COMPRESSED NATURAL GAS (CNG)

July 18, 2015


The United States has longed for energy independence for years now.  The need to lessen or eliminate reliance on foreign sources for petroleum products by developing alternate fuels is now coming to fruition.  The question is: Will compressed natural gas be a future source of energy for the internal combustion engine?  Resources Magazine thinks so.  Let’s take a quick look at the assessment from Alan J. Krupnick, Senior Fellow and Co-Director, RFF’s Center for Energy and Climate Economics.

“Natural gas holds the promise of reducing carbon emissions and dependence on oil. But until recently, it was an also-ran in the sweepstakes for transforming fuel costs and transportation in the United States. The new abundance of domestically available shale gas and continuingly high gasoline and diesel prices could change that. Will these developments be enough to extend the reach of natural gas vehicles beyond buses, garbage trucks, and delivery trucks?”

I feel his conclusions indicate CNG is a very viable alternative for local delivery vans and trucks as well as “the big rigs”.  Other information substantiates his conclusion.  From this, we can see the following.

Industry Analysis

The CNG market has grown at the rate of 3.7% since 2000. The market for these products has experienced slow growth to due to: 1.) availability of the products, 2.) heat build-up during the compression process, 3.) time delays in the refilling process and 4.) the expense of locating CNG at the market locations. The areas of greatest growth in the CNG market are in the area of transporters that possess fleets (Tractor Trailers), Straight Trucks, and Public Transportation such as school and/or city buses. California and Texas lead the way with CNG fueling stations on a national level. There are approximately 1,300 CNG fueling stations in the US today; however, 730 are public stations with the remainder private fleet stations. There are currently less than 10 public CNG filling stations within the Tri-State area of Tennessee, Georgia, and Alabama. Southeast Tennessee currently has no CNG fueling stations. The industry is rapidly changing as the 2014 EPA NHTSA Heavy Duty Truck Program has been put in place by president Obama. This legislation has forced fleet and fuel managers to reduce emissions as well as increase fuel efficiency. Small savings have been made by reducing drag, adequate tire pressure, and reduced idling practices. CNG is a “game changing” modification that addresses the new standards that are currently in place as well as future reductions that are scheduled for 2018. We will adopt a customer centric approach that addresses the needs of the immediate market based on available original equipment and after market manufacturers. Some industry pundits have estimated CNG will realize 25% annual growth for the next 5 to 10 years on a conservative level.

Market Segment

Key points in defining the market segment for CNG are existing markets and projected future markets. Electric power and industrial markets make up almost 60% of the current consumer market. Existing markets include the fields of Agriculture, Industrial, and Motor Fuel in a static environment. Projected markets include opportunities in a more mobile environment. Transportation appears to be the most likely segment to grow as it makes up less than 1% of total natural gas used. Currently, the market is distributed with limited, if any, diversity of participants. Trending for share gains and losses typically represents large potential for gains across the entire industry. Share losses are predominantly absorbed by the diesel fuel and propane distributors, as recent supply shortages have clearly proven in the motor fuel and poultry industries. Market share will be lost by the above mentioned industries due to loss of confidence by the respective customer bases. The current and projected trends in the motor fuel industry are now driven by the Tier II Fuel Initiative causing off road diesel fuel to be banned in the near future. The result of the ban will continue to be increases in motor fuel pricing. As motor fuel costs increase, CNG becomes not only the clean alternative fuel replacement, but also the affordable alternative. CNG cuts the cost of a diesel equivalent gallon by as much as 50% based on the volatile and often fluctuating diesel market. Also, CNG is a much more effective fuel in cold weather areas as opposed to diesel and the multiple problems which exist.

The implied trends in the propane and agricultural industries currently indicate an extended, long-term propane supply shortage. The result is that CNG becomes the efficient, clean energy solution by cutting propane costs by 25 to 50%. Users of CNG are looking for quality and productivity improvements. The history of CNG development has resulted in the need for creative technology solutions that enable the full application of the CNG Natural Gas Industry. Recent patenting and innovation that Cielo has identified allows CAF to operate more efficiently than diesel or propane. The stability of this market segment is solid, based on CNG product category performance over the past two years. The forecasters predict an exponential growth over the next two years.

CNG STATION:

With this in mind, Cielo Technologies, LLC has entered into a partnership to “sink” one CNG station in the Chattanooga area.  Land has been purchased, layouts determined, zoning completed, and site preparation underway.  Right now, the area selected does not look like much.  The following JPEGs will illustrate that fact.  I intend to give you progress reports as we erect the facility and hopefully in five months, show you the completed and operating compound.  Let’s take a very quick look at the site itself.

ENTERANCE DRIVE

The first digital shows the proposed entry to the station itself.  As I mentioned, not much to look at and definitely needs considerable attention—that attention is on the way.

EXIT DRIVE

This is the proposed exit from the facility.  We feel less confusion will be the order of the day if we have one way in and one way out.

GROUND SITE

There will be three (3) pumping stations installed on a concrete island located left to right on the JPEG above.  Room enough for three “18 wheelers”.

LOCATION OF PUMPING STATION(2)

Another look at the pumping station locations.  The CNG compressors and storage will be to the right of the pumping stations.  All piping will be underground and unexposed to the elements.  We opted to go hard-wire instead of Wi-Fi due to possible interruption of service.

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