One source for this post is Forbes Magazine article, ” U.S. Dependence on Foreign Oil Hits 30-Year Low”, by Mr. Mike Patton.  Other sources were obviously used.

The United States is at this point in time “energy independent”—for the most part.   Do you remember the ‘70s and how, at times, it was extremely difficult to buy gasoline?  If you were driving during the 1970s, you certainly must remember waiting in line for an hour or more just to put gas in the ol’ car? Thanks to the OPEC oil embargo, petroleum was in short supply. At that time, America’s need for crude oil was soaring while U.S. production was falling. As a result, the U.S. was becoming increasingly dependent on foreign suppliers. Things have changed a great deal since then. Beginning in the mid-2000s, America’s dependence on foreign oil began to decline.  One of the reasons for this decline is the abundance of natural gas or methane existent in the US.

“At the rate of U.S. dry natural gas consumption in 2015 of about 27.3 Tcf (trillion cubic feet) per year, the United States has enough natural gas to last about 86 years. The actual number of years will depend on the amount of natural gas consumed each year, natural gas imports and exports, and additions to natural gas reserves. Jul 25, 2017”

For most of the one hundred and fifty (150) years of U.S. oil and gas production, natural gas has played second fiddle to oil. That appeared to change in the mid-2000s, when natural gas became the star of the shale revolution, and eight of every 10 rigs were chasing gas targets.

But natural gas turned out to be a shooting star. Thanks to the industry’s incredible success in leveraging game-changing technology to commercialize ultralow-permeability reservoirs, the market was looking at a supply glut by 2010, with prices below producer break-even values in many dry gas shale plays.

Everyone knows what happened next. The shale revolution quickly transitioned to crude oil production, and eight of every ten (10) rigs suddenly were drilling liquids. What many in the industry did not realize initially, however, is that tight oil and natural gas liquids plays would yield substantial associated gas volumes. With ongoing, dramatic per-well productivity increases in shale plays, and associated dry gas flowing from liquids resource plays, the beat just keeps going with respect to growth in oil, NGL and natural gas supplies in the United States.

Today’s market conditions certainly are not what had once been envisioned for clean, affordable and reliable natural gas. But producers can rest assured that vision of a vibrant, growing and stable market will become a reality; it just will take more time to materialize. There is no doubt that significant demand growth is coming, driven by increased consumption in industrial plants and natural gas-fired power generation, as well as exports, including growing pipeline exports to Mexico and overseas shipments of liquefied natural gas.

Just over the horizon, the natural gas star is poised to again shine brightly. But in the interim, what happens to the supply/demand equation? This is a critically important question for natural gas producers, midstream companies and end-users alike.

Natural gas production in the lower-48 states has increased from less than fifty (50) billion cubic feet a day (Bcf/d) in 2005 to about 70 Bcf/d today. This is an increase of forty (40%) percent over nine years, or a compound annual growth rate of about four (4%) percent. There is no indication that this rate of increase is slowing. In fact, with continuing improvements in drilling efficiency and effectiveness, natural gas production is forecast to reach almost ninety (90) Bcf/d by 2020, representing another twenty-nine (29%) percent increase over 2014 output.

Most of this production growth is concentrated in a few extremely prolific producing regions. Four of these are in a fairway that runs from the Texas Gulf Coast to North Dakota through the middle section of the country, and encompasses the Eagle Ford, the Permian Basin, the Granite Wash, the SouthCentral Oklahoma Oil Play and other basins in Oklahoma, and the Williston Basin. The other major producing region is the Marcellus and Utica shales in the Northeast. Almost all the natural gas supply growth is coming from these regions.

We are at the point where this abundance can allow US companies to export LNG or liquified natural gas.   To move this cleaner-burning fuel across oceans, natural gas must be converted into liquefied natural gas (LNG), a process called liquefaction. LNG is natural gas that has been cooled to –260° F (–162° C), changing it from a gas into a liquid that is 1/600th of its original volume.  This would be the same requirement for Dayton.  The methane gas captured would need to be liquified and stored.  This is accomplished by transporting in a vessel similar to the one shown below:

As you might expect, a vessel such as this requires very specific designs relative to the containment area.  A cut-a-way is given below to indicate just how exacting that design must be to accomplish, without mishap, the transportation of LNG to other areas of the world.

Loading LNG from storage to the vessel is no easy manner either and requires another significant expenditure of capital.

For this reason, LNG facilities over the world are somewhat limited in number.  The map below will indicate their location.

A typical LNG station, both process and loading may be seen below.  This one is in Darwin.

CONCLUSIONS:

With natural gas being in great supply, there will follow increasing demand over the world for this precious commodity.  We already see automobiles using LNG instead of gasoline as primary fuel.  Also, the cost of LNG is significantly less than gasoline even with average prices over the US being around $2.00 +++ dollars per gallon.  According to AAA, the national average for regular, unleaded gasoline has fallen for thirty-five (35) out of thirty-six (36) days to $2.21 per gallon and sits at the lowest mark for this time of year since 2004. Gas prices continue to drop in most parts of the country due to abundant fuel supplies and declining crude oil costs. Average prices are about fifty-five (55) cents less than a year ago, which is motivating millions of Americans to take advantage of cheap gas by taking long road trips this summer.

I think the bottom line is: natural gas is here to stay.

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I want us to consider a “what-if” scenario.  You are thirty-two years old, out of school, and have finally landed a job you really enjoy AND you are actually making money at that job. You have your expenses covered with “traveling money” left over for a little fun.  You recently discovered the possibility that Social Security (SS), when you are ready to retire, will be greatly reduced if not completely eliminated. You MUST start saving for retirement and consider SS to be the icing on the cake if available at all.  QUESTION: Where do you start?  As you investigate the stock markets you find stocks seem to be the best possibility for future income.  Stocks, bonds, “T” bills, etc. all are possibilities but stocks are at the top of the list.

People pay plenty of money for consulting giants to help them figure out which technology trends are fads and which will stick. You could go that route, or get the same thing from the McKinsey Global Institute’s in-house think-tank for the cost of a new book. No Ordinary Disruption: The Four Global Forces Breaking All the Trends, was written by McKinsey directors Richard Dobbs, James Manyika, and Jonathan Woetzel, and offers insight into which developments will have the greatest impact on the business world in coming decades. If you chose stocks, you definitely want to look at technology sectors AND consider companies contributing products to those sectors.  The following list from that book may help.  Let’s take a look.

Below, we’re recapping their list of the “Disruptive Dozen”—the technologies the group believes have the greatest potential to remake today’s business landscape.

Batteries

energy-storage

The book’s authors predict that the price of lithium-ion battery packs could fall by a third in the next 10 years, which will have a big impact on not only electric cars, but renewable energy storage. There will be major repercussions for the transportation, power generation, and the oil and gas industries as batteries grow cheaper and more efficient.  Battery technology will remain with us and will contribute to ever-increasing product offerings as time goes by.  Companies supplying this market sector will only increase in importance.

Genomics

genomics

As super computers make the enormously complicated process of genetic analysis much simpler, the authors foresee a world in which “genomic-based diagnoses and treatments will extend patients’ lives by between six months and two years in 2025.” Sequencing systems could eventually become so commonplace that doctors will have them on their desktops.  This is a rapidly growing field and one that has and will save lives.

Material Science

advanced-materials

The ability to manipulate existing materials on a molecular level has already enabled advances in products like sunglasses, bike frames, and medical equipment. Scientists have greater control than ever over nanomaterials in a variety of substances, and their understanding is growing. Health concerns recently prompted Dunkin’ Donuts to remove nanomaterials from their food. But certain advanced nanomaterials show promise for improving health, and even treating cancer. Coming soon: materials that are self-healing, self-cleaning, and that remember their original shape even if they’re bent.

Self-Driving or Autonomous Automobiles

self-driving-vehicles

Autonomous cars are coming, and fast. By 2025, the “driverless revolution” could already be “well underway,” the authors write. All the more so if laws and regulations in the U.S. can adapt to keep up. Case in point: Some BMW cars already park themselves. You will not catch me in a self-driving automobile unless the FED and the auto maker can assure me they are safe.  Continuous effort is being expended to do just that.  These driverless automobiles are coming and we all may just as well get used to it.

Alternate Energy Solutions

reneuable-energy

Wind and solar have never really been competitive with fossil fuels, but McKinsey predicts that status quo will change thanks to technology that enables wider use and better energy storage. In the last decade, the cost of solar energy has already fallen by a factor of 10, and the International Energy Agency predicts that the sun could surpass fossil fuels to become the world’s largest source of electricity by 2050.  I might include with wind and solar, methane recovery from landfills, biodiesel, compressed natural gas, and other environmentally friendly alternatives.

Robotic Systems

advanced-robotics

The robots are coming! “Sales of industrial robots grew by 170% in just two years between 2009 and 2011,” the authors write, adding that the industry’s annual revenues are expected to exceed $40 billion by 2020. As robots get cheaper, more dexterous, and safer to use, they’ll continue to grow as an appealing substitute for human labor in fields like manufacturing, maintenance, cleaning, and surgery.

3-D Printing

3-d-printing

Much-hyped additive manufacturing has yet to replace traditional manufacturing technologies, but that could change as systems get cheaper and smarter. “In the future, 3D printing could redefine the sale and distribution of physical goods,” the authors say. Think buying an electric blueprint of a shoe, then going home and printing it out. The book notes that “the manufacturing process will ‘democratize’ as consumers and entrepreneurs start to print their own products.”

Mobile Devices

mobile-internet

The explosion of mobile apps has dramatically changed our personal experiences (goodbye hookup bars, hello Tinder), as well as our professional lives. More than two thirds of people on earth have access to a mobile phone, and another two or three billion people are likely to gain access over the coming decade. The result: internet-related expenditures outpace even agriculture and energy, and will only continue to grow.

Artificial Intelligence

automation-of-knowledge

It’s not just manufacturing jobs that will be largely replaced by robots and 3D printers. Dobbs, Manyika, and Woetzel report that by 2025, computers could do the work of 140 million knowledge workers. If Watson can win at “Jeopardy!” there’s nothing stopping computers from excelling at other knowledge work, ranging from legal discovery to sports coverage.

 

The Internet of Things (IoT)

iot

Right now, 99% of physical objects are unconnected to the “internet of things.” It won’t last. Going forward, more products and tools will be controlled via the internet, the McKinsey directors say, and all kinds of data will be generated as a result. Expect sensors to collect information on the health of machinery, the structural integrity of bridges, and even the temperatures in ovens.

Cloud Technology

cloud-technology

The growth of cloud technology will change just how much small businesses and startups can accomplish. Small companies will get “IT capabilities and back-office services that were previously available only to larger firms—and cheaply, too,” the authors write. “Indeed, large companies in almost every field are vulnerable, as start-ups become better equipped, more competitive, and able to reach customers and users everywhere.”

Oil Production

advanced-oil-technology

The International Energy Agency predicts the U.S. will be the world’s largest producer of oil by 2020, thanks to advances in fracking and other technologies, which improved to the point where removing oil from hard-to-reach spots finally made economic sense. McKinsey directors expect increasing ease of fuel extraction to further shift global markets.  This was a real surprise to me but our country has abundant oil supplies and we are already fairly self-sufficient.

Big Data

big-data

There is an ever-increasing accumulation of data from all sources.  At no time in our global history has there been a greater thirst for information.  We count and measure everything now days with the recent election being one example of that very fact.  Those who can control and manage big data are definitely ahead of the game.

CONCLUSION:  It’s a brave new world and a world that accommodates educated individuals.  STAY IN SCHOOL.  Get ready for what’s coming.  The world as we know it will continue to change with greater opportunities as time advances.  Be there.  Also, I would recommend investing in those technology sectors that feed the changes.  I personally don’t think a young investor will go wrong.

INTELLIGENT FLEET SOLUTIONS

October 16, 2016


Ever been on an Interstate?  Ever travel those highways WITHOUT seeing one of the “big rigs”?  I don’t think so. I have a commute every day on Interstate 75 and even at 0530 hours the heavy-duty truck traffic is significant.  As I travel that route, I pass two rest stops dedicated solely for drivers needing to take a break.  They are always full; lights on, engines running. (More about that later.)

Let’s take a very quick look at transportation in the United States to get calibrated as to the scope and breadth of the transportation industry. (NOTE: The following information comes from TruckInfo.net.)

  • How big is the trucking industry?
    The trucking companies, warehouses and private sector in the U.S. employs an estimated 8.9 million people employed in trucking-related jobs; nearly 3.5 million were truck drivers. Of this figure UPS employs 60,000 workers and 9% are owner operators.  LTL shippers account for around 13.6 percent of America’s trucking sector.
  • How many trucks operate in the U.S.?
    Estimates of 15.5 million trucks operate in the U.S.  Of this figure 2 million are tractor trailers.
  • How many truckers are there?
    It is an estimated over 3.5 million truck drivers in the U.S.  Of that one in nine are independent, a majority of which are owner operators. Canada has in excess of 250,000 truck drivers.
  • How many trucking companies are there in the U.S.?
    Estimates of 1.2 million companies in the U.S. Of that figure 97% operate 20 or fewer while 90% operate 6 or fewer trucks.
  • How many miles does the transportation industry transports good in a year?
    In 2006 the transportation industry logged 432.9 billion miles. Class 8 trucks accounted for 139.3 billion of those miles, up from 130.5 billion in 2005
  • What is the volume of goods transported by the trucking industry?
    The United States economy depends on trucks to deliver nearly 70 percent of all freight transported annually in the U.S., accounting for $671 billion worth of manufactured and retail goods transported by truck in the U.S. alone. Add $295 billion in truck trade with Canada and $195.6 billion in truck trade with Mexico.

As you can see, the transportation industry, moving products from point “A” to point “B” by truck, is HUGE—absolutely HUGE.    With this being the case, our country has established goals to improving gas mileage for passenger cars, light trucks and heavy-duty trucks.  These goals are dedicated to improving gas mileage but also goals to reduce emissions.  Let’s take a look.

Passenger Car and Light Truck Standards for 2017 and beyond

In 2012, NHTSA established final passenger car and light truck CAFE standards for model years 2017-2021, which the agency projects will require in model year 2021, on average, a combined fleet-wide fuel economy of 40.3-41.0 mpg. As part of the same rulemaking action, EPA issued GHG standards, which are harmonized with NHTSA’s fuel economy standards that are projected to require 163 grams/mile of carbon dioxide (CO2) in model year 2025.  EPA will reexamine the GHG standards for model years 2022-2025 and NHTSA will set new CAFE standards for those model years in the next couple of years, based on the best available information at that time.

The Big Rigs

On June 19, the U.S. Environmental Protection Agency (EPA) and the Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) announced major increases for fuel efficiency of heavy-duty trucks. Part of President Obama’s comprehensive Climate Action Plan, Phase 2 of the Heavy-Duty National Program tightens emission standards for heavy-duty trucks and includes big rigs, delivery vehicles, dump trucks and buses.  The updated efficiency rule for trucks joins a growing list of fuel efficiency measures, including the President’s 2012 doubling of fuel efficiency standards for cars and light-duty trucks (CAFE standards), as well as expected aircraft rules, following the agency’s finding that aircraft emissions endanger human health.

While the miles per gallon (mpg) rating of cars and light duty trucks has increased over the last decade or so, the fuel efficiency of heavy-duty trucks has held at 5 mpg for over four decades. Conversely, the average passenger vehicle reached 24 mpg in 2010.  Under CAFE, cars and light duty trucks are set to reach 54.5 MPG by 2025. 

According to EPA, heavy-duty trucks are the fastest growing emissions segment of the U.S. transportation sector; they are currently responsible for twenty percent (20%) of greenhouse gas (GHG) emissions, while comprising just four percent (4%) of on-road vehicles.  Heavy duty trucks power the consumer economy, carrying seventy percent (70%) of all U.S. freight – weighing in at 10 billion tons of everything from food to electronics, building materials, clothes and other consumer goods.

As you can see, the goals are not only reduction in fuel usage but improvements in emissions.  There are companies and programs dedicated to meeting these goals.  The reason for this post is to indicate that people and companies are working to provide answers; solving problems; providing value-added to our environment and even our way of life. One such company is Intelligent Fleet Solutions.

The big questions is, how do we meet these goals?  The burden is up to companies manufacturing the engines and design of the cabs and trailers.  Alternate fuels are one answer; i.e. using CNG (compressed natural gas), biofuels, hydrogen, etc. but maybe not the entire answer.

One manner in which these goals may be met is reducing engine idle while trucks are at rest.  The following chart will explain the dilemma and one target for reduction in petroleum consumption.

gas-usage-at-idle

This chart shows petroleum consumption of various vehicles at idle.  Notice: diesel engine consumption can use up to 1.00 gallon per hour when idling.  Question, can we lessen this consumption?

Companies designing and manufacturing devices to contribute to this effort are being introduced helping to drive us towards meeting really tough café goals.  One such company is Intelligent Fleet Solutions. Let’s take a look.

INTELLIGENT FLEET SOLUTIONS

What if the vehicle you drive could automatically alter its performance by doing the following?

  • Governing maximum speed in Class 8 vehicles
  • Optimizing acceleration
  • Providing for a more efficient cruise

If you look carefully at the following brochure you will see a device that provides all three.  The DERIVE program is downloaded into your vehicle’s ECM (Electronic Control Module) allowing control from generic to specific.  You are in control.  The program is contained in a hand-held pendent that “jacks” into the same receptacle used to reset your check engine light.  Heavy-duty trucks may have another port for this pendent but the same process is used.  The great part—the software is quick loading and low cost.  A driver or owner has a payback considerably less one year.  My friend Amy Dobrikova is an approved reseller for DERIVE technologies. Please contact her for further information at 765-617-8614.

derive

derive-2

CONCLUSIONS:  Intelligent Fleet Solutions performs a great service in helping to preserve non-renewable fossil fuels AND lessening or eliminating harmful effluent from our environment.  “Solutions” recognizes the fact that “all hands must be on deck” to solve emission problems and conserve remaining petroleum supplies.  This company embodies the fact that America is still THE country in which technology is applied to solve problems and insure specific goals are met.  Intelligent Fleet Solutions is a great contributor to that effort.  Check them out at intelligent-fleet.com


As you probably know, I don’t “DO” politics.  I stay with STEM (Science, Technology, Engineering and Mathematics).  In other words, subjects I actually know something about.  With that being the case, I do feel the technical community must have definite opinions relative to pronouncements made by our politicians.  Please keep in mind; most politicians have other than technical degrees so they are dependent upon input from individuals in the STEM professions.  That’s really what this post is about—opinions relative to Senator Sander’s Energy Plan. (NOTE: My facts are derived from Senator Sander’s web site and Design News Daily Magazine.  Mr. Charles Murray wrote an article in March detailing several points of Sander’s plan. )

Sanders’ ideas seemingly represent a growing viewpoint with the American population at large. He fared fairly well in the Iowa caucuses and won the New Hampshire primary election although history indicates he will not be the Democratic candidate facing the GOP representative unless Secretary Clinton is indicted by the FBI.  I personally feel this has a snowball’s chance of happening.    Sanders’ popularity provides an opportunity for engineers to weigh in on some of the hard issues facing the country in the energy arena. We want to know:  How do seasoned engineers react to some of his ideas? Let’s look first at a brief statement from “Bernie” relative to his ideas on energy.

“Right now, we have an energy policy that is rigged to boost the profits of big oil companies like Exxon, BP, and Shell at the expense of average Americans. CEO’s are raking in record profits while climate change ravages our planet and our people — all because the wealthiest industry in the history of our planet has bribed politicians into complacency in the face of climate change. Enough is enough. It’s time for a political revolution that takes on the fossil fuel billionaires, accelerates our transition to clean energy, and finally puts people before the profits of polluters.”

                                                                                                — Senator Bernie Sanders

THE GOALS

Bernie’s comprehensive plan to combat climate change and insure our planet is habitable and safe for our kids and grandkids will:

  • Cut U.S. carbon pollution by forty percent (40%) by 2030 and by over eighty percent (80%) by 2050 by 1.) putting a tax on carbon pollution, 2.) repealing fossil fuel subsidies and 3.) Making massive investments in energy efficiency and clean, sustainable energy such as wind and solar power.
  • Create a Clean-Energy Workforce of ten (10) million good-paying jobs by creating a one hundred percent (100%) clean energy system. Transitioning toward a completely nuclear-free clean energy system for electricity, heating, and transportation is not only possible and affordable it will create millions of good jobs, clean up our air and water, and decrease our dependence on foreign oil.
  • Return billions of dollars to consumers impacted by the transformation of our energy system and protect the most vulnerable communities in the country suffering the ravages of climate change. Bernie will tax polluters causing the climate crisis, and return billions of dollars to working families to ensure the fossil fuel companies don’t subject us to unfair rate hikes. Bernie knows that climate change will not affect everyone equally – disenfranchised minority communities and the working poor will be hardest hit. The carbon tax will also protect those most impacted by the transformation of our energy system and protect the most vulnerable communities in the country suffering the ravages of climate change.

THE PLAN:

  1. Acceleration Away from Fossil Fuels. Sanders proposes a carbon tax that he believes would reduce carbon pollution 40% by 2030 and 80% by 2050. He also wants to ban Arctic oil drilling, ban offshore drilling, stop pipeline projects like the Keystone XL, stop exports of liquefied natural gas and crude oil, ban fracking for natural gas, and ban mountaintop removal coal mining.  Ban fossil fuels lobbyists from working in the White House. Massive lobbying and unlimited super PAC donations by the fossil fuel industry gives these profitable companies disproportionate influence on our elected leaders. This practice is business as usual in Washington and it is not acceptable. Heavy-handed lobbying causes climate change skepticism. It has no place in the executive office.
  2. Investment in Clean Sustainable Energy. Sanders proposes investments in development of solar, wind, and geothermal energy plants, as well as cellulosic ethanol, algae-based fuels, and energy storage. As part of his move to cleaner energy sources, he is also calling for a moratorium on nuclear power plant license renewals in the US.
  3. Revolutionizing of Electric Transportation Infrastructure. To begin ridding the country of tailpipe emissions, Sanders wants to build electric vehicle charging stations, as well as high-speed passenger rail and cargo systems. Funds, he says, would also be needed to update and modernize the existing energy grid. Finally, he is calling for extension of automotive fuel economy standards to 65 mpg, instead of the planned 54.5 mpg, by 2025.
  4. Reclaiming of Our Democracy from the Fossil Fuel Lobby. Sanders wants to ban fossil fuel lobbyists from the White House. More importantly, he is proposing a “climate justice plan” that would bring deniers to justice “so we can aggressively tackle climate change.” He has already called for an investigation of Exxon Mobil, his website says.

COMMENTS FROM ENGINEERS:

  • As engineers we should recognize the value of confronting real problems rather than dwelling on demagoguery. Go Bernie.  This comment is somewhat generic but included because there is an incredible quantity of demagoguery in political narrative today.  Most of what we here is without specifics.
  • “Without fuel, we have no material or energy to manufacture anything. Plastics, fertilizer (food), metals, medicine –- all rely on fuel … We are not going to reduce our need for fuel by eighty percent (80%) without massive technology breakthroughs.”  I might add, those breakthroughs are decades away from being cost effective.
  • “I like the idea of renewable energy and I think there are many places in which we are on the right track. A big question is how fast it takes to get there. The faster the transition, the more pain will occur … The slower the transition, the more comfortably we’ll all be able to adapt.”
  • “Imagine if we had rolling power outages throughout the United States on a daily basis because of the shutdown of coal or nuclear power plants.”
  • Another engineer wrote that “the actual numbers of death and cancer risks associated with all the nuclear disasters from Three Mile Island to (Chernobyl) and the Fukushima plant pale in comparison to the result of death and misery of coal and fossil fuel power plants supplying most of our electricity today and for the foreseeable future.”
  • Another commenter said that “for Sanders to rid the US of fossil fuels, he must be one hundred percent (100%) in favor of nuclear energy. No amount of wind, solar, or geothermal will ever replace an ever-growing energy need.”
  • Little or no attention in the forum was paid to the issue of intermittency –- in particular, whether a grid that’s heavy in renewables would be plagued by intermittency problems and, if so, how that might be solved. Intermittent problems where no electrical power will NOT be tolerated by the US population.  I think that’s a given.  We are dependent upon electrical energy.  This certainly includes needed security.

As a parting shot we read: “I am suggesting that folks carefully examine the record of those yelling the loudest, and then decide what to believe,” noted reader William K. “As engineering professionals, we should always be examining the history as well as the current.”

I would offer a sanity check:  WE WILL NEVER COMPLETELY REMOVE OURSELVES FROM THE PRODUCTS PROVIDED BY FOSSIL FUELS.  We must get over it.  As always, I welcome your comments.


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.


Compressed Natural Gas or CNG is finding its way into a variety of applications, both commercial and residential.  Our country is looking for alternatives to petroleum-based products for transportation and CNG is one method to accomplish this desired outcome.

  • Global CNG demand was 61,668 MCM in 2013 and is expected to reach 108,957.9 MCM by 2020, growing at a CAGR of 8.5% from 2014 to 2020.
  • Light duty vehicles (LDV) were the largest CNG consuming segment and accounted for 48.3% of total market volume in 2013. Growth of passenger cars particularly in emerging markets of BRICS is expected to drive this segment. LDV is also expected to witness highest growth rate over the forecast period. The segment is expected to grow at an estimated CAGR of 9.1% from 2014 to 2020.
  • Asia Pacific was the leading regional CNG market and is expected to continue its dominance over the next six years in the global market. The region accounted for 46.6% of total market volume in 2013. Positive outlook on automotive industry coupled with government support to promote the use of alternative transportation fuel particularly in China and India is expected to drive the regional CNG market. Central & South America is expected to be the fastest growing regional market for CNG at an estimated CAGR of 17% from 2014 to 2020.
  • Highly fragmented CNG industry participants compete on the basis of price differentiation across various regions. Major industry participants operating in the global CNG market include National Iranian Gas Comp, Indraprastha Gas Ltd (IGL), China Natural Gas Inc and Mahanagar gas Ltd (MNGL).

Industry Analysis

In the United States, the CNG market has grown at a rate of 3.7% since the year 2000. The market for these products has seen slow growth to this point for the following reasons: 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 being private fleet stations.  To give you an idea as to the need, there are currently fewer than ten (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.  The proper approach is to 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 five (5) to ten (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 one percent (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 fifty percent (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 twenty-five (25) to fifty percent (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.

The major market segments for CNG are:

  • Agricultural, with customer applications being in the fields of poultry farming, grain drying, irrigation, hydroponics and propane displacement for remote locations with no historical access to natural gas.
  • Industrial, with customer applications in the fields of electric generators, heat production, lumber drying, and forklift fuel.
  • Motor Fuel, involving Duel Fuel Fleets and Designated Gasoline Fuel Fleets.

The Motor Fuel segment of the market is generally based on diesel with retail prices in the range of $3.50 to $4.00 per gallon. The vast majority of sales in this category will be handled by on site stations at fleet terminals or using the GTM model providing on demand fleet fueling. Transportation represents the largest sector of gas consumption and emissions in the US. The aforementioned legislation has forced fleet and fuel managers to prepare for potential penalties that could have dramatic balance sheet implications if found to not be compliant.

Over the past thirty (30) years, equipment manufacturing companies have proven that meaningful features can be developed for this class of fuel. These companies have primarily focused on the use of pipelines to improve the quality of transport in Natural Gas. These products have been successfully distributed in many areas of the industry, in a limited capacity.

In the next 5 to 10 years it is estimated that there will be more than 18 million vehicles on US highways. The market potential for CNG in these quantities–with a current retail price of $2.50 per DGE (Diesel Gallon Equivalent)–is approximately $2.6 billion per month in revenue with an equivalent net profit of $45 million dollars. This translates to a market share of approximately two percent (2%) of the overall market. An excellent comparison is the country of Iran has 3,300,000 natural gas vehicles on the road today compared to United States with 250,000 to 300,000.

In conclusion, CNG seems to be one very great possibility for commercial AND domestic transportation.  Only time will tell.  As always, I welcome your comments.

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