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NGV INFRASTRUCTURE FACT PACK 2012




Natural Gas Vehicle Infrastructure Market Fact Pack

                                                                  www.ngvevent.com
NGV INFRASTRUCTURE FACT PACK 2012                   |    PAGE 2




                                                                                                                                                                                   2nd Natural Gas Vehicle Infrastructure
Natural Gas Vehicle Infrastructure Market Overview                                                                                                                                 Conference & Exhibition
                                                                                                                                                                                   For more info please visit
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The IEA’s June 2011 report heralded “the golden age of gas” (IEA, 2011). Improvements in extraction
technology are making it possible to tap previously inaccessible sources of supply, and the high price of
oil compared with Natural Gas is providing companies with the incentives to do so. Shifting to Natural                   WA
                                                                                                                                              MT                                                                                  ME
Gas is not a carbon neutral approach, but in the short term provides a path toward a less                                                                  ND
                                                                                                                                                                                                                            VT
carbon-intensive energy future.                                                                                      OR                                                 MN                                                       NH
                                                                                                                                    ID                    SD
                                                                                                                                                                                     WI                                      MA
                                                                                                                                                                                                                       NY       RI
Natural Gas has great potential as a transportation fuel, and many countries have already shifted to                                          WY
                                                                                                                                                                                                 MI                          CT
promote its use. NGVs have been available since the 1930s. Today’s NGVs do not represent a disruptive                                                                    IA                                  PA
                                                                                                                                                            NE                                                         NJ
technology, as little technological innovation has been required to modify existing vehicles to burn                      NV                                                          IL
                                                                                                                                                                                                      OH
                                                                                                                                         UT                                                 IN                      MD DE
Natural Gas as a transportation fuel. Rather, Natural Gas is a disruptive resource, where recent                                                                                                      Washington DC
                                                                                                                                                   CO                                                     WV
                                                                                                                    CA                                                                                          VA
innovations in hydraulic fracturing have allowed for substantial domestic Natural Gas resources to be                                                            KS           MO
                                                                                                                                                                                                 KY
accessed, at a cost far less than that of gasoline and diesel produced from imported oil, has changed                                                                                                             NC
the playing field for NGVs in North America.                                                                                                                        OK
                                                                                                                                                                                            TN
                                                                                                                                   AZ
                                                                                                                                               NM                             AR                            SC
                                                                                                                                                                                      MS
It’s clear that the NGV market is at a tipping point, where operating cost advantages, lower emissions                                                                                       AL        GA
and energy independence considerations are combining to lead public and private sector players to                                                           TX
promote CNG & LNG as a transportation fuel.                                                                                                                                   LA
                                                                                                                                                                                                             FL
                                                                                                                     AL

In this mini report we look a little further into the major challenge impacting the development of this
market, the lack of refuelling infrastructure. We will share the perspectives of key stakeholders from
across the industry on how they are working to overcome this hurdle and grow the NGV market in
North America.




   United States’ global ranking                   AT&T’s investment                        Federal funding for                Time taken to repay fuel/station
          (No. of NGVs)                                in NGVs                             Home fuelling research                capital costs/trucks for Dillon
                                                                                                                                    Transport’s NG stations

               14                             $565 million                                $30 million                              50 months
NGV INFRASTRUCTURE FACT PACK 2012     |   PAGE 3




                                                                                                                                                            2nd Natural Gas Vehicle Infrastructure
Concentration of NGV fuelling stations in the US                                                                                                            Conference & Exhibition
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                                                                                                                                                                47
  CALIFORNIA                                 UTAH                                    COLORADO, OKLAHOMA,                NEW YORK
  Ranked 1st nationally for NG               Ranked 3rd nationally for NG            PENNSYLVANIA and TEXAS             Ranked 2nd
  infrastructure. Pioneer in air             infrastructure. 9% of CNG               All strongly promote               nationally for NG       LNG stations are operating nationwide
  quality policies and provides              vehicles (11,000) in the United         infrastructure investments         infrastructure
  incentives for converting to               States are located here.
  alternative WA vehicles and
              fuel
  infrastructure construction.
                                                                                                                                                              988
                                           MT                                                                                         ME
                                                               ND
             OR                                                                                                                 VT
                                                                               MN                                                    NH         CNG stations are operating nationwide
                             ID                                SD                         WI                                     MA
                                                                                                                           NY
                                                                                                       MI                           RI
                                              WY                                                                                 CT
                                                                                IA                                 PA
                  NV                                           NE                                                           NJ
                                                                                                            OH
                                  UT                                                        IL    IN                     MD DE
                                                                                                            Washington DC
        CA                                         CO                                                           WV
                                                                    KS               MO                               VA
                                                                                                       KY
                                                                                                                  NC
                                                                                                   TN
                             AZ                                          OK
                                              NM                                     AR
                                                                                           MS
                                                                                                   AL        GA
                                                                                                                  SC
                                                                                                                                                        180,000
                                                                                                                                            conventional stations are operating nationwide
                                                                 TX
                                                                                     LA
           AL                              Legend: Natural Gas Stations                                            FL
                                                None                51-100
                                                10 or less          101-200
                                                11-20               201-300
                                                21-50

Source: www.cleanenergyfuels.com/pdf/CE-OS.ANGH.012412.pdf
NGV INFRASTRUCTURE FACT PACK 2012     |   PAGE 4




                                                                                     2nd Natural Gas Vehicle Infrastructure
America’s natural gas highway                                                        Conference & Exhibition
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                                                             Clean Energy co-founder T. Boone Pickens, a $150 million
                                                             investment by Chesapeake Energy Corporation, and investments
                                                             by additional international investors: Temasek Holdings, Seatown
                                                             Holdings and RRJ Capital Master Fund.




Source: www.cleanenergyfuels.com/pdf/CE-OS.ANGH.012412.pdf
Source: www.cleanenergyfuels.com/pdf/CE-OS.ANGH.012412.pdf
NGV INFRASTRUCTURE FACT PACK 2012    |   PAGE 5




                                                                                                                                                                         2nd Natural Gas Vehicle Infrastructure
NGV infrastructure global map                                                                                                                                            Conference & Exhibition
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                                                                                              1 – 10           11 – 25   USA
  10. UKRAINE                                              7. CHINA                                                                                                           14. USA
  Natural gas vehicles:           200,000                  Natural gas vehicles:   450,000                                                                                    Natural gas vehicles:    112,000
  Refuelling stations:                285                  Refuelling stations:      1,350                                                                                    Refuelling stations:       1,000
  (December 2006)                                          (December 2009)                                                                                                    (December 2010)




                                                                                                                                                                              4. BRAZIL
                                                                                                                                                                              Natural gas vehicles: 1,664,847
                                                                                                                                                                              Refuelling stations:      1,725
                                                                                                                                                                              (December 2010)




  6. ITALY                                                                                   9. THAILAND                           8. COLUMBIA
  Natural gas vehicles:           730,000                                                    Natural gas vehicles:       218,459   Natural gas vehicles:   340,000
  Refuelling stations:                790                                                    Refuelling stations:            426   Refuelling stations:        614
  (December 2010)                                                                            (November 2010)                       (December 2010)




  2. IRAN                                                  1. PAKISTAN                       5. INDIA                              3. ARGENTINA
  Natural gas vehicles: 1,954,925                          Natural gas vehicles: 2,740,000   Natural gas vehicles: 1,080,000       Natural gas vehicles: 1,954,925
  Refuelling stations:      1,574                          Refuelling stations:      3,285   Refuelling stations:        571       Refuelling stations:      1,878
  (December 2010)                                          (December 2010)                   (December 2010)                       (December 2010)




Source: http://iangv.org/tools-resources/statistics.html
NGV INFRASTRUCTURE FACT PACK 2012     |   PAGE 6




                                                                                                                                                                       2nd Natural Gas Vehicle Infrastructure
NGV Infrastructure Overview                                                                                                                                            Conference & Exhibition
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Weak Infrastructure is a major obstacle to development of the natural gas vehicle market— despite     Recently FC Business Intelligence surveyed 202 NGV executives to determine the most important
the considerable operating cost advantages switching to natural gas provides to fleet managers.        factors in the future market size of Natural Gas Vehicles. Availability of NG stations emphatically proved
Currently, natural costs $2.64 less per gallon equivalent than does diesel in Boston and Washington   to be most important, with 95% of the executives considering it very important. An obstacle that
D.C., and $3.26 in Portland, Oregon, and this trend looks set to continue.                            companies are addressing.

                                                                                                      Here’s a breakdown of the survey results:




                Spread of price
                between Diesel
                                                       Availability
                                                      of Natural Gas
                                                                                                                          Lack of NG
                                                                                                                            stations                                                         65%
                 & Natural Gas                           supplies




                                                                                                                          Lack of tax
                                                                                                                          incentives                                                         24%

                                                                                                                        Complicated

                                                                                                                                                                                             22%
                  Availability                         Availability                                                           fuel tax
                 of Natural Gas                       of Natural Gas                                                  obligations for
                    vehicles                             stations                                                     station owners




                                                                                                                        High relative
                                                                                                                          cost of NG
                                                                                                                            vehicles                                                            8%

Source: FC Business Intelligence survey, April 2012
NGV INFRASTRUCTURE FACT PACK 2012    |   PAGE 7




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Forecasted NGV infrastructure timeline                                                                      Conference & Exhibition
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                                                      CNG will
                                                                                37%   60%    57%   36%




            43% of Natural Gas producers believe
                 that LNG will fuel 51% of long
                                                                                43% 28%      48%   40%                     40%           28%
                       haul operators by 2020.




    60% of Natural Gas Utilities believe that NG
     stations will be easily available by 2030.                     29%        64% 60% 29%   29%   60%



           50% of Equipment suppliers think that
            home refuelling appliances will be                   50% 40% 43%      44%              Equipment suppliers
                                                                                                   Natural Gas producers
                                                                                                                              Fleet managers
                                                                                                                              Natural Gas Utilities
                      easily available by 2015.




                                                                    2015          2020         2030                             Never
Source: FC Business Intelligence survey, April 2012
NGV INFRASTRUCTURE FACT PACK 2012     |   PAGE 8




                                                                                                                                                                                  2nd Natural Gas Vehicle Infrastructure
NGV Industry Perspectives:                                                                                                                                                        Conference & Exhibition
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Significant strides are being made by stakeholders from across the value chain including fleet opera-              FC Business Intelligence Interviewed a number of stakeholders from across the value chain to get their
tors, natural gas utilities, c-store’s / truck stops and natural gas producers alike to develop CNG & LNG        thoughts and perspectives on how they are working to develop CNG & LNG infrastructure.
infrastructure and to stake their claim to a part of this burgeoning industry.
                                                                                                                 Here’s feedback from Apache Corp, Chesapeake Energy, Drive Natural Initiative and NGV Global


BUSINESS MODELS: How is your organization involved in driving this market forward?                               Kathryn Clay: The Drive Natural Gas Initiative is a collaboration between producers of natural gas and
                                                                                                                 the distributors of natural gas. We now have about 50 companies, about half from each side. Our
Frank Chapel: Apache’s mission is to promote natural gas as the alternative transportation fuel of               mission is to promote natural gas to meet the goals of energy security and environment benefits, and
choice. We are doing this by transforming our US fleet vehicles to natural gas-power and constructing             doing the work that needs to be done on the infrastructure side to make that happen.
CNG fueling stations to support this initiative. We have converted more than 230 of our 900-plus US
fleet vehicles to natural gas-power, about 26 per cent. By the end of 2015, our objective is to have over         When we go to vehicle manufacturers and ask them what it would take to build this market, the
80 per cent of our US fleet powered by CNG. To support that, we have constructed 16 CNG fueling                   number one thing they say is a gas station fueling infrastructure. We know it’s up to us to build that. We
stations, with 5 of these being publicly accessible to serve other fleets and individuals.                        have to get out of this old mindset of whether it’s the vehicles first or the infrastructure. We have to
                                                                                                                 move to a new paradigm where we do both together.
Historically, the industry has had a “chicken and egg” dilemma. Nobody wanted to build the fueling
station infrastru ture because there were no vehicles and nobody wanted to provide the vehicles                  We see this materializing in regions that have had success, like Southern California, Utah and part of the
because of the lack of fueling station infrastructure. There were also no significant fuel savings, or other      Rocky Mountain region, with its natural gas corridor. The Texas Clean Transportation Triangle is another
advantages. That has all changed. We now have a very attractive price differential between natural gas            good example of where local distribution companies, stakeholders and fleet operators have come
as a transportation fuel and conventional fuels. This economic advantage – $1.50 to $2.00 per                    together and agreed on building fleets and infrastructure at the same time. Both sides do the
equivalent gallon savings – is projected to continue. As a result, fleet managers and individuals are             investment without the other worrying that the other isn’t going to fall into place.
finding it very compelling to consider this. I feel that the “chicken and egg” argument is no longer valid.
Natural gas fueling station infrastructure is rapidly expanding, with the objective of increasing the            We are looking at building on those examples, and that Pennsylvania might be another good
availability of natural gas fueling in metro markets and along the inter-and intra-state corridors.              opportunity. It has tremendous resources of shale gas, which means that if we build the infrastructure,
Utilizing natural gas as a transportation fuel is a real win-win. It provides great fuel savings and a           the resource to be used locally, making natural gas a strong job-creating force. Also, because of its
significant reduction in harmful vehicle exhaust emissions. And it is an abundant American product                location, we think Pennsylvania can provide a structure for buildout to the neighboring states. The
that can reduce our dependency on petroleum imports.                                                             Pennsylvania Turnpike is one of the most heavily trafficked roads in the country. It is one of he most
                                                                                                                 important arteries for long-haul trucking, and really joins up the North East and the Mid West. That’s a
Brett Jarman: NGV Global was formed 25 years ago in New Zealand. At that point, the technology                   key corridor, and we think it could help move our issue forward.
was very young, and the industry was immature, but there was a lot of enthusiasm. In the last 10 or 12
years, it has really matured significantly. Our role is to facilitate increased use of natural gas vehicles any   Norman Herrera: Chesapeake has 4,500 vehicles in 18 states that we are converting to natural gas. We
way we can. We are not at street level doing conversions or supplying gas; we leave that to industry             know there are other companies out there that are also converting their fleets. Transportation is the
members. But we are doing what we can to remove barriers, for example by harmoniing standards,                   third leg of the stool after power generation and industrials, and all of us have an interest in seeing the
trying to solve legislative problems, and promoting industry safety. We can’t be in every country, but           market grow. We all drive similar three-quarter ton trucks that we can purchase at quantities. We are
there is a network of associations around the world. Where possible, we help with information to                 converting our vehicles and providing a market that’s on the road and using the fuels.
promote their cause.
NGV INFRASTRUCTURE FACT PACK 2012     |   PAGE 9




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We are saying to retailers: ‘You don’t need to worry that customers are going to come, you can be              Frank Chapel: More OEMs need to begin the assembly line production of natural gas vehicles.
profitable not only selling gasoline and diesel but by selling compressed natural gas. We think our             Hopefully, this will result in economies of scale, and a reduction in the increased cost of natural
energy future can be supplied 100 percent by homegrown resources, where we can take advantage of               gas-powered vehicles. In addition, this may result in a larger selection of available vehicles.
the tremendous exploration going on, and the abundance of energy we have now.’
                                                                                                               A second obstacle is the limited number of vehicle makes or models that have been approved by the
Then, we’re going to be investing heavily so that retailers like Clean Energy Fuels, Pilot Flying J, Love’s,   EPA for conversion to natural gas power. I believe that both of these obstacles will be overcome due to
and On Cue Express, which may need assistnce are all maintaining stations, and can help us solve the           the increasing natural gas vehicle demand. Third is the general lack of knowledge about the benefits of
chicken-and-egg conundrum of infrastructure or vehicles.                                                       natural gas as a transportation fuel. A lot of people I talk to confuse it with propane. Considering that
                                                                                                               the US has more natural gas than Saudi Arabia has oil, its time has come to play an important role in
And, we’re looking at other segments, like transits, refuse trucks, and delivery fleets. The refuse market is   our energy policy. I think we’ve got a really good story to tell beyond the savings: that it’s clean,
really exciting because you’ve got cities across the country making decisions to convert their waste           abundant, and American.
haulage to natural gas. It’s a sector that has low fuel economy and lots of starting and stopping, and
the emissions requirements in certain areas of the country are policed pretty heavily.                         My advice to anyone thinking of converting their vehicle would be to engage only experienced
                                                                                                               conversion kit dealers or installers who are trained and certified by the EPA-certified conversion kit
On delivery vehicles, you’ve seen UPS and Ryder show great leadership, and Fedex is considering                manufacturers. It is important that the driving experience be transparent – that it feels the same as
switching. What’s great about that part of the market is that you’ve got an OEM solution that can fuel at      when powered by the conventional fuel. Using reputable and experienced providers for these
publicly available locations, as well at behindthe- fence locations. These early adopters are all              conversion services will help ensure this transparency.
companies people have heard of, they have heavy mileage, and consistency in their routes.
                                                                                                               MARKET CHALLENGES: What obstacles does the industry need to address?
PARTNERSHIPS: What alliances do you have with other organizations?
                                                                                                               Brett Jarman: If you look at the mobile phone industry, back in the 1980s phones were horrendously
Norman Herrera: We’re talking with automakers. They need to have confidence they can allocate                   expensive, it was hard to get reception, they were very heavy, and had a battery life of about an hour.
resources to engineering, and to brake and crash testing the new vehicles. They are only going to do           There wasn’t much infrastructure to support them. What drove the market was consumer interest. And
that if there is a customer base. We need to partner with them, and explain the value proposition of an        that’s the thing that has to come first for our industry too. As long as we can drive demand, the
abundant fuel that is present throughout the country.                                                          infrastructure and the vehicles will follow. If we go back more than 100 years to Henry Ford’s day, there
                                                                                                               weren’t many fueling stations then. But now there are stations on pretty much every street corner. It’s
Honda already has its Civic GX vehicle in the market, and GM has announced that its Express and                the customer that comes first, not the vehicles or the infrastructure. That’s where you get growth, and I
Savannah vans are going to be fully certified and warrantied. Then you have Ford and Chrysler looking           think we’re seeing that round the world now.
at this market. Some of these companies already have bi-fuel vehicles that sell well in other countries,
so it’s about combining those success stories, and making our case.
NGV INFRASTRUCTURE FACT PACK 2012     |   PAGE 10




                                                                                                                                                                                 2nd Natural Gas Vehicle Infrastructure
NGV Industry Perspectives:                                                                                                                                                       Conference & Exhibition
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We can learn a lot from nations that have developed big NGV markets. They have done that entirely               Second, we need to improve the comfort-level of vehicle and engine manufacturers that this market is
with converted vehicles, no OEMs. All the fueling stations have grown organically. The same can be said         ready for natural gas vehicles. We don’t need any technology breakthroughs. These vehicles are on offer
about Pakistan, which has about 2,500 fueling stations, and more than 2 million vehicles. That wasn’t           in other markets in South America, Europe, and increasingly in Asia. It’s just a question of bringing them
driven by OEM availability, or the fueling stations. It was driven by consumers.                                to North America. Ironically, the US is largest producer of natural gas vehicles, but only 1 percent of 12
We can learn from their mistakes as well. Even though they have a lot of vehicles and fueling stations,         million worldwide are here in the United States.
they are only now waking up to opportunities in the commercial sector. That is where the North                  We learnt a lot from the 1990s about how we promote the industry, and we we were able to prove the
American market is ahead of the game. You’ve also the focus on the commercial sector, which uses                technology. The reason those attempts before were false starts is largely because of extreme price
more fuel than the moms and dads.                                                                               volatility we saw in the mid-1990s. It was also because we were in a very different place in the
                                                                                                                production of natural gas. It was going down. Every analyst thought the US was going to become an
You can’t just focus on infrastructure. Germany has something like 900 to 1000 gas stations, but they           importer of natural gas, in the form of LNG. Shale gas has revolutionized the energy landscape. The US
only have 90,000 vehicles. That’s a ratio of 100 vehicles per station, where the global average is closer to    is no longer looking at a future of natural gas importation, but having our own supplies for up to a 100
1,000 vehicles per station. It is in the interests of the infrastructure providers to generate demand, and      years into the future. Going forward, we can expect oil prices to rise and stay volatile, while natural gas
that’s the shift I’ve noticed in the US in the last five years. The gas industry now sees its role in shifting   is expected to stay low and stable. That means it’s going to become even more attractive fuel choice.
demand. They know they have to convince the fleet operators, for example.
                                                                                                                Norman Herrera: There are great stories happening across the country that aren’t told nearly enough,
So much has changed since the 1990s. First, the technology is mature. We can now match diesel and               and really it’s the industry’s responsibility to communicate that. Whether it’s a station opening in Boger
gasoline for performance. Second, the environment is now on everyone’s agenda. Back then, it was a              City, Louisana, or Cicero, in New York, you have plenty of things happening every day. Communication
PR exercise for some companies. Now it’s a factor companies have to take into consideration in their            is important.
buying decisions. There is the availability of natural gas, especially in the United States, and it’s a good
price. Back in the 1990s, when the oil price was so low, fluctuations didn’t matter so much; now they            On the regulatory side, there are always opportunities to discuss a market that has parity with other
hurt. Finally, we have the energy security issue.                                                               alternative fuels. You want to have incentive structures that a level of parity there, and that is not the
                                                                                                                case today. That is somehing that can be improved. But the prospects for the industry are much better
Kathryn Clay: We need to think about public awareness. There was a poll conducted by                            than they were in the 1990s. Then, you didn’t have the abundance of natural gas, and you had a price
TechnoMetrica that asked about natural gas as an alternative transportation fuels, and they were                point that was coupled with diesel and gasoline, so there wasn’t any differentiation. Today,
surprised by the results especially in the west of the country. Over 70 percent of Americans are awareof        you have stations in Oklahoma that have had prices of a $1.39 for gas gallon equivalent for the last 18
natural gas vehicles as an option for public transport. That was encouraging, although awareness is             months, so you have a more attractive price.
somewhat lower in the North East. We still have some work to do to build awareness in different parts
of the country.                                                                                                 You also have producer companies like Chesapeake and our peers at America’s Natural Gas Alliance
                                                                                                                that have all begun to look at this as a true market. And then you have large corporations that are
                                                                                                                studying this market and seeing that doing something domestically is appealing. Whenever you can
NGV INFRASTRUCTURE FACT PACK 2012     |   PAGE 11




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have Fortune 500 companies with their vast logistics chains and consumer channels participate, that’s      Brett Jarman: The US gas industry and vehicle manufacturers are doing a good job educating the
a big difference.                                                                                           marketplace. When you see major companies like AT&T and Ryder putting thousands of natural gas
                                                                                                           vehicles on the road, that means you are making progress. You can turn up the heat on the information
FUTURE DEVELOPMENTS: What does the industry need to do in the next few years?                              even more, but it’s good at the moment.

Kathryn Clay: We have been supportive of tax incentives for consumers of natural gas vehicles, and         The major weak link, I think, is a lack of political understanding of the importance of NGV. We need to
for companies that invest in fueling technologies. We support language that is technology neutral –        see some balance in political decision-making that says ‘our oil supplies are not that reliable, so we’ve
that gives the same level of support whether it’s gas, electric recharging, or new biofuels. We think      got to have some alternatives’. The US sends $1bn a day overseas to buy oil, and I think that could be
there is tremendous market pull already to bring natural gas vehicles into the market, but                 brought back. It would also be good to see local and federal governments themselves buying natural
thoseincentives can really accelerate the process.                                                         gas vehicles, and incentivizing the alternative fueling stations at the local level.

At the Drive Natural Gas Initiative, we are really excited about home-refueling. We have the opportunity   Norman Herrera: In the next two or three years, I would expect the big automakers to have made
to open up the passenger vehicle market in much the way as with plug-in hybrids. It would work the         announcements on pick-up trucks specifically, because that is what our industry has been driving. They
same way: you would come home at night and hook up the car to your natural gas line. It’s using the        are the vehicles that consumers can purchase as well as commercial fleet customers.
gas that is already safely delivered across the country. There was a good product on the market in the
1990s, called Fuelmaker. But we think we could make an even better product. So we have been                The second thing I expect is more announcements on infrastructure development. Chesapeake is a
reaching out to the producers of small compressors that could manufacture this. We have contacted          company that is going to continue investing. In July, we announced a nearly $1bn venture fund for
35 worldwide, and started engaging them. We think in addition to public transportation and fleet            transportation and technologies. So, in two years I think we will have additional partners outside of the
vehicles, there is a lot of potential in passenger vehicles, and that home refueling is the key to         first two, which were Sundrop and Clean Energy Fuels.
unlocking it.
                                                                                                           Finally, I think we’ll have diversity of participants outside the companies that have always participated
Frank Chapel: In the next few years we need to focus our efforts to produce a national network of           in this market. I would expect new convenience store chains, new companies doing home fueling
natural gas fueling stations. This station infrastructure must be adequate to serve the metro markets      devices, and new technologies on the compression and dispensing. We think that environmental
and the inter- and intra-state transportation corridors throughout our country. Then, anyone deciding      regulation, favorable price points, and the promise of good returns on investment make for a really a
to transform their vehicle to natural gas can do so without a concern. Currently, because of limited       bright outlook.
infrastructure in many areas, it can be prudent to convert your vehicle to bi-fuel operation, CNG or
gasoline. We also need to continue educating potential customers to the benefits of natural gas as a
transportation fuel, and working with the OEMs to encourage them to meet this future demand.
NGV INFRASTRUCTURE FACT PACK 2012     |   PAGE 12




                                                                                                                                                                           2nd Natural Gas Vehicle Infrastructure
NGV Infrastructure Business Models                                                                                                                                         Conference & Exhibition
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Companies are using different business models to develop infrastructure, which has potential to               And each of these company types employ different business models to invest in and develop
further transform the market, by making it easier for future natural gas vehicle purchasers, whether         profitable and sustainable NGV infrastructure. To give you a taste of some of the business models
they be fleet managers, or individual drivers, to fuel their vehicles. The 4 main developers of               being employed here are a couple of case studies:
infrastructure fall into 4 main categories

• Fleet Owners                              • Natural Gas Utilities                                          • C-Store, Truck Stop Operators                       • Natural Gas Producers


AT&T                                                                      Dillon
In March 2009, AT&T announced plans to invest up to $656                  Dillon has supplied a sample ROI calculation that demonstrates the possible payback for switching to NG.
million as part of a long-term strategy to deploy approximately
15,000 alternative-fuel vehicles through 2018. Up to 8,000 of
these vehicles will be CNG vehicles, representing one of the
largest US corporate commitments to CNG vehicles to date.
AT&T has also committed to replacing gasoline-powered
passenger vehicles it retires with alternative fuel models,
including replacing more than 7,000 passenger cars through
2018. AT&T had deployed more than 6,000 alternative fuel
                                                                                           10 trucks
vehicles as of January 2012, including more than 4,500 CNG                                                                        400,000 DGE per year                               Incremental cost of
                                                                                               x
vehicles and more than 1,600 hybrid electric vehicles.                                                                                      x                                         NG truck $50,000
                                                                                      200,000 miles a year
                                                                                                                                    $1.50 fuel savings                                        x
                                                                                                :
                                                                                                –
                                                                                                                                            =                                            10 vehicles
                                                                                            5mpg
Clean Energy / Navistar
                                                                                              =                                       $600,000                                                =
In 2012, Clean Energy and Navistar entered into an agreement
                                                                                     400,000 DGE per year                      savings on fuel costs per year                          $500,000
to supply customers with NG-fueled trucks, if customers agree
to purchase NG from Clean Energy. The program will commence
with MD trucks, and then expand to include Heavy Duty (HD)                Payback period for trucks is 10 months.
rigs during 2013. Navistar will develop and sell the NGVs, while
Clean Energy is responsible for necessary fueling infrastructure.
                                                                          development

Ryder
Ryder launched an HD and Medium Duty (MD) truck rental and
leasing project in Southern California, with an initial order of 202
vehicles in July 2011. The company will construct two NG fueling
NGV INFRASTRUCTURE FACT PACK 2012         |   PAGE 14




                                                                                                                                                                      2nd Natural Gas Vehicle Infrastructure
Infrastructure Business Models                                                                                                                                        Conference & Exhibition
                                                                                                                                                                      For more info please visit
                                                                                                                                                                      www.ngvevent.com




Apache Corporation                                                                                   Chesapeake Energy

Apache opened public access CNG stations, in Tulsa, Oklahoma, and Lafayette, Louisiana in            Chesapeake Energy Corporation has invested $150 million in America’s Natural Gas Highway,
April 2012. By the end of 2012, 20 NG fueling stations will be in place, five of which will be        and has also partnered with national fuel station retailers, such as Love’s Travel Stops & Country
public access, and will include a station in Houston, Texas, and two in Midland, Texas.              Stores. Chesapeake, in conjunction with GE, is also developing a proprietary CNG In A Box™
The company’s business model is simple. Converting 80% of its fleet to NG by 2015 requires            technology, a plug and play unit, that will allow Chesapeake to extend the Love’s model and
it to build necessary supporting infrastructure. Once in place, that infrastructure makes it         partner with other retailers, especially chain convenience stores, with sufficient scale to allow
convenient for other companies to convert their fleets to NG. Other fleet managers can                 incremental gains in fueling availability. This strategy targets existing retail stores and chains,
realize operational cost savings without the need to construct their own stations, since they        which already own necessary real estate, have verifiable existing traffic counts, and enjoy
can use either Apache’s public access stations, or take advantage of Apache’s liberal policy         significant consumer popularity.
of entering into agreements that allow other fleets access to its stations. This model creates        Some companies have invested in general infrastructural development. Other companies have
a cycle of market building. Apache has so far signed agreements with Chesapeake Energy               decided to construct their own infrastructure:
Corporation and Laredo Petroleum to allow them to use Apache’s network of private CNG
fueling stations and is open to entering into further such agreements.                               • Waste Management has elected to allow public access to their stations, when it can do so safely, to
                                                                                                       increase the baseload on each station and thus reap the greatest return on their investment.
Clean Energy Fuels                                                                                   • Questar Gas Company, which constructed its first CNG station in 1981, is extremely selective about
                                                                                                       siting and constructing stations, which it does according to a standardized plan, focused intensely on
Clean Energy is developing America’s Natural Gas Highway, a network of 150 million LNG and             cost minimization.
LNGC fueling stations, to be operational by the end of 2013. The company is partnering with          • Mansfield Energy, by contrast, provides its customers with highly customized solutions in station
Pilot Flying J Truck Travel Centers, a major operator of truck stops throughout the U.S., so           siting and design. Mansfield helps customers decide where to locate their stations by using
allowing Clean Energy to add NG fueling options to the services already offered at Pilot Flying J’s     Mansfield’s extensive customer records of refined products purchase data.
extensive network of truck stops.
NGV INFRASTRUCTURE FACT PACK 2012     |   PAGE 15




                                                                                                                                                                        2nd Natural Gas Vehicle Infrastructure
NGV Industry Thought Leaders Perspectives                                                                                                                               Conference & Exhibition
                                                                                                                                                                        For more info please visit
                                                                                                                                                                        www.ngvevent.com




Industry Thought Leaders in Their Own Words

As part of the 1st Natural Gas Vehicle Infrastructure Conference & Exhibition USA leaders from across
the NGV industry shared their perspectives on the NGV market development – here are a couple of
presentations so you can hear the thoughts of some of the industry’s leading pioneers on this subject.




The Utilities Critical Role in NGV Market Development                                                      Building Blocks in the Infrastructure of a Growing Natural Gas Highway Network

• Discover why now is a critical time for regulators to embrace innovative approaches to utility           • Discover how Encana is expanding its use of liquefied natural gas (LNG) in large freight vehicles
  participation in NGV infrastructure development                                                            through its new mobile LNG fuelling stations
• Hear why an approach is needed that will allow utilities to add their expertise and private capital to   • Learn how Encana is working with public and private stakeholders to stimulate demand, create
  the NGV market while Protecting ratepayers and supporting new entrants and growth of                       incentives and tax breaks and attract investment to set up a natural gas fuelling corridor for
  competitive markets                                                                                        Canada
• Learn what SoCalGas is doing in order to grow the market for NGV’s and NGV Infrastructure in             • Hear insight into Encana’s multi-year plan to convert a large number of the more than 1,400
  California and beyond                                                                                      trucks and passenger vehicles in Encana’s fleet to run on natural gas
Michael Allman, Chief Executive Officer, Southern California Gas Company (SoCalGas)                        Eric Marsh, Executive Vice-President & Senior Vice-President, USA Division, Encana Natural Gas




          Download PDF                                                              Play Audio                      Download PDF                                                                 Play Audio
NGV INFRASTRUCTURE FACT PACK 2012       |   PAGE 16




2nd Natural Gas Vehicle Infrastructure Conference & Exhibition
February 24-26, Renaissance Hotel, Houston
North America’s Premier NGV Focussed Event




                         Dave McCurdy                               John Somerhalder                        Ron Jibson                               Laurence Downes                          Gordon Gillette
                         CEO                                        CEO                                     CEO                                      CEO                                      President
                         American Gas                               AGL Resources                           Questar Corporation                      New Jersey                               Tampa Electric/
                         Association                                                                                                                 Natural Gas                              People’s Gas




North America’s leading Natural Gas Vehicle focused conference is back for its second sell-out year. This     Plus exclusive fleet case studies from the nation’s leading NGV fleet operators, top Policy makers from
is the only forum that will give you the direction and tools you need to build a comprehensive Natural        across the US discuss how they are working to move NGV’s centre stage, home refuelling & much
Gas Vehicle Infrastructure strategy to ensure success in this booming market.                                 much more…

Over 600 senior decision makers will be in attendance to network, do business and exchange the latest
industry updates. Our world class agenda will equip you with business critical information:

• NGV Infrastructure Business Models: Hear from the nation’s leading utilities & c-store’s on
  how to develop a profitable and sustainable NGV business
• Marketing & Communication: Innovative and effective ways in which to communicate the
  benefits of NGV’s to win fleet customers and secure long term contracts                                                         For more information on the conference
                                                                                                                                  including the full agenda and fantastic
• Technology Updates and Developments: Discover the very latest in NGV vehicle and                                                speaker line up please CLICK HERE
  infrastructure technology developments to ensure you have the crucial knowledge your
  customers require
• Planning, Siting & Project Development: Benefit from a comprehensive assessment of NGV
  Infrastructure project development approaches, utilizing the latest project experience to
  maximize efficiency and minimize costs
• Partnerships & Alliances: Form key partnerships with leading companies from across the NGV
  value chain in North America to expand your NGV business and guarantee project success

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NGV-Market-Fact-Pack

  • 1. NGV INFRASTRUCTURE FACT PACK 2012 Natural Gas Vehicle Infrastructure Market Fact Pack www.ngvevent.com
  • 2. NGV INFRASTRUCTURE FACT PACK 2012 | PAGE 2 2nd Natural Gas Vehicle Infrastructure Natural Gas Vehicle Infrastructure Market Overview Conference & Exhibition For more info please visit www.ngvevent.com The IEA’s June 2011 report heralded “the golden age of gas” (IEA, 2011). Improvements in extraction technology are making it possible to tap previously inaccessible sources of supply, and the high price of oil compared with Natural Gas is providing companies with the incentives to do so. Shifting to Natural WA MT ME Gas is not a carbon neutral approach, but in the short term provides a path toward a less ND VT carbon-intensive energy future. OR MN NH ID SD WI MA NY RI Natural Gas has great potential as a transportation fuel, and many countries have already shifted to WY MI CT promote its use. NGVs have been available since the 1930s. Today’s NGVs do not represent a disruptive IA PA NE NJ technology, as little technological innovation has been required to modify existing vehicles to burn NV IL OH UT IN MD DE Natural Gas as a transportation fuel. Rather, Natural Gas is a disruptive resource, where recent Washington DC CO WV CA VA innovations in hydraulic fracturing have allowed for substantial domestic Natural Gas resources to be KS MO KY accessed, at a cost far less than that of gasoline and diesel produced from imported oil, has changed NC the playing field for NGVs in North America. OK TN AZ NM AR SC MS It’s clear that the NGV market is at a tipping point, where operating cost advantages, lower emissions AL GA and energy independence considerations are combining to lead public and private sector players to TX promote CNG & LNG as a transportation fuel. LA FL AL In this mini report we look a little further into the major challenge impacting the development of this market, the lack of refuelling infrastructure. We will share the perspectives of key stakeholders from across the industry on how they are working to overcome this hurdle and grow the NGV market in North America. United States’ global ranking AT&T’s investment Federal funding for Time taken to repay fuel/station (No. of NGVs) in NGVs Home fuelling research capital costs/trucks for Dillon Transport’s NG stations 14 $565 million $30 million 50 months
  • 3. NGV INFRASTRUCTURE FACT PACK 2012 | PAGE 3 2nd Natural Gas Vehicle Infrastructure Concentration of NGV fuelling stations in the US Conference & Exhibition For more info please visit www.ngvevent.com 47 CALIFORNIA UTAH COLORADO, OKLAHOMA, NEW YORK Ranked 1st nationally for NG Ranked 3rd nationally for NG PENNSYLVANIA and TEXAS Ranked 2nd infrastructure. Pioneer in air infrastructure. 9% of CNG All strongly promote nationally for NG LNG stations are operating nationwide quality policies and provides vehicles (11,000) in the United infrastructure investments infrastructure incentives for converting to States are located here. alternative WA vehicles and fuel infrastructure construction. 988 MT ME ND OR VT MN NH CNG stations are operating nationwide ID SD WI MA NY MI RI WY CT IA PA NV NE NJ OH UT IL IN MD DE Washington DC CA CO WV KS MO VA KY NC TN AZ OK NM AR MS AL GA SC 180,000 conventional stations are operating nationwide TX LA AL Legend: Natural Gas Stations FL None 51-100 10 or less 101-200 11-20 201-300 21-50 Source: www.cleanenergyfuels.com/pdf/CE-OS.ANGH.012412.pdf
  • 4. NGV INFRASTRUCTURE FACT PACK 2012 | PAGE 4 2nd Natural Gas Vehicle Infrastructure America’s natural gas highway Conference & Exhibition For more info please visit www.ngvevent.com Clean Energy co-founder T. Boone Pickens, a $150 million investment by Chesapeake Energy Corporation, and investments by additional international investors: Temasek Holdings, Seatown Holdings and RRJ Capital Master Fund. Source: www.cleanenergyfuels.com/pdf/CE-OS.ANGH.012412.pdf Source: www.cleanenergyfuels.com/pdf/CE-OS.ANGH.012412.pdf
  • 5. NGV INFRASTRUCTURE FACT PACK 2012 | PAGE 5 2nd Natural Gas Vehicle Infrastructure NGV infrastructure global map Conference & Exhibition For more info please visit www.ngvevent.com 1 – 10 11 – 25 USA 10. UKRAINE 7. CHINA 14. USA Natural gas vehicles: 200,000 Natural gas vehicles: 450,000 Natural gas vehicles: 112,000 Refuelling stations: 285 Refuelling stations: 1,350 Refuelling stations: 1,000 (December 2006) (December 2009) (December 2010) 4. BRAZIL Natural gas vehicles: 1,664,847 Refuelling stations: 1,725 (December 2010) 6. ITALY 9. THAILAND 8. COLUMBIA Natural gas vehicles: 730,000 Natural gas vehicles: 218,459 Natural gas vehicles: 340,000 Refuelling stations: 790 Refuelling stations: 426 Refuelling stations: 614 (December 2010) (November 2010) (December 2010) 2. IRAN 1. PAKISTAN 5. INDIA 3. ARGENTINA Natural gas vehicles: 1,954,925 Natural gas vehicles: 2,740,000 Natural gas vehicles: 1,080,000 Natural gas vehicles: 1,954,925 Refuelling stations: 1,574 Refuelling stations: 3,285 Refuelling stations: 571 Refuelling stations: 1,878 (December 2010) (December 2010) (December 2010) (December 2010) Source: http://iangv.org/tools-resources/statistics.html
  • 6. NGV INFRASTRUCTURE FACT PACK 2012 | PAGE 6 2nd Natural Gas Vehicle Infrastructure NGV Infrastructure Overview Conference & Exhibition For more info please visit www.ngvevent.com Weak Infrastructure is a major obstacle to development of the natural gas vehicle market— despite Recently FC Business Intelligence surveyed 202 NGV executives to determine the most important the considerable operating cost advantages switching to natural gas provides to fleet managers. factors in the future market size of Natural Gas Vehicles. Availability of NG stations emphatically proved Currently, natural costs $2.64 less per gallon equivalent than does diesel in Boston and Washington to be most important, with 95% of the executives considering it very important. An obstacle that D.C., and $3.26 in Portland, Oregon, and this trend looks set to continue. companies are addressing. Here’s a breakdown of the survey results: Spread of price between Diesel Availability of Natural Gas Lack of NG stations 65% & Natural Gas supplies Lack of tax incentives 24% Complicated 22% Availability Availability fuel tax of Natural Gas of Natural Gas obligations for vehicles stations station owners High relative cost of NG vehicles 8% Source: FC Business Intelligence survey, April 2012
  • 7. NGV INFRASTRUCTURE FACT PACK 2012 | PAGE 7 2nd Natural Gas Vehicle Infrastructure Forecasted NGV infrastructure timeline Conference & Exhibition For more info please visit www.ngvevent.com CNG will 37% 60% 57% 36% 43% of Natural Gas producers believe that LNG will fuel 51% of long 43% 28% 48% 40% 40% 28% haul operators by 2020. 60% of Natural Gas Utilities believe that NG stations will be easily available by 2030. 29% 64% 60% 29% 29% 60% 50% of Equipment suppliers think that home refuelling appliances will be 50% 40% 43% 44% Equipment suppliers Natural Gas producers Fleet managers Natural Gas Utilities easily available by 2015. 2015 2020 2030 Never Source: FC Business Intelligence survey, April 2012
  • 8. NGV INFRASTRUCTURE FACT PACK 2012 | PAGE 8 2nd Natural Gas Vehicle Infrastructure NGV Industry Perspectives: Conference & Exhibition For more info please visit www.ngvevent.com Significant strides are being made by stakeholders from across the value chain including fleet opera- FC Business Intelligence Interviewed a number of stakeholders from across the value chain to get their tors, natural gas utilities, c-store’s / truck stops and natural gas producers alike to develop CNG & LNG thoughts and perspectives on how they are working to develop CNG & LNG infrastructure. infrastructure and to stake their claim to a part of this burgeoning industry. Here’s feedback from Apache Corp, Chesapeake Energy, Drive Natural Initiative and NGV Global BUSINESS MODELS: How is your organization involved in driving this market forward? Kathryn Clay: The Drive Natural Gas Initiative is a collaboration between producers of natural gas and the distributors of natural gas. We now have about 50 companies, about half from each side. Our Frank Chapel: Apache’s mission is to promote natural gas as the alternative transportation fuel of mission is to promote natural gas to meet the goals of energy security and environment benefits, and choice. We are doing this by transforming our US fleet vehicles to natural gas-power and constructing doing the work that needs to be done on the infrastructure side to make that happen. CNG fueling stations to support this initiative. We have converted more than 230 of our 900-plus US fleet vehicles to natural gas-power, about 26 per cent. By the end of 2015, our objective is to have over When we go to vehicle manufacturers and ask them what it would take to build this market, the 80 per cent of our US fleet powered by CNG. To support that, we have constructed 16 CNG fueling number one thing they say is a gas station fueling infrastructure. We know it’s up to us to build that. We stations, with 5 of these being publicly accessible to serve other fleets and individuals. have to get out of this old mindset of whether it’s the vehicles first or the infrastructure. We have to move to a new paradigm where we do both together. Historically, the industry has had a “chicken and egg” dilemma. Nobody wanted to build the fueling station infrastru ture because there were no vehicles and nobody wanted to provide the vehicles We see this materializing in regions that have had success, like Southern California, Utah and part of the because of the lack of fueling station infrastructure. There were also no significant fuel savings, or other Rocky Mountain region, with its natural gas corridor. The Texas Clean Transportation Triangle is another advantages. That has all changed. We now have a very attractive price differential between natural gas good example of where local distribution companies, stakeholders and fleet operators have come as a transportation fuel and conventional fuels. This economic advantage – $1.50 to $2.00 per together and agreed on building fleets and infrastructure at the same time. Both sides do the equivalent gallon savings – is projected to continue. As a result, fleet managers and individuals are investment without the other worrying that the other isn’t going to fall into place. finding it very compelling to consider this. I feel that the “chicken and egg” argument is no longer valid. Natural gas fueling station infrastructure is rapidly expanding, with the objective of increasing the We are looking at building on those examples, and that Pennsylvania might be another good availability of natural gas fueling in metro markets and along the inter-and intra-state corridors. opportunity. It has tremendous resources of shale gas, which means that if we build the infrastructure, Utilizing natural gas as a transportation fuel is a real win-win. It provides great fuel savings and a the resource to be used locally, making natural gas a strong job-creating force. Also, because of its significant reduction in harmful vehicle exhaust emissions. And it is an abundant American product location, we think Pennsylvania can provide a structure for buildout to the neighboring states. The that can reduce our dependency on petroleum imports. Pennsylvania Turnpike is one of the most heavily trafficked roads in the country. It is one of he most important arteries for long-haul trucking, and really joins up the North East and the Mid West. That’s a Brett Jarman: NGV Global was formed 25 years ago in New Zealand. At that point, the technology key corridor, and we think it could help move our issue forward. was very young, and the industry was immature, but there was a lot of enthusiasm. In the last 10 or 12 years, it has really matured significantly. Our role is to facilitate increased use of natural gas vehicles any Norman Herrera: Chesapeake has 4,500 vehicles in 18 states that we are converting to natural gas. We way we can. We are not at street level doing conversions or supplying gas; we leave that to industry know there are other companies out there that are also converting their fleets. Transportation is the members. But we are doing what we can to remove barriers, for example by harmoniing standards, third leg of the stool after power generation and industrials, and all of us have an interest in seeing the trying to solve legislative problems, and promoting industry safety. We can’t be in every country, but market grow. We all drive similar three-quarter ton trucks that we can purchase at quantities. We are there is a network of associations around the world. Where possible, we help with information to converting our vehicles and providing a market that’s on the road and using the fuels. promote their cause.
  • 9. NGV INFRASTRUCTURE FACT PACK 2012 | PAGE 9 2nd Natural Gas Vehicle Infrastructure NGV Industry Perspectives: Conference & Exhibition For more info please visit www.ngvevent.com We are saying to retailers: ‘You don’t need to worry that customers are going to come, you can be Frank Chapel: More OEMs need to begin the assembly line production of natural gas vehicles. profitable not only selling gasoline and diesel but by selling compressed natural gas. We think our Hopefully, this will result in economies of scale, and a reduction in the increased cost of natural energy future can be supplied 100 percent by homegrown resources, where we can take advantage of gas-powered vehicles. In addition, this may result in a larger selection of available vehicles. the tremendous exploration going on, and the abundance of energy we have now.’ A second obstacle is the limited number of vehicle makes or models that have been approved by the Then, we’re going to be investing heavily so that retailers like Clean Energy Fuels, Pilot Flying J, Love’s, EPA for conversion to natural gas power. I believe that both of these obstacles will be overcome due to and On Cue Express, which may need assistnce are all maintaining stations, and can help us solve the the increasing natural gas vehicle demand. Third is the general lack of knowledge about the benefits of chicken-and-egg conundrum of infrastructure or vehicles. natural gas as a transportation fuel. A lot of people I talk to confuse it with propane. Considering that the US has more natural gas than Saudi Arabia has oil, its time has come to play an important role in And, we’re looking at other segments, like transits, refuse trucks, and delivery fleets. The refuse market is our energy policy. I think we’ve got a really good story to tell beyond the savings: that it’s clean, really exciting because you’ve got cities across the country making decisions to convert their waste abundant, and American. haulage to natural gas. It’s a sector that has low fuel economy and lots of starting and stopping, and the emissions requirements in certain areas of the country are policed pretty heavily. My advice to anyone thinking of converting their vehicle would be to engage only experienced conversion kit dealers or installers who are trained and certified by the EPA-certified conversion kit On delivery vehicles, you’ve seen UPS and Ryder show great leadership, and Fedex is considering manufacturers. It is important that the driving experience be transparent – that it feels the same as switching. What’s great about that part of the market is that you’ve got an OEM solution that can fuel at when powered by the conventional fuel. Using reputable and experienced providers for these publicly available locations, as well at behindthe- fence locations. These early adopters are all conversion services will help ensure this transparency. companies people have heard of, they have heavy mileage, and consistency in their routes. MARKET CHALLENGES: What obstacles does the industry need to address? PARTNERSHIPS: What alliances do you have with other organizations? Brett Jarman: If you look at the mobile phone industry, back in the 1980s phones were horrendously Norman Herrera: We’re talking with automakers. They need to have confidence they can allocate expensive, it was hard to get reception, they were very heavy, and had a battery life of about an hour. resources to engineering, and to brake and crash testing the new vehicles. They are only going to do There wasn’t much infrastructure to support them. What drove the market was consumer interest. And that if there is a customer base. We need to partner with them, and explain the value proposition of an that’s the thing that has to come first for our industry too. As long as we can drive demand, the abundant fuel that is present throughout the country. infrastructure and the vehicles will follow. If we go back more than 100 years to Henry Ford’s day, there weren’t many fueling stations then. But now there are stations on pretty much every street corner. It’s Honda already has its Civic GX vehicle in the market, and GM has announced that its Express and the customer that comes first, not the vehicles or the infrastructure. That’s where you get growth, and I Savannah vans are going to be fully certified and warrantied. Then you have Ford and Chrysler looking think we’re seeing that round the world now. at this market. Some of these companies already have bi-fuel vehicles that sell well in other countries, so it’s about combining those success stories, and making our case.
  • 10. NGV INFRASTRUCTURE FACT PACK 2012 | PAGE 10 2nd Natural Gas Vehicle Infrastructure NGV Industry Perspectives: Conference & Exhibition For more info please visit www.ngvevent.com We can learn a lot from nations that have developed big NGV markets. They have done that entirely Second, we need to improve the comfort-level of vehicle and engine manufacturers that this market is with converted vehicles, no OEMs. All the fueling stations have grown organically. The same can be said ready for natural gas vehicles. We don’t need any technology breakthroughs. These vehicles are on offer about Pakistan, which has about 2,500 fueling stations, and more than 2 million vehicles. That wasn’t in other markets in South America, Europe, and increasingly in Asia. It’s just a question of bringing them driven by OEM availability, or the fueling stations. It was driven by consumers. to North America. Ironically, the US is largest producer of natural gas vehicles, but only 1 percent of 12 We can learn from their mistakes as well. Even though they have a lot of vehicles and fueling stations, million worldwide are here in the United States. they are only now waking up to opportunities in the commercial sector. That is where the North We learnt a lot from the 1990s about how we promote the industry, and we we were able to prove the American market is ahead of the game. You’ve also the focus on the commercial sector, which uses technology. The reason those attempts before were false starts is largely because of extreme price more fuel than the moms and dads. volatility we saw in the mid-1990s. It was also because we were in a very different place in the production of natural gas. It was going down. Every analyst thought the US was going to become an You can’t just focus on infrastructure. Germany has something like 900 to 1000 gas stations, but they importer of natural gas, in the form of LNG. Shale gas has revolutionized the energy landscape. The US only have 90,000 vehicles. That’s a ratio of 100 vehicles per station, where the global average is closer to is no longer looking at a future of natural gas importation, but having our own supplies for up to a 100 1,000 vehicles per station. It is in the interests of the infrastructure providers to generate demand, and years into the future. Going forward, we can expect oil prices to rise and stay volatile, while natural gas that’s the shift I’ve noticed in the US in the last five years. The gas industry now sees its role in shifting is expected to stay low and stable. That means it’s going to become even more attractive fuel choice. demand. They know they have to convince the fleet operators, for example. Norman Herrera: There are great stories happening across the country that aren’t told nearly enough, So much has changed since the 1990s. First, the technology is mature. We can now match diesel and and really it’s the industry’s responsibility to communicate that. Whether it’s a station opening in Boger gasoline for performance. Second, the environment is now on everyone’s agenda. Back then, it was a City, Louisana, or Cicero, in New York, you have plenty of things happening every day. Communication PR exercise for some companies. Now it’s a factor companies have to take into consideration in their is important. buying decisions. There is the availability of natural gas, especially in the United States, and it’s a good price. Back in the 1990s, when the oil price was so low, fluctuations didn’t matter so much; now they On the regulatory side, there are always opportunities to discuss a market that has parity with other hurt. Finally, we have the energy security issue. alternative fuels. You want to have incentive structures that a level of parity there, and that is not the case today. That is somehing that can be improved. But the prospects for the industry are much better Kathryn Clay: We need to think about public awareness. There was a poll conducted by than they were in the 1990s. Then, you didn’t have the abundance of natural gas, and you had a price TechnoMetrica that asked about natural gas as an alternative transportation fuels, and they were point that was coupled with diesel and gasoline, so there wasn’t any differentiation. Today, surprised by the results especially in the west of the country. Over 70 percent of Americans are awareof you have stations in Oklahoma that have had prices of a $1.39 for gas gallon equivalent for the last 18 natural gas vehicles as an option for public transport. That was encouraging, although awareness is months, so you have a more attractive price. somewhat lower in the North East. We still have some work to do to build awareness in different parts of the country. You also have producer companies like Chesapeake and our peers at America’s Natural Gas Alliance that have all begun to look at this as a true market. And then you have large corporations that are studying this market and seeing that doing something domestically is appealing. Whenever you can
  • 11. NGV INFRASTRUCTURE FACT PACK 2012 | PAGE 11 2nd Natural Gas Vehicle Infrastructure NGV Industry Perspectives: Conference & Exhibition For more info please visit www.ngvevent.com have Fortune 500 companies with their vast logistics chains and consumer channels participate, that’s Brett Jarman: The US gas industry and vehicle manufacturers are doing a good job educating the a big difference. marketplace. When you see major companies like AT&T and Ryder putting thousands of natural gas vehicles on the road, that means you are making progress. You can turn up the heat on the information FUTURE DEVELOPMENTS: What does the industry need to do in the next few years? even more, but it’s good at the moment. Kathryn Clay: We have been supportive of tax incentives for consumers of natural gas vehicles, and The major weak link, I think, is a lack of political understanding of the importance of NGV. We need to for companies that invest in fueling technologies. We support language that is technology neutral – see some balance in political decision-making that says ‘our oil supplies are not that reliable, so we’ve that gives the same level of support whether it’s gas, electric recharging, or new biofuels. We think got to have some alternatives’. The US sends $1bn a day overseas to buy oil, and I think that could be there is tremendous market pull already to bring natural gas vehicles into the market, but brought back. It would also be good to see local and federal governments themselves buying natural thoseincentives can really accelerate the process. gas vehicles, and incentivizing the alternative fueling stations at the local level. At the Drive Natural Gas Initiative, we are really excited about home-refueling. We have the opportunity Norman Herrera: In the next two or three years, I would expect the big automakers to have made to open up the passenger vehicle market in much the way as with plug-in hybrids. It would work the announcements on pick-up trucks specifically, because that is what our industry has been driving. They same way: you would come home at night and hook up the car to your natural gas line. It’s using the are the vehicles that consumers can purchase as well as commercial fleet customers. gas that is already safely delivered across the country. There was a good product on the market in the 1990s, called Fuelmaker. But we think we could make an even better product. So we have been The second thing I expect is more announcements on infrastructure development. Chesapeake is a reaching out to the producers of small compressors that could manufacture this. We have contacted company that is going to continue investing. In July, we announced a nearly $1bn venture fund for 35 worldwide, and started engaging them. We think in addition to public transportation and fleet transportation and technologies. So, in two years I think we will have additional partners outside of the vehicles, there is a lot of potential in passenger vehicles, and that home refueling is the key to first two, which were Sundrop and Clean Energy Fuels. unlocking it. Finally, I think we’ll have diversity of participants outside the companies that have always participated Frank Chapel: In the next few years we need to focus our efforts to produce a national network of in this market. I would expect new convenience store chains, new companies doing home fueling natural gas fueling stations. This station infrastructure must be adequate to serve the metro markets devices, and new technologies on the compression and dispensing. We think that environmental and the inter- and intra-state transportation corridors throughout our country. Then, anyone deciding regulation, favorable price points, and the promise of good returns on investment make for a really a to transform their vehicle to natural gas can do so without a concern. Currently, because of limited bright outlook. infrastructure in many areas, it can be prudent to convert your vehicle to bi-fuel operation, CNG or gasoline. We also need to continue educating potential customers to the benefits of natural gas as a transportation fuel, and working with the OEMs to encourage them to meet this future demand.
  • 12. NGV INFRASTRUCTURE FACT PACK 2012 | PAGE 12 2nd Natural Gas Vehicle Infrastructure NGV Infrastructure Business Models Conference & Exhibition For more info please visit www.ngvevent.com Companies are using different business models to develop infrastructure, which has potential to And each of these company types employ different business models to invest in and develop further transform the market, by making it easier for future natural gas vehicle purchasers, whether profitable and sustainable NGV infrastructure. To give you a taste of some of the business models they be fleet managers, or individual drivers, to fuel their vehicles. The 4 main developers of being employed here are a couple of case studies: infrastructure fall into 4 main categories • Fleet Owners • Natural Gas Utilities • C-Store, Truck Stop Operators • Natural Gas Producers AT&T Dillon In March 2009, AT&T announced plans to invest up to $656 Dillon has supplied a sample ROI calculation that demonstrates the possible payback for switching to NG. million as part of a long-term strategy to deploy approximately 15,000 alternative-fuel vehicles through 2018. Up to 8,000 of these vehicles will be CNG vehicles, representing one of the largest US corporate commitments to CNG vehicles to date. AT&T has also committed to replacing gasoline-powered passenger vehicles it retires with alternative fuel models, including replacing more than 7,000 passenger cars through 2018. AT&T had deployed more than 6,000 alternative fuel 10 trucks vehicles as of January 2012, including more than 4,500 CNG 400,000 DGE per year Incremental cost of x vehicles and more than 1,600 hybrid electric vehicles. x NG truck $50,000 200,000 miles a year $1.50 fuel savings x : – = 10 vehicles 5mpg Clean Energy / Navistar = $600,000 = In 2012, Clean Energy and Navistar entered into an agreement 400,000 DGE per year savings on fuel costs per year $500,000 to supply customers with NG-fueled trucks, if customers agree to purchase NG from Clean Energy. The program will commence with MD trucks, and then expand to include Heavy Duty (HD) Payback period for trucks is 10 months. rigs during 2013. Navistar will develop and sell the NGVs, while Clean Energy is responsible for necessary fueling infrastructure. development Ryder Ryder launched an HD and Medium Duty (MD) truck rental and leasing project in Southern California, with an initial order of 202 vehicles in July 2011. The company will construct two NG fueling
  • 13. NGV INFRASTRUCTURE FACT PACK 2012 | PAGE 14 2nd Natural Gas Vehicle Infrastructure Infrastructure Business Models Conference & Exhibition For more info please visit www.ngvevent.com Apache Corporation Chesapeake Energy Apache opened public access CNG stations, in Tulsa, Oklahoma, and Lafayette, Louisiana in Chesapeake Energy Corporation has invested $150 million in America’s Natural Gas Highway, April 2012. By the end of 2012, 20 NG fueling stations will be in place, five of which will be and has also partnered with national fuel station retailers, such as Love’s Travel Stops & Country public access, and will include a station in Houston, Texas, and two in Midland, Texas. Stores. Chesapeake, in conjunction with GE, is also developing a proprietary CNG In A Box™ The company’s business model is simple. Converting 80% of its fleet to NG by 2015 requires technology, a plug and play unit, that will allow Chesapeake to extend the Love’s model and it to build necessary supporting infrastructure. Once in place, that infrastructure makes it partner with other retailers, especially chain convenience stores, with sufficient scale to allow convenient for other companies to convert their fleets to NG. Other fleet managers can incremental gains in fueling availability. This strategy targets existing retail stores and chains, realize operational cost savings without the need to construct their own stations, since they which already own necessary real estate, have verifiable existing traffic counts, and enjoy can use either Apache’s public access stations, or take advantage of Apache’s liberal policy significant consumer popularity. of entering into agreements that allow other fleets access to its stations. This model creates Some companies have invested in general infrastructural development. Other companies have a cycle of market building. Apache has so far signed agreements with Chesapeake Energy decided to construct their own infrastructure: Corporation and Laredo Petroleum to allow them to use Apache’s network of private CNG fueling stations and is open to entering into further such agreements. • Waste Management has elected to allow public access to their stations, when it can do so safely, to increase the baseload on each station and thus reap the greatest return on their investment. Clean Energy Fuels • Questar Gas Company, which constructed its first CNG station in 1981, is extremely selective about siting and constructing stations, which it does according to a standardized plan, focused intensely on Clean Energy is developing America’s Natural Gas Highway, a network of 150 million LNG and cost minimization. LNGC fueling stations, to be operational by the end of 2013. The company is partnering with • Mansfield Energy, by contrast, provides its customers with highly customized solutions in station Pilot Flying J Truck Travel Centers, a major operator of truck stops throughout the U.S., so siting and design. Mansfield helps customers decide where to locate their stations by using allowing Clean Energy to add NG fueling options to the services already offered at Pilot Flying J’s Mansfield’s extensive customer records of refined products purchase data. extensive network of truck stops.
  • 14. NGV INFRASTRUCTURE FACT PACK 2012 | PAGE 15 2nd Natural Gas Vehicle Infrastructure NGV Industry Thought Leaders Perspectives Conference & Exhibition For more info please visit www.ngvevent.com Industry Thought Leaders in Their Own Words As part of the 1st Natural Gas Vehicle Infrastructure Conference & Exhibition USA leaders from across the NGV industry shared their perspectives on the NGV market development – here are a couple of presentations so you can hear the thoughts of some of the industry’s leading pioneers on this subject. The Utilities Critical Role in NGV Market Development Building Blocks in the Infrastructure of a Growing Natural Gas Highway Network • Discover why now is a critical time for regulators to embrace innovative approaches to utility • Discover how Encana is expanding its use of liquefied natural gas (LNG) in large freight vehicles participation in NGV infrastructure development through its new mobile LNG fuelling stations • Hear why an approach is needed that will allow utilities to add their expertise and private capital to • Learn how Encana is working with public and private stakeholders to stimulate demand, create the NGV market while Protecting ratepayers and supporting new entrants and growth of incentives and tax breaks and attract investment to set up a natural gas fuelling corridor for competitive markets Canada • Learn what SoCalGas is doing in order to grow the market for NGV’s and NGV Infrastructure in • Hear insight into Encana’s multi-year plan to convert a large number of the more than 1,400 California and beyond trucks and passenger vehicles in Encana’s fleet to run on natural gas Michael Allman, Chief Executive Officer, Southern California Gas Company (SoCalGas) Eric Marsh, Executive Vice-President & Senior Vice-President, USA Division, Encana Natural Gas Download PDF Play Audio Download PDF Play Audio
  • 15. NGV INFRASTRUCTURE FACT PACK 2012 | PAGE 16 2nd Natural Gas Vehicle Infrastructure Conference & Exhibition February 24-26, Renaissance Hotel, Houston North America’s Premier NGV Focussed Event Dave McCurdy John Somerhalder Ron Jibson Laurence Downes Gordon Gillette CEO CEO CEO CEO President American Gas AGL Resources Questar Corporation New Jersey Tampa Electric/ Association Natural Gas People’s Gas North America’s leading Natural Gas Vehicle focused conference is back for its second sell-out year. This Plus exclusive fleet case studies from the nation’s leading NGV fleet operators, top Policy makers from is the only forum that will give you the direction and tools you need to build a comprehensive Natural across the US discuss how they are working to move NGV’s centre stage, home refuelling & much Gas Vehicle Infrastructure strategy to ensure success in this booming market. much more… Over 600 senior decision makers will be in attendance to network, do business and exchange the latest industry updates. Our world class agenda will equip you with business critical information: • NGV Infrastructure Business Models: Hear from the nation’s leading utilities & c-store’s on how to develop a profitable and sustainable NGV business • Marketing & Communication: Innovative and effective ways in which to communicate the benefits of NGV’s to win fleet customers and secure long term contracts For more information on the conference including the full agenda and fantastic • Technology Updates and Developments: Discover the very latest in NGV vehicle and speaker line up please CLICK HERE infrastructure technology developments to ensure you have the crucial knowledge your customers require • Planning, Siting & Project Development: Benefit from a comprehensive assessment of NGV Infrastructure project development approaches, utilizing the latest project experience to maximize efficiency and minimize costs • Partnerships & Alliances: Form key partnerships with leading companies from across the NGV value chain in North America to expand your NGV business and guarantee project success