Natural Gas Gets Big Boost in Deal by Navistar, Clean Fuels and T. Boone Pickens
February 01, 2012
The agreement will see Navistar building more International trucks with natural gas engines, while Clean Energy will build more filling stations for truckers who commit to using the comparatively inexpensive and increasingly abundant fuel.
Customers who sign up will pay no extra money for trucks equipped to store and burn natural gas and filling stations for them.
"Progress is being made in alternative fuels," said Dan Ustian, Navistar's chairman, president and chief operating officer, who opened the press conference before slipping away to prepare for a stock analysts meeting later that morning.
"It's always seemed to be government supported. While we hope we can get more money for research and development, this can stand on its own."
Pickens, who's been promoting the use of natural gas since 2010, said it's both a financial and national security matter.
"Prices vary, but this is the cheapest fuel in the United States" at about $2.50 per diesel-equivalent gallon, or about $1 to $1.50 less than diesel, he said. "We cannot pass up this opportunity.
"Heavy trucks are the biggest users of fuel and stand to see the biggest savings" because of gas's lower cost. "It's a big deal for our country because we've got to get off OPEC oil."
Clean Energy spent $200 million last year to build fueling stations for both compressed and liquefied natural gas, said Andrew Littlefair, the firm's president and CEO. That effort will expand under the partnership with Navistar, with $250 million budgeted for this year.
Jerry Moyes, president of Swift Transportation, who participated in the announcement, said he'd like his company to have the first trucks in the program. "We're very excited about the potential for natural gas," he said. "We buy millions of gallons (of fuel) every day, so this is a big deal."
"We have been testing it for about a year with a couple of different projects. We like what we see, but right now are restricted on products."
Navistar will have Class 6, 7 and 8 trucks under the program, said Jim Hebe, senior vice president for North American sales operations. It will see the adoption of Cummins' ISL-G natural gas model for the TranStar regional tractor and final development of its own gas-fired engines for others.
Navistar's MaxxForce gas engines will include a DT for the DuraStar midrange truck, for which development is almost complete, and a MaxxForce 13, which will use diesel fuel for pilot injection, for WorkStar and ProStar models.
The 13 will be the only American diesel-gas engine that won't need selective catalytic reduction and will require only a "very small" diesel particulate filter, Hebe said. A diesel-gas MaxxForce 15 might follow.
CNG is the fuel for local trucks, and LNG, with its smaller but higher capacity cryogenic storage tanks, is best for over-the-road tractors, Hebe said. A range of about 400 miles with LNG is easily done, and up to 600 miles is doable.
Customers who commit to buying at least 1,000 gallons of natural gas from Clean Energy for five years will not pay the usual $35,000 upcharge for a gas-fueled truck, Hebe said. So "there will be no cost to go from diesel to gas."
Those customers will pay more than the going rate for gas, but there'll still be a 50- to 60-cent a gallon saving compared to diesel fuel, said Littlefair. And a fueling infrastructure would be put in specifically for the customer at no cost to him.
Commercial-size fueling stations usually cost tens of thousands of dollars for compressed natural gas and a million or more for liquefied gas, industry sources have said.
Enthusiasm and business plans for using natural gas are predicated on gas being cheaper than diesel, a reporter said. What happens if the price of diesel fuel suddenly tumbles?
"I don't ever see diesel selling below natural gas," answered Pickens. "It's been made very clear by the Saudis that they have to have $100 per barrel [of oil] to meet social commitments. The world is producing pretty much all the oil it can use" and developing countries will insure continued demand.
"We wouldn't be sitting here without the big disparity in price" between diesel and gas, Pickens commented. "Now it's $2.50 a gallon. In five, 10 years, will we be looking at $10, $15? I don't think so.
"I'm a geologist. I've been in it since '51. That must be a hundred years ago now. I've made a lot of money and lost a lot of money. You will never see another person who has drilled more dry wells than I have.
"But right now, this country is overwhelmed with natural gas. There are thousands and thousands of places to drill. We have more than a hundred years of natural gas supplies."
Pickens, now 87 and said to be worth $2 billion, is a gas motor-fuel user. He told TruckingInfo.com that he drives a Honda Civic Gas sedan to work from his home in Dallas. He fills it from a compressed natural gas pump in his garage.