Cleaner, cheaper fuel

North Dakota’s long distances and sparse population have been obstacles in developing a transportation system powered by natural gas. But some promoters of the alternative fuel believe that today’s high diesel costs and an abundance of natural gas in the state might be the triggers that break the gridlock.

North Dakota Clean Cities and the North Dakota Natural Gas Vehicle Coalition held informational seminars around the state at the end of April and earlier this month to generate interest in a fuel that is cleaner, safer and cheaper than petroleum-based diesel or gasoline.

“It’s just working through the chicken and the egg problem,” said Joey Roberson-Kitzman, coordinator for North Dakota Clean Cities, Bismarck. People don’t buy vehicles because of the lack of fueling stations, and there’s no fueling stations because of the lack of vehicles, he explained.

Roberson-Kitzman believes there is a way to solve the problem. It starts with getting fleet managers and infrastructure providers in the same room to talk about what they can provide each other, he said. That was the impetus behind the seminars held in Dickinson, Williston, Minot, Bismarck, Fargo and Grand Forks.

The North Dakota Natural Gas Vehicles Coalition formed to keep the conversation going.

Dickinson city officials met with Montana-Dakota Utilities several months ago to discuss the possibility of creating a slow-fill, compressed natural gas station at the city’s new public works building.

Shawn Kessel, Dickinson city administrator, said the city originally sought to convert vehicles that operate strictly within the city limits, beginning with its solid waste division and police department. The city decided that natural gas might not be suitable for police cars. Kessel said the cars would require retrofits that not only are costly but the tank would take up needed trunk space. Natural gas takes a greater volume of space than gas or diesel.

The concept appears feasible for the garbage operation, though, he said. The main concern is money. The city received a bid indicating the cost could be between $300,000 and $600,000. The cost of retrofitting vehicles would be another $10,000 to $30,000 per vehicle.

Kessel said Dickinson has two garbage trucks scheduled for replacement next year. It is considering retiring one and replacing the other with a new natural gas-powered truck. It also would retrofit the remaining four diesel-powered trucks in the fleet.

“It’s definitely an investment, but the return on that investment, based on today’s natural gas prices, is fairly good. You do get your dollars back fairly quickly,” Kessel said. He estimated an annual fuel cost saving of about $50,000, based on the city’s current fuel use in garbage collection.

“We have a natural gas plant just down the road to the west of us so certainly the abundant supply of natural gas in our state which the Geological Survey said is much higher than we originally even anticipated means that it should be plentiful and therefore cheaper for many years to come,” he said.

Paul Jensen, president of Green Way Energy, Fargo, said the initial investment causes many potential natural gas transportation users to hang back.

“That is a little bit of a financial hurdle to get over. However, the payback time is relatively short. When we present people with the return on investment calculations, then their eyes really light up because the cost of the fuel, if they compress it themselves, it’s less than half what they pay today,” Jensen said.

Green Way Energy, which offers consulting in renewable and alternative energies, sells and installs compressed natural gas dispensing equipment through its Green Way Smart Transportation division.

“The first step into the North Dakota market will be to get fleet owners to adopt this fuel,” Jensen said.

Natural-gas promoters have their eyes on the Bakken region because of the amount of trucking that is occurring.

“The truck owners out there have shown interest,” Jensen said. “What they need is, of course, a little bit more experience with it, although it’s been around for many, many years.”

If flared natural gas in North Dakota were used to fuel passenger vehicles, at 2012 production rates, there would be enough gas to fuel 1.1 million passenger vehicles, or about three times more than the number of passenger vehicles in the state, according to Green Way Energy.

Natural gas contains a variety of gases as well as impurities and must be processed before it can be used as a fuel. To tap into the state’s natural gas resources will require processing plants and pipelines to get the natural gas to the plants, Jensen said.

Dan Genovese, manager of market development for Chesapeake Energy, Denver, said two companies are working on compact, mobile units that can liquefy the methane in natural gas into fuel. The technology could enable oil-field companies to process natural gas on site to run field equipment, but North Dakota also needs to expand its pipeline and processing infrastructure to catch up with demand, he said.

“By building demand and building that market for transportation, it will simply help create that infrastructure,” he said.

Chesapeake Energy is the nation’s second largest natural gas producer, although it does not operate in North Dakota.

The company is a leader in compressed natural gas transportation infrastructure and natural gas vehicles market development. Genovese said the company is converting 4,000 of its vehicles to

bi-fuel and aims to have 80 percent of its fuel utilization be compressed natural gas. At $1.79 a gallon, the company sees a tremendous savings in natural gas, he said.

“It’s a rapidly growing fuel for transportation, especially the high-mile, high-consumption vehicles,” he said. “The payback on that vehicle is usually within a couple of years.”

Although companies such as FedEx, UPS, CocaCola and Waste Management have adopted natural gas as a fuel in their operations around the country, the companies haven’t extended that use to North Dakota.

“We have evaluated the North Dakota area, Bismarck in particular, several times, and for at this period of time, we don’t have any plans to site a fueling station or use natural gas trucks in that area, but we continue to evaluate it,” said Julie Ketchum, spokeswoman for Waste Management in Minneapolis-St. Paul.

Jensen said smaller states like North Dakota lack the economy of scale that national companies seek. There are not enough long-haul trucks or a large enough company operations to warrant stations. The solution may be for partnerships that bring multiple users together, he said.

“That’s why we were advocating that the state government try to crack the shell and do it together with municipalities so we could get come CNG stations placed strategically in eight locations,” Jensen said. The coalition would like to see stations in Grand Forks, Devils Lake, Minot, Williston, Dickinson, Bismarck, Jamestown and Fargo.

The Legislature approved House Concurrent Resolution 3016, which proposes an interim study on the use of natural gas in vehicles.

Rep. Dan Ruby, R-Minot, who chaired the House Transportation Committee this past session, said the concept generated a lot of interest in committee. A legislative study would look at the ability to get fueling stations established and whether incentives would help.

“My preference is that the market would take care of it,” Ruby said. “I think there’s a huge potential for natural gas in the state.”

He doesn’t see his own company, Circle Sanitation, as a potential customer at this time, though, because it serves a large rural area. That makes a central fueling station unworkable.

Dana Larsen, Ward County highway engineer, said the county hasn’t considered natural gas fuel because there have been too many unanswered questions. One question is whether the county could transport to or store the fuel at project sites, which it does now with diesel.

Dan Jonasson, Minot public works director, said one of the city’s concerns would be finding employees who are certified in servicing the natural-gas powered vehicles.

“We are having a tough enough time just finding mechanics,” he said.

The North Dakota Department of Transportation does not operate natural gas vehicles because of the lack of fueling stations, said department spokeswoman Jamie Olson.

Burlington Northern Santa Fe Railway announced in March that it will begin testing a small number of locomotives using liquefied natural gas later this year.

The former Burlington Northern used natural gas locomotives in the 1980s and 1990s. BNSF also tested liquefied natural gas switch locomotives in Los Angeles until they reached the end of their useful life a few years ago.

BNSF reports that improved economics and technology make the use of natural gas in long-haul service more operationally feasible today. However, the company notes that several significant regulatory challenges need to be addressed.

The rail industry, like long-haul trucking, is suited to using liquefied natural gas.

Liquefied natural gas is kept at cold temperatures and stored in double-wall, vacuum-insulated pressure vessels. It is used in heavy-duty vehicles, typically those that are over-the-road vehicles because it takes a smaller volume of gas to go the same distance. It also requires a higher initial investment to establish a station. It costs 30 to 40 percent less than diesel.

Compressed natural gas is stored in onboard tanks under high pressure with a fuel economy similar to gasoline. It is used with fleets that return to base every day or have significant numbers of vehicles and by retail fuelers. It can be half the cost of diesel.

In the United States, there are 1,204 compressed gas stations and 67 liquefied gas stations, according to the U.S. Department of Energy.