Future of Fuel

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Winter 2015

FutureofFuel Future of Fuel is a quarterly newsletter produced by the Department of MLGW Energy Resources

Inland Waste SolutionsProviding an Environmentally Friendly Solution for Memphis

CNG vs. LNG Which one is Right for your Fleet?

TDOT announces new CMAQ grant opportunity

MLGW Fuel of the Future Conference

CNG vs. LNG for Heavy Duty TrucksWhich One is Right for Your Fleet? Speaking to fleets and truck dealers on a regular basis, it has become clear there is a large amount of confusion as to which form of natural gas is superior. Both Compressed Natural Gas (CNG) and Liquefied Natural Gas (LNG) are worthy fuels if you need to improve profitability and increase competitive advantage by moving to a lower cost fuel. I will spoil the surprise by telling you upfront that neither one of these is superior to the other. They are simply different, and different fleet operations have different priorities.

So what should you do? Evaluate your fleet priorities based on the information below and you can quickly decipher which fuel best suits your needs.

1. Introduction to CNG & LNG

CNG and LNG are the same fuel, but stored in different physical form on board your truck. CNG is a gaseous fuel that is lighter than air. CNG stations tap into the local gas utility lines and compress the gas up to 3,600

pounds per square inch (psi). It is then dispensed into vehicles and stored in a high pressure storage cylinder. On tractor units, the CNG tanks are typically mounted on the frame rails, behind the cab or a combination of the two.

LNG is the same fuel, but it is stored in a cryogenic form. At approximately -260 F, natural gas turns into a color-less, odorless liquid fuel. It is produced at an industrial processing facility and then trucked to the fueling station where it is stored as a liquid. It is dispensed into vehicles as a cryogenic liquid.

2. Fuel Cost

CNG is almost always going to be less expensive than LNG. This is primarily due to the lack of transportation costs to get the fuel to the station. Both fuels provide significant savings com-pared to diesel fuel, but CNG is typical-ly going to be even more affordable.

3. Fueling Experience: Heat of Compression vs. Boil Off

The fueling experience is a bit differ-ent with each fuel. CNG is very similar

to fueling with gasoline and diesel fuel. It requires no special protective gear and minimal training. There are two types of CNG stations, time-fill and fast-fill. CNG stations designed for trucking applications tend to be fast-fill.

LNG is cryogenic liquid and therefore requires a bit more training as well as protective eyewear and gloves. This may be a consideration if your fleet al-ready has dedicated fueling personnel. Keep in mind diesel fuel is also highly toxic -- we are more familiar with die-sel as a fuel because it is so prevalent.

LNG is not compressed, and therefore has no issues with heat of compres-sion. Instead, there is the issue of-- boil off. LNG is stored at -260 F and has a natural tendency to heat up. As it heats up, it begins to boil in the tank and will eventually vent off.

4. Fuel Economy

Regardless of how you are storing the fuel (CNG vs. LNG) , once the fuel hits the engine, it is a gaseous fuel. On a diesel gallon equivalent (DGE ) basis, you can expect to see a five -20 per-cent loss in fuel economy with natural gas in general. This is true with both CNG and LNG trucks. This impacts the final economics of the program, but is typically not a deal killer.

5. Weight, Range & Incremental Truck Price

The primary driver of the choice be-tween CNG and LNG comes down to weight and range. You can simplify this entire evaluation by asking yourself this one question:

How sensitive is your operation to weight and how far do you need to go before refueling?

CNG cylinders are very safe and very strong due to their pressure require-

ments, but these attributes come with one downside: weight. Despite

numerous advances in material sciences, CNG fuel systems continue to add significant weight to the truck when compared to a traditional diesel vehicle. However, if you add 80 DGEs

of CNG storage, you can expect to add at least 1,000 lbs of weight.

(con’t page 4)

By James Orsulak, FuelSpace

Customer Spotlight: Inland Waste Solutions

The Environment and Energy Today

Excerpt from “Environmentally Friendly Waste Solutions-

Inland Waste” Fox Business Weekend Business Report

Reported by Richard Allen

For the full story, visit http://inlandwaste.com/corporate-infor-

mation/media/

Bart Begley, CEO Inland Waste Solutions:

“Operating large trucks, of course diesel was our fuel of use for many years in the solid waste business. With the rising cost of diesel and the negative impact on both our cost and what we had to charge our clients, we were look-ing for alternative energy sources. We decided to go with compressed natural gas. With that said, we were looking to convert both our diesel trucks to CNG and buy new trucks with our new ventures, along with building our own Compressed Natural Gas stations.

CNG has reduced the carbon footprint for the city of Memphis and for us. We took 24 trucks and reduced emissions by 90 percent per truck. Our whole focus as a company now is using CNG as our fuel source. Over the next five years, you will see our company move from 100 percent diesel to 100 percent CNG. We are going to build CNG stations at all of our loca-tions and we are also going to build the retail aspect of it. We will have the infrastructure built by our cost savings and also have the re-tail outlets on the front end of our operations.

We share a great relationship with the city and with the authority that supplies us the gas – MLGW. It’s been great coming together and putting this project together and seeing this project to the end. “

Bill Bullock, Manager MLGW Commercial/Industrial Customer Care:

“Memphis is working hard to be clean and green and having Inland Waste here is a testament that we are moving in the right direction. The trucks that have been running in our community everyday are so much cleaner than the diesel counterparts that have been run in the past. The benefits are economics and environmental and our customers and the citizens are pleased that we could combine those two in a city service. Having Inland Waste as a new customer of MLGW is similar to having 400-500 residential customers, over which, we can bill utilities and spread those fixed costs out. That way we can have a low-ering impact on rates for all of our customers.”

At a recent MLGW Board Meeting,

Micheal Taylor, Asst. Manager, Commercial/

Industrial Customer Care, Dillon Transport representative, Jerry

Collins, MLGW President and CEO,

and Board Chairman Rick Masson,

acknowledge the grant award from

TDOT.

Dillon Transport receives $500,000 grant for CNG Truck Deployment

TDOT announces NEW CMAQ Grant Opportunity for Shelby County

Tennessee Department of Transpor-tation (TDOT) announced the avail-ability of Congestion Mitigation and Air Quality Improvement (CMAQ) grant incentives for projects that reduce PM-2.5 (fine particle) pollution from diesel engines. Approximately $8 million is available for projects in air quality non-attainment and maintenance areas to reduce emissions from onroad and some non-road diesel engines. The grant competition is open to a wide variety of government and private sector diesel vehicle own-ers. Cost-effectiveness of PM-2.5 reduced (the amount of CMAQ money per kilogram per year) is a primary project selection criterion. Reductions of other pollutants will also be considered.

TDOT intends to consider a geo-graphic distribution of grant fund-ing and most projects will require a non-federal match. The grant opportunity is expected to open in January 2015.

MLGW and Dillon Transport were awarded $500,000 in Congestion Mitigation and Air Quality (CMAQ) funds by the Tennessee Department of Transportation (TDOT) through the 2014 -2017 CMAQ Improvement Program.

As part of Memphis Light Gas and Water’s Compressed Natural Gas (CNG) market development, Dillon Transport, Inc. has committed to a public-private partnership to invest

in the purchase of 20 heavy duty trucks of their fleet to CNG vehicles in the Memphis area. Dillon plans to use these trucks to transport goods throughout the state of Tennessee.

This commitment creates an anchor customer for MLGW’s South CNG Fueling Center and will significantly contribute to emissions reduction and better air quality in the Memphis and Shelby County area.

CNG vs. LNG (con’t) This leads us to the final factor: incre-mental truck cost. Natural gas trucks carry a premium over diesel units. The vast majority of the incremental cost of a CNG truck is due to the fuel tanks. They are expensive. A 100 DGE fuel storage system can easily add $70,000 to the truck price. So again, make sure you have the right fuel spec nailed down.

If you have shorter routes, and the right-size fuel storage spec, you should see a payback period somewhere between two - three years. So you get the same

basic range, with a lower incremen-tal cost and a lower weight penalty. This may be worth the slightly higher fuel price of LNG. If you are extremely weight sensitive and you have a long range route, LNG is worth a look. This is why you see rail, mining and marine vessels all going to LNG. They all have extreme range requirements and are incredibly sensitive to weight limits.

Summary

Trucking firms and logistics pro-viders no longer have the option of simply ignoring this transition.

If your competition reduces their fuel cost by 40 percent and you do not, you lose and they win. Period. If you have shorter routes and are not ultra weight sensitive, CNG is most likely going to be a better fit. Trash trucks, for example, almost always choose CNG because they typically have short routes. If you are running long routes and max out the weight each and every time, LNG needs to be in your evaluation.

Information provided by, http://www.fuelspace.org/blog/2014/10/20/cng-vs-lng-for-heavy-duty-trucks

Future of Fuel Conference Scheduled for April

MLGW Energy Resources has scheduled an opportunity to hear from industry leaders about the economic oulook of natural gas and its benefits for your fleet. This year, our focus will be Compressed Natural Gas (CNG) as a cost effective and green fueling option. Aimed at educating fleet managers, the Future of Fuel Conference will discuss what is involved in fleet conversions and share success stories.

Featured speakers include: Pat Riley, General Manager Gibson County Utilities, Hugh Donnell, North America Truck Market Segment Leader, Cummins Westport and Bart Begley, CEO Inland Waste Solutions.

The conference will be held on April 30, 2015, from 8:00 a.m. - noon at the MLGW Traning Facility located at 4949 Raleigh - LaGrange Rd. Space is limited. Please RSVP to afouche’@mlgw.org or call 901-528-4143.

Conference Schedule

7:30 a.m. – 8:00 a.m. Registration & Continental Breakfast

8:05 a.m. – 8:45 a.m. Economic Outlook for the

Transportation Sector and Natural Gas Pat Riley, General Manager

Gibson County Utilities

8:50 a.m. – 9:30 a.m. Fleet Success: Inland Waste Solutions

Bart Begley, CEO Inland Waste Solutions

9:35 a.m. – 10:15 a.m. Natural Gas Retrofitting

Hugh Donnell, Segment Leader Cummins Westport

10:30 a.m. - 11:00 a.m. Travel to CNG South Center

11:00 a.m. – 12:00 p.m. Tour of South CNG Fueling Station

3071 S. Center Rd. (Located off Brooks Rd. at Hwy 61)

Future of Fuel is a quarterly publication of MLGW Energy Resources. Additions, omissions, inquiries and revisions, contact Allison J. Fouche’, Strategic Marketing Coordinator CNG Sales, [email protected]