http://www.iangv.org/current-ngv-stats/
Natural Gas Stations in Pennsylvania
NATURAL GAS VEHICLES BY REGION Source: NGV Global, 2012 www.iangv.org
GM CNG VEHICLES AVAILABLE GLOBALLY
CHRYSLER GROUP/FIAT NGVS
NGVs with Zero cargo space loss
NATURAL GAS IN TRANSPORTATION Natural Gas is CLEAN Mostly methane, only one carbon atom Reduces GHG by 21-27% Reduces particulate matter by up to 95% Natural Gas is SAFE Higher ignition temperature than diesel or gasoline (1000 1100 degrees F) Narrow range of oxygen/fuel combustion ratio (5-15%) Highly engineered tanks and components Lighter than air Dissipates into atmosphere quickly Natural Gas is POWERFUL Octane rating of ~130 HD natural gas engines have equivalent torque and horsepower to diesel counterparts Source: US Dept. of Energy Argonne National Laboratory Report: A Full-Cycle Analysis of Energy and Emissions Impacts of Transportation Fuels Produced from Natural Gas, Dec. 1999
THE BENEFITS OF NATURAL GAS VEHICLES NGVs are proven and reliable 15 million NGVs in use worldwide (only 120,000 in the U.S.) Many fleets are already adopting 11,000 transit buses (1 in 4 on order) 4,000 refuse trucks (40% of new orders) 3,000 school buses 20,000 medium duty vehicles 30,000 light duty vehicles NGVs are quiet HD 80-90% lower DB than diesel NGV life-cycle costs are lower Fuel Costs Maintenance Costs
CNG AND LNG BASICS
TODAY S OBJECTIVES 1. World Competition for Energy Resources 2. Domestic Natural Gas Abundance a) Natural Gas Price Stability 3. Global NGV s a) Why the world is converting to Natural Gas b) Natural Gas Vehicle Options 4. Fleet Owner s Dream 5. Detroit s NGV Plans 6. Conversion Cost 7. Break-Even Analysis a) Don t Forget the Residual 8. What s Inside an NGV? 9. Infrastructure a) Retail vs Private
NGVS ARE A FLEET OWNER S DREAM Local/State Governments Airports Terminal Buses, Shuttles, Taxis, Tarmac Vehicles Refuse Collection, Recycling Transit City Buses, Maintenance, Shuttles School Districts Buses, Vans, Maintenance Short Haul Delivery Food & Beverage Distributors, Postal, Newspapers, Linens, Uniforms, Regional Freight Utilities & Telecom Gas/Electric/Water, Communications Small Businesses Plumbers, Electricians, Florists, Service Companies Energy Companies
Ford: Alternative Fuel Buyers Guide OEM Gaseous Engine Solutions 2.0L 4.6L 5.4L 6.8L 4,965 lbs GVWR 36,000 lbs GVWR 1. Dealer and customer determine appropriate vehicle based on application, payload and range 2. Dealer places vehicle order, and vehicle is delivered to upfitter 3. Upfitter installs alternative fuel components and system 4. Vehicle is delivered to dealer and dealer delivers vehicle to customer
FORD F150: COMING Q4 2013 3.7L V6 only
CHEVROLET SILVERADO AND GMC SIERRA Chevrolet Silverado and GMC Sierra 2500 GM is currently taking orders for MY 2013 GM predicts a 650-mile range between fill-ups
RAM 2500 HD CNG PICKUP
AMERICAN HONDA CIVIC GX Introduced in 1998 Produced on the same factory line in Indiana as the other 4-door Civics Same factory warranty, same 5-star safety rating GGE = approximately 8 gallons 27 mpg city / 38 mpg highway / 31 mpg combined The Honda Civic Natural gas was named Greenest vehicle by the ACEEE (American Council for Energy-Efficient Economy) for 8 years in a row!
OVER-THE-ROAD PLATFORM OFFERINGS Cummins Westport ISL-G 8.9L Volvo Kenworth T440 Kenworth T800SH Kenworth W900S Freightliner M2 Peterbilt 384 International Transtar, Workstar Cummins Westport ISX-G 11.9L Volvo VN Series Mack Pinnacle Kenworth T660 Freightliner Cascadia Peterbilt International Prostar+, Workstar Westport HD GX 15L Kenworth T800 Peterbilt 386 Peterbilt 388
PICKUP BREAK EVEN ANALYSIS Ford F-250 15 mpg 30,000 miles per year 2,000 GGE/year Cost Premium: $9,000 OK Tax Credit: $4,500 Bi-Fuel CNG/Gasoline At Fuel Differential of $1.50 Simple payback in 1.5 years (w/ tax credit) Simple payback in 3 years (w/o tax credit) Net Life Cycle Savings: $10,500 5 year lifespan
CONCERNED ABOUT CNG RESALE VALUE? Don t be; Resale value of cng vehicles are promising!!! Vehicle Type Mileage Fair Market Value Gross Sale Premium CNG Kit Residual Value 2010 2500 Series 4WD 89.2K $16,800 $22,000 $5,200 57.8% 2010 2500 Series 4WD 86.6K $17,000 $22,900 $5,900 65.6% 2010 2500 Series 4WD 85.9K $17,100 $22,200 $5,100 56.7% 2010 2500 Series 4WD 109.3K $16,500 $20,000 $3,500 38.9% 2010 2500 Series 4WD 92.3K $17,000 $22,700 $5,700 63.3% 2010 2500 Series 4WD 60.4K $20,000 $24,900 $4,900 54.4% 2010 2500 Series 4WD 90.5K $17,250 $22,900 $5,650 62.8% 2010 2500 Series 4WD 98.5K $16,500 $21,200 $4,700 52.2% 2010 2500 Series 4WD 100.5K $16,500 $22,300 $5,800 64.4% 2010 2500 Series 4WD 93.7K $16,500 $22,600 $6,100 67.8% 2010 2500 Series 4WD 106.5K $16,500 $21,200 $4,700 52.2% 2010 2500 Series 4WD 98.7K $15,100 $21,500 $6,400 71.1% 2010 2500 Series 4WD 98.5K $16,500 $20,000 $3,500 38.9% 2009 1500 Series 4WD 5K $23,300 $27,100 $3,800 42.2% 2009 HONDA CIVIC 3K $15,500 $18,600 $3,100 47.7% 2009 HONDA CIVIC 25.3K $14,700 $18,000 $3,300 50.8% 2009 HONDA CIVIC 73.4K $8,700 $14,700 $6,000 92.3% 2009 HONDA CIVIC 87.1K $7,900 $14,000 $6,100 93.8% 2009 HONDA CIVIC 86.6K $7,900 $14,000 $6,100 93.8% 2009 HONDA CIVIC 140.1K $4,200 $7,700 $3,500 53.8% Average Residual 61.0% Truck Incremental CNG Conversion Kit Cost $9,000 Honda Incremental CNG Factory Option Cost $6,500
Complete Life Cycle Cost 2500 Series Cost Savings Per Mile @ 13 MPG $0.04 Savings Per GGE $1.25 $1.50 $2.00 Total Mileage 90k Miles 150k Miles 175k Miles 90k Miles 150k Miles 175k Miles 90k Miles 150k Miles 175k Miles Vehicle Purchase Price $46,530 $46,530 $46,530 $46,530 $46,530 $46,530 $46,530 $46,530 $46,530 Resale Value ($23,265) ($13,959) ($11,633) ($23,265) ($13,959) ($11,633) ($23,265) ($13,959) ($11,633) Resale Value % 50% 30% 25% 50% 30% 25% 50% 30% 25% Total Fuel Spend $14,538 $24,231 $28,269 $14,885 $24,808 $28,942 $15,577 $25,962 $30,288 Total Fuel Gallons Purchase 6,923 11,538 13,462 6,923 11,538 13,462 6,923 11,538 13,462 CNG Utilization 80% 80% 80% 80% 80% 80% 80% 80% 80% Total Maintenance $7,000 $16,000 $20,000 $7,000 $16,000 $20,000 $7,000 $16,000 $20,000 Total Operating Cost $21,538 $40,231 $48,269 $21,885 $40,808 $48,942 $22,577 $41,962 $50,288 Operating Cost Per Mile $0.24 $0.27 $0.28 $0.24 $0.27 $0.28 $0.25 $0.28 $0.29 Total Life Cycle Cost w/o Tax Credit $44,803 $72,802 $83,167 $45,150 $73,379 $83,840 $45,842 $74,533 $85,186 Total Cost Per Mile w/o Tax Credit $0.50 $0.49 $0.48 $0.50 $0.49 $0.48 $0.51 $0.50 $0.49 Total Life Cycle Cost Benefit Gas vs. Bi-Fuel CNG w/o Tax Credit ($2,433) ($5,252) ($6,727) ($3,818) ($7,560) ($9,419) ($6,587) ($12,176) ($14,803) Cost Per Mile Benefit Gas vs. Bi-Fuel CNG w/o Tax Credit ($0.03) ($0.04) ($0.04) ($0.04) ($0.05) ($0.05) ($0.07) ($0.08) ($0.08) Cost Per Mile Benefit Gas vs. Bi-Fuel CNG w/ Tax Credit ($0.08) ($0.06) ($0.06) ($0.09) ($0.08) ($0.08) ($0.12) ($0.11) ($0.11)
CNG CONVERSION KIT AFFORDABILITY Note: Cost excludes any State or Federal Tax Credits
RETAILERS ARE INTERESTED IN CNG 4,900 6,523 List retailers represent over 12,400 total locations
MOU SIGNED BY MULTIPLE GOVERNORS Governors sign Memorandum of Understanding on November 9, 2011 to convert their states transportation fleets to CNG. 16 Governors joined WY, CO, UT, NM, OK, TX, AR, LA, MS, TN, KY, VA, PA, ME, OH, WV 23 State Purchasing Directors Dealers in 28 states are participating Goal is to create a critical mass of fleet vehicle purchases to entice auto makers to manufacture more affordable NGVs. Total fleet between states of more than 100,000 vehicles Learn more at: http://www.ok.gov/governor/
Contact Information William Freeman Energy Consultant wfreeman4@gmail.com 717-418-7484