Kennon Guglielmo, Ph.D. President, EControls CTO, Enovation Controls at NAFA 2013, Fleet Sustainability Session 2

1. April 25, 2013
Domestic Heavy-Duty Mobile Natural Gas
History, Technology, and Outlook
NAFA Institute & Exposition – Atlantic City
Presenter:
Kennon Guglielmo, Ph.D.
President, EControls
CTO, Enovation Controls

2. 2
A Snapshot of EControls...
 EControls Served OEM Applications:
Heavy-Duty On-Road, Industrial, Marine
 Complete OEM fuel system provider...
MarineIndustrialHeavy-Duty On-Road
Electronic Control Modules
Fuel Control Actuators & Sensors

3. 3
A Snapshot of EControls...
 130,000+ OEM heavy-duty NG systems on the road today
 Installed base of 1,000,000+ engine control systems
 Engine development and emissions certification
 Engine management systems for NG, LPG, Gasoline, Diesel
 But... for domestic HD NG we have been skeptics for 15 years!

4. 4
Early Domestic NG Struggles
 Why have domestic HD NG engines failed to achieve critical
mass over the last 2 decades ???:
Lack of broad-based refueling infrastructure
Limited space for long-range fuel storage
High cost of tankage relative to diesel
Insufficient sustained relative cost advantage of NG to diesel
 Proof of this assessment is the fact that transit buses and waste
trucks are currently the only domestic HD NG success stories:
No need for broad-based refueling infrastructure
Plenty of room for tankage for all-day operation
Incremental cost of tankage a small percentage of total vehicle cost

5. 5
Fuel Cost Economics
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1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
NaturalGaspricein$/MCF
OilPricein$/barrel
Year
Historical Oil and NG Fuel Prices
Oil $/barrel
Natural Gas $/MCF
Domestic shale
production hits its stride

6. 6
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1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Oil/NG$/Btuwellheadcostratio
Year
Relative Energy Cost of Oil and Natural Gas
Fuel Cost Economics
< 2:1 ratio insufficient for critical mass
Domestic shale
production hits its stride
Non-sustainable > 2:1 ratio
triggers 1990’s activity
Sustainable > 2:1 ratio will
drive market build-out

7. 7
Fuel Cost Economics
 “We’ve heard it all before”...
“As soon as we commit, NG prices will go up”
“As soon as we commit, oil prices will drop”
 Why things are different now (in the last 5 years):
Domestic (and worldwide) NG shale plays
• Total NG game changer
• New fracturing technology allows previously economically
inconceivable access to NG
• Current production capability massively outstrips demand
• Future production will continue to outstrip demand
• The U.S. has some of the world’s largest fields
Oil price escalation is here to stay
• Oil prices failed to even keep up with inflation in the 1990’s –
those days are over
• China is driving worldwide oil consumption – and will continue to do so

8. 8
Critical Fuel System Technologies
 Major Technology Areas:
Vehicle fuel storage type
• CNG = Compressed Natural Gas
• LNG = Liquefied Natural Gas
Engine fuel delivery system
• Air/Fuel pre-mix
• Direct NG injection
Engine ignition system
• Spark
• Micro-pilot diesel
• Standard diesel

9. 9
Vehicle Fuel Storage
 CNG = Compressed Natural Gas (3600 psi gas)
 ≈ 5:1 tank size for the same diesel range
Lower tank price, but more tanks
Least expensive pump delivery price
User-friendly filling
Indefinite fuel storage
 LNG = Liquefied Natural Gas (cryogenic 150 psi liquid)
 ≈ 2.3:1 tank size for the same diesel range
Higher tank price, but less tanks
More expensive than CNG at the pump
Filling requires training / safety gear
Limited time after filling before tank vents (days to weeks)
since tank is essentially a large “thermos” bottle

10. 10
Domestic HD NG Engine Availability
 Cummins ISLG:
9L, 6-cylinder
Spark ignition (SI)
Standard CNG or LNG tank system compatible
Up to 320 bhp, 1000 ft-lbs @ 1300 rpm
 Cummins ISX12G:
12L, 6-cylinder
Spark ignition (SI)
Standard CNG or LNG tank system compatible
Up to 400 bhp, 1450 ft-lbs @ 1200 rpm
 Westport HD15:
15L, 6-cylinder
Micro-pilot diesel compression ignition (CI)
Requires special LNG tank system with high-pressure cryogenic pump
Up to 475 bhp, 1750 ft-lbs @ 1200 rpm
Only 3 OEM “Heavy-Duty” NG engines are EPA 2013 certified:

11. 11
Initial Truck Cost Considerations
 Why are HD NG engines so much more expensive than diesel?
They should be the same or cheaper because...
 Spark ignited, pre-mix NG fuel system = HPCR diesel fuel system cost
 Spark ignited NG engine aftertreatment is about $1000
Tier4 diesel aftertreatment is about $6000
But...
 Low volume production by domestic manufacturers = higher cost
 Extremely limited domestic engine competition = higher cost
 Domestic market will currently bear a higher price because NG vehicle buying
decisions are driven by fuel cost advantages – not engine cost
 What does the fuel storage system cost?
 Both CNG and LNG tanks are ≈ $100 / diesel gallon equivalent (DGE)
in high-volume (i.e. mature market) – current domestic cost is $300 / DGE
 Mounting brackets and tank to engine plumbing are more expensive than diesel
 Fuel heat exchangers required on LNG systems, may also be used with CNG
 No SCR system required for leading technology spark-ignited systems

12. 12
NG vs. Diesel Maintenance Cost Differences
 For spark-ignited engines (Cummins ISLG9, ISX12G):
Spark plug changes cost approximately $0.01 per mile
No SCR fluid is required – saving about $0.01 per mile
Fuel filter changes are typically much less frequent
Cummins recommends somewhat more frequent oil changes
Valve adjustment requirements are typically more frequent
 For compression-ignition engines (Westport HD15):
Both diesel and NG fuel filters must be maintained
The hydraulic system for the cryogenic pump in the LNG tank must be
maintained
SCR is required – costing about $0.01 per mile

13. 13
Other Miscellaneous Operating Cost Differences
 CNG tanks must be replaced every 20 years
 NG truck weight carrying capacity reduction:
CNG tanks add about 10 to 20 lbs per DGE net
LNG tanks add about 5 lbs per DGE net
 On spark ignited engines, there is no DPF or SCR system
to maintain or potentially fail

14. 14
Fuel Cost Operating Advantages
Basic Assumptions:
Truck miles per year 100,000 miles
Diesel cost 4.00 $/gallon
LNG cost per DGE 2.50 $/DGE
CNG cost per DGE 2.00 $/DGE
Diesel fuel economy 7.0 miles/DGE
NG fuel economy - CI 7.0 miles/DGE
NG fuel economy - SI 6.3 miles/DGE
Fuel Operating Cost Advantage Analysis:
Truck Premium Diesel Fuel Cost NG Fuel Savings Payback ROI - 5 year
Engine Platform (Initial $) ($ / Year) ($ / Year) (Months) (avg % / year)
Westport HD15 (LNG) $90,000 $57,143 $21,429 50 3.8%
Cummins ISX12G (CNG) - Current $45,000 $57,143 $25,397 21 36.4%
Cummins ISX12G (CNG) - Future/Mature $23,000 $57,143 $25,397 11 90.4%
Yuchai 6112 (CNG) – Current $18,000 $57,143 $25,397 9 121.1%

15. 15
Payback Sensitivity to Annual Mileage
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12
24
36
48
60
72
Westport HD15 (LNG) Cummins ISX12G (CNG)
Current
Cummins ISX12G (CNG)
Future/Mature
Yuchai 6112 (CNG)
Current
PaybackPeriod(Months)
80,000 miles/year
100,000 miles/year
120,000 miles/year