Chesapeake teams with Clean Energy for 'gas highway'

Date: 13.07.2011

Chesapeake invests in US 'natural gas highway', as Australian truck manufacturers call for greater investment in access to alternative fuels

By Gary Worrall | July 13, 2011

Natural gas producer Chesapeake Energy Corporation will pump US$150 million (A$141 million) into the Clean Energy Fuels Corporation to fund the construction of liquefied natural gas refuelling stations in the USA.

Under the agreement, Clean Energy Fuels will build 150 LNG refuelling stations at strategic truck stops along major North American transport routes to create what CEO and President of Clean Energy Fuels Andrew Littlefair calls "America’s natural gas highway".

"With the advent of new natural gas truck engines well-suited for heavy-duty, over-the-road trucking, it is time to build America’s natural gas highway," he says.

"The investment by Chesapeake will help us accelerate the development of this important fuelling network."

The new investment programme is in addition to Clean Energy Fuel’s ongoing development of a network of refuelling stations for a variety of operations, including transit, refuse and regional transport across the USA.

CEO of Chesapeake Energy Aubrey McLendon says there is ample demand for American natural gas among operators who would otherwise be locked into buying diesel fuel sourced from OPEC oil.

"We are investing our capital in Clean Energy to accelerate the delivery of the natural gas fuelling infrastructure needed to assure truck operators that they can transition away from high-priced diesel, the cost of which is set by foreign oil, and choose a better road powered by American natural gas," McLendon says.

Littlefair says the combination of new natural gas engines from major manufacturers and the expansion of the refuelling network should "quicken the transition to natural gas fuel as a game-changer for heavy-duty trucking".

Australia holds at least as much high quality natural gas reserves as the USA and Canada. The fuel has the potential to cut greenhouse gas emissions by up to 25 percent depending on the application and reduce Australia’s dependence on imported fuel oil.

Isuzu Trucks Australia marketing manager Jeff Birdseye says the company has four natural gas-powered trucks in its Australian range, which are entering service with a number of large fleets and proactive councils with access to their own refuelling infrastructure.

"The only thing holding CNG back in this country is the lack of refuelling infrastructure. If we had the fuelling stations then we could introduce more trucks to the market," Birdseye says.

While Isuzu currently offers the largest range of natural gas powered commercial vehicles, a number of other manufacturers including Kenworth, Mack, Volvo, Mercedes-Benz and Iveco all have natural gas options within their product portfolios.

IMPROVE ACCESS TO CLEAN FUEL WITH CARBON TAX
Volvo Trucks Australia General Manager Gary Bone says the company has a number of alternative fuel options developed as part of a global commitment to providing fuel efficient transport solutions.

"Recently we demonstrated three of our most environmentally optimised vehicles, the Volvo FM Methane diesel, Volvo FE Hybrid and Volvo FH DME," he says.

With sales of hybrid and methane-diesel trucks beginning earlier this year in other Volvo markets, Bone says Volvo is still in the process of undergoing field tests for bio-DME (dimethyl ether), a next-generation fuel.

"But there are global challenges with the new technologies - including better distribution and more refuelling stations for liquid methane gas," he says.

"We would welcome initiatives by any government to support transport operators in their quest to reduce emissions and fuel consumption. And it would make sense that a percentage of the carbon tax be invested in technology development and infrastructure to support this.

"Volvo developed test vehicles for seven different CO2-neutral fuel alternatives and has readied itself technologically for the future, irrespective of which fuels end up dominating the market. This was a major investment by Volvo Trucks, but to proceed we need to see governments actively supporting commercialisation of alternative fuels, by driving infrastructure developments."

Bone says it is critical the transport industry lobby government on behalf of alternative fuel strategies to reduce the impact of transport on the climate.

"These solutions also provide more cost-efficiencies in the long run for transport companies so it is a critical issue for an environmentally sustainable society," he says.

Mack Trucks Australia General Manager Dean Bestwick says the company has worked hard to introduce natural gas versions of its trucks and is keen to see improved access to refuelling facilities for customers.

"Mack Trucks introduced Granite agitators with Cummins Westport ISL-G gas engines into the Boral fleet in 2009," Bestwick says.

"As an Australian manufacturer, Mack Trucks has invested heavily in preparing for the future of the transport industry in this country. However, expanding the presence of natural gas fuelled vehicles requires the support of governments and the development of necessary infrastructure."

GET RID OF OLD TRUCKS: McCARTHY
With Mercedes-Benz already offering natural gas-powered versions of its Vito and Sprinter vans for sale in Australia, as well as having heavy truck models available in overseas markets, the issue centres on the lack of refuelling locations.

Mercedes-Benz senior corporate communications manager David McCarthy says the proposed carbon tax is an "excellent opportunity" for public access refuelling sites to be built on major freight routes, in a virtual mirror of the natural gas highway being built in the USA.

"If $23 per tonne of carbon is going to be taken out of the economy, with a guarantee of funding for clean energy projects, then this should be one of them," McCarthy says.

"Not only will this reduce the greenhouse gas emissions of the national transport fleet, but it will have the added advantage of reducing our foreign debt, because the fuel source is totally Australian, from start to finish, and not dependent on overseas oil prices."

McCarthy says the situation should be even more attractive to government because there is also the additional revenue coming from the excise charged on natural gas fuel sales.

He also proposed additional steps be taken to encourage operators of older trucks to update to newer models through the introduction of registration concessions for trucks less than 10 years old.

"Perhaps it could be on a sliding scale, the newer the truck the greater the concession, but there also needs to be some sort of disincentive for very old trucks, which are the biggest polluters, but under the current proposal they would be exempt from paying a carbon tax," he says.

"It these trucks, which are predominantly owner-operators or small businesses, that will continue to receive the full fuel rebate, this highlights that exhaust emissions should be the target of this policy."