Natural gas is rapidly becoming more than just the fuel most Wisconsin residents use to heat their homes.
As the price of crude oil continues to rise, nuclear energy comes under intense scrutiny and debate rages over ethanol and its effect on the world’s food supply, natural gas is becoming a greater focus of U.S. energy needs.
Higher petroleum prices and drilling technology that make it cheaper to extract the gas from shale rock formations are driving the trend.
“In 2008, when gasoline went to $4 (a gallon) and diesel went to $5, we couldn’t answer the phone fast enough. And we can’t answer the phone fast enough today,” said Richard Kolodziej, president of NGV America, the national trade association for natural gas vehicles.
“From a public policy point of view, there is recognition now that we have the gas, and it’s ours and we should use it,” he said.
Others, too, are reporting more interest in natural gas as a vehicle fuel.
“In the last month, there has been an uptick in inquiries about vehicle conversions,” said Brian Manthey, a We Energies spokesman. “Businesses and governments are also calling to inquire about the steps they need to take to add natural gas pumps.”
It’s similar to an increase in interest the utility said it saw three years ago, the last time gas prices topped $3.50 a gallon.
The situation is not as simple as building natural gas filling stations and converting all our vehicles to run on the fuel, though.
Natural gas is most efficient when used in furnaces for home heating or as a feedstock for chemicals, said economist Jeff Rubin, former chief economist at CIBC World Markets.
As a transportation fuel, he said, “natural gas is not a good substitute for oil.”
“There may be some opportunities on the margins, with large trucks and buses, where we can substitute it. But the bulk of the gasoline in the U.S. is consumed by private motor vehicles,” Rubin said.
There are up to 150,000 natural gas vehicles on the road today, out of about 250 million vehicles overall.
And there are 180,000 gasoline stations in the United States. There are slightly more than 1,000 natural gas stations.
The cost to convert a car from gasoline to natural gas is about $10,000. And the cost of a natural-gas fueled passenger car is about $6,000 more – the Honda Civic GX is the only such vehicle available in the U.S. – than a gasoline-fueled car, Kolodziej said.
Focus on urban fleets
The industry’s goal, though, isn’t for natural gas to take the place of gasoline for private passenger vehicles.
“Our focus is on high fuel-use urban fleet vehicles – vehicles that go out in the day and either come back to a common location or go back and forth between two locations,” Kolodziej said. “You don’t need 180,000 stations for those fleets.”
Even if it is impossible to completely replace petroleum-based fuels with natural gas, it makes sense to move in that direction, said Ethan Bellamy, senior energy research analyst at Robert W. Baird & Co.
“The U.S. has an incredible bounty at its disposal, a 100-year supply of natural gas that could eliminate our dependence on oil imports if deployed in vehicles, particularly fleet vehicles,” he said in an email.
“You are seeing multiple bottom-up conversions (to natural gas) by vehicle fleet managers,” Bellamy added. “This trickle could turn into a flood, but a nudge from government could help, particularly on the infrastructure side.”
That nudge may be coming.
A bipartisan group in the U.S. House of Representatives on Wednesday introduced a bill to create energy tax credits for investments in alternative uses of energy, including natural gas.
Businesses are turning to natural gas as a vehicle fuel in greater numbers.
As part of a $565 million program to put 15,000 alternative fuel vehicles on the road through 2018, AT&T has moved to deploy more than 2,000 natural gas vehicles across the country. The company saved more than 1 million gallons of petroleum fuel last year as a result, spokeswoman Jessica Erickson said. The telecommunications company has 54 hybrid and natural gas vehicles in its Wisconsin fleet.
The abundance and low price of shale gas is resulting in changes on the energy front of all sorts, whether for transportation or for generating electricity.
It was cited as a factor for Xcel Energy’s decision to halt construction of a biomass power plant in Ashland. The biomass plant was too expensive, the utility said.
Vehicles face limitations
Meanwhile, utility industry observers see natural gas as a key fuel for the years to come as power companies comply with Environmental Protection Agency rules that ratchet down the pollution generated by aging, inefficient coal-fired power plants.
“It’s trending toward natural gas as the fuel of choice,” said Mark Thimke, an energy and environment lawyer with Foley & Lardner.
The main ingredient in natural gas is methane, according to the U.S. Energy Information Administration. Natural gas is colorless, odorless and tasteless. Mercaptan, a chemical that smells like rotten eggs, is added to give the fuel its distinct odor.
Natural gas use in vehicles faces some of the same limits as electric vehicles.
“Natural gas vehicles face significant range and infrastructure limitations, in addition to higher upfront capital costs, that drastically diminish the market for natural gas vehicles even in the presence of tax credits for capital, infrastructure and fuel,” according to congressional testimony in March from Richard Newell, administrator in charge of the Energy Information Administration.
For now, the fuel is one of the many alternatives mentioned as a contributor to ending the nation’s dependence on foreign oil imports.
“There’s no one silver bullet, so it takes a combination of all these alternative fuels going forward,” said Lorrie Lisek, executive director of Wisconsin Clean Cities, a fleet-focused outreach initiative of the U.S. Department of Energy. “What will be right for one fleet isn’t going to be the best answer for (another) fleet.”
Vehicle use increasing
Despite its limitations, the use of natural gas in transportation is increasing.
“Between 1999 and 2009, domestic consumption of natural gas in the transportation sector nearly tripled,” Robert Bryce, a senior fellow at the Center for Energy Policy and the Environment at the Manhattan Institute, wrote in a research paper this month. “That growth will likely continue over the coming decades, particularly if natural gas prices stay relatively low and crude oil prices rise.”
And there is a convenience factor. Gasoline is a liquid. It’s easy to fill up a vehicle with it. Natural gas is just that – a gas. To use it in vehicles, it must be compressed. To liquefy it, natural gas must be cooled to minus 260 degrees Fahrenheit.
Technology is a wild card in the process.
“That could change relatively quickly if an inventor can develop a cheap, scalable process that can convert natural gas into quality liquid fuel,” Bryce wrote.