NGV Day 2015 CNG An Attractive Fuel for UK Transportation
Q: How can CH 4 (methane) achieve widespread UK adoption as a transportation fuel? A: CH 4 hasto be significantly less costlyand have a lower carbon footprintthan diesel
CNG Fuels Who Are We? CNG Fuels aspires to be the UK s leading owner and operator of Compressed Natural Gas (CNG) refuelling infrastructure Owners of the UK s highest capacity CNG station, located in Crewe, which was previously owned by our affiliated company CNG Services Developing the UK s first CNG station that is connected to the highpressure (LTS) pipeline grid close to Leyland (J28/M6) Multiple additional LTS-connected CNG stations in development CNG supplier to Brit European s off-grid daughter station located close to Scunthorpe (expected operational November 2015) CNG Fuels Ltd Page 3
Benefits of Methane as a Vehicle Fuel A dedicated natural gas engine has the following benefits: Ultralow emissions - Euro 6 demand confirmed in WHTC test Considerably less noise than a diesel engine Estimated 18% lower tail-pipe GHG compared to diesel NOTE If same efficiency as diesel would be 28% lower GHG 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 - WHTC Test Cycle for Scania 9 Litre Dedicated Gas Engine (g/kwh) 4.00 0.46 0.50 0.32 0.46 0.38 0.0100.007 CO CH4 NOX PM Source: Scania Euro VI Demand Scania 9-litre CNG Fuels Ltd Page 4
Compressed Natural Gas (CNG) vs Liquefied Natural Gas (LNG) CNG and LNG are both predominantly made up of methane Production, distribution and storage are very different, which influences the cost and environmental credentials of each fuel CNG Advantages Lower cost fuel Simple refuelling procedure No boil-off/venting issues Low CO2eq footprint from LTS Bio-CNG option LNG Advantages Greater range for 6 x 2 trucks Station location does not rely on natural gas grid Liquefied biomethane option CNG Fuels Ltd Page 5
Lessons From North America North American transportation industry started down the LNG route in 2010/2011, main arguments being: LNG offers greater range for HGVs with CNG vehicles only seen as suitable for shorter distances & urban distribution Easier to locate LNG stations as they could be sited independently of gas pipelines and would require less electricity to run Today 85-90% of over the road NGV transport in North America has opted for CNG. What happened: Apply to the UK? Lessons From North America CNG is typically 15-20% lower cost than LNG Majority of fleets operate within a range that is achievable with a CNG tractor unit OEM and CNG fuel system providers have developed more efficient CNG systems offering a significant increase in range CNG is seen as a greener (no venting issues and lowest WTW emissions) and safer fuel (no PPE required) No shortage of locations that offer access to natural gas pipelines, good electricity supply and highway accessibility CNG Fuels Ltd Page 6
Benefits of the LTS High-Pressure Natural Gas Grid The LTS high-pressure grid provides the following advantages: Close to zero methane leakage and the lowest WTW emissions of any gas option potentially 25% lower than diesel Approx. 75% less kwh required to compress CNG, which significantly reduces the CO2eq. footprint of the CNG station and lowers OPEX Less CAPEX required as 2 compressors can deliver 6-8 times as much CNG as 3 or 4 compressors on the lower pressure grid Lower OPEX & CAPEX means lower cost fuel CNG Fuels Ltd Page 7
Leyland LTS CNG Station - Overview Leyland LTS CNG station can refuel 500+ HGVs/day and supply 100% renewable Bio-CNG to customers such as Waitrose Unmanned and accessible 24/7/365 Scheduled to open in December 2015 and will be equipped with: 2 CNG compressors with a total annual capacity of 25 million kg 2 refuelling lanes with 4 independent fast-fill refuelling dispensers 2 separate loading bays offering fast-fill for CNG trailers CNG Fuels would like to thank National Grid for their STRONG SUPPORT in bringing this project forward from concept to reality Area for CNG Station LTS (HP Pipeline) CNG Fuels Ltd Page 8
Leyland LTS CNG Station Before Photos CNG Fuels Ltd Page 9
Leyland LTS CNG Station Progress Photos CNG Fuels Ltd Page 10
Economics How Competitive is Methane as a Fuel? Industry tells us the payback period for additional cost of natural gas vehicles (dedicated or dual-fuel) has to be less than 2-2.5 years The adoption rate surged in North America when the payback period was no more than 2 years Now let s do some simple math: Additional Cost of Dedicated Gas Truck = 30,000 (CNG Fuels estimate) Prevailing Diesel Price = 0.85/litre (FTA bulk diesel) Annual Mileage = 100.000 miles MPG = 9.0 Annual Fuel Cost = 42,935 Fuel Savings Per Year For 2 year payback = 15,000, or 35% below current cost of diesel However, a dedicated gas engine is currently around 10% less efficient compared to a diesel engine, so the fuel cost saving has to be closer to 40% to achieve a 2-year payback period CNG Fuels Ltd Page 11
Is 2-year Payback Feasible With a Low Diesel Price? In energy eq. terms a 40% fuel cost saving means a diesel price of 51 pence/litre. Is this achievable from a natural gas refuelling facility? The answer is YES, CNG can be dispensed from LTS-connected CNG stations at diesel equivalent prices below 51 pence/litre, ensuring a 2-year payback period even in a low diesel price environment A CNG station operates on an unmanned basis and draws gas from the grid (no trucks required to bring fuel to site) and achieves attractive economies of scale as OPEX drops significantly per kg CNG dispensed as utilisation of the station increases 120.0 100.0 CNG From LTS vs Diesel ( /ltr eq.) The spread has remained wide despite a 50% fall in underlying crude price 80.0 60.0 Spread- 52% Spread- 40% 40.0 20.0 - CNG Diesel 19/09/2014 19/09/2015 CNG Fuels Ltd Page 12
CNG Stations Are Ideal for Dispensing Renewable Gas A CNG station can dispense two types of CNG: CNG, is fossil natural gas that currently makes up the vast majority of gas in the UK grid. An LTS-connected CNG station will minimise WTW emissions and thereby provide a greener fossil fuel Bio-CNG, is 100% renewable biomethane from an AD plant that is injected into the pipeline grid. Can be sold at grid-connected CNG stations when accompanied by Green Gas Certificates Biomethane is a wonderful local resource that is already available in the gas grid and it can play a key role in decarbonising UK transport By year end 2015 a growing number of UK AD plants will have the capacity to inject 150,000 tons of biomethane/year into the grid. Enough fuel for approx. 4,000 dedicated gas HGVs or 7 8,000 dualfuel vehicles Source: CNG Services CNG Fuels Ltd Page 13
Summary CNG is not only a fuel for urban distribution, buses and refuse applications, it is also an attractive fuel for traditional haulage operations In order to achieve a widespread UK adoption rate as an HGV fuel, methane has to be significantly less costly and have a lower carbon footprint than diesel Cost premiums for natural gas vehicle technology (dedicated or dualfuel) are likely to be reduced as production volume increases. However, until such a point in time adoption rates are likely to require payback periods of approx. 2 years CNG stations utilising the LTS gas grid can dispense Bio-CNG or fossil CNG at a price point that offers compelling economics and is supportive of adoption rates, even in a low diesel price environment CNG Fuels Ltd Page 14
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