'The Chicken & The Egg' of Compressed Natural Gas for Transportation

With the consistently rising price of gasoline and diesel and threats of climate change, vehicle fleets and independent drivers are looking to alternative transportation fuels for their transportation needs. One of the leading alternative transportation fuels in the United States is natural gas. When used as a transportation fuel natural gas is stored in storage tanks on the vehicles, in either a compressed natural gas (CNG) form at pressures between 3,000 and 3,600 pounds per square inch, or in a liquefied natural gas (LNG) form at a temperature of -260°F.  Compared to the traditional transportation fuels (gasoline and diesel) natural gas has fewer fuel life-cycle emissions (6%-11% fewer greenhouse gas emissions) and is less expensive, in terms of gasoline gallon equivalents (GGEs).

According to the latest alternative fuels price report from Clean Cities the average cost for CNG in the Rocky Mountain Region is $1.82 per GGE and the average cost for gasoline is $3.42 per gallon. Today in the United States there are approximately 112,000 CNG vehicles in operation and 672 CNG fueling stations where these vehicles can be refueled. However, in the four corners region there is only one CNG fueling station, located in Moab, Utah. With the cost to operate CNG vehicles being almost half the cost to operate traditionally fueled vehicles, why is there almost no CNG presence in the region?

Which came first the chicken, or the egg? 

Fleet managers in the four corners are discussing which should come first, CNG fueling stations or CNG fueled vehicles. CNG fueling stations generally cost between $1 and $2.5 million and, investors are skeptical to put forth such large amounts of money when there is no demand for the transportation fuel. Likewise, fleet managers are resistant to purchase CNG vehicles when there is no place to fuel them, especially since these vehicles cost $7,000 to $10,000 more than traditionally fueled vehicles. Unlike the issue of the chicken and the egg, eventually the four corners region will find a solution to the CNG vehicle and infrastructure dilemma.

One solution to the dilemma currently being considered is subsidization of the first CNG fueling station in Southwest Colorado. In December 2013, Governor Hickenlooper announced a $30 million award from the Federal Highway Administration’s Congestion Mitigation and Air Quality (CMAQ) program for the development of CNG fueling stations statewide, and CNG vehicle purchases in non-attainment air quality areas in Colorado. The grant application process for these funds is expected to begin in the spring of 2014. With this funding opportunity the first CNG station developer in Southwest Colorado could be eligible for up to $500,000 in CMAQ funds to purchase the equipment for the station. Capital investment in station equipment is the largest cost associated with the development of a CNG fueling station therefore, the CMAQ funds could make a CNG fueling station project more enticing to investors.

4CORE is working to diversify fuel sources and create demand for alternative fuel vehicles. 4CORE is a sub-grantee of the Refuel Colorado grant, which was awarded to the Colorado Energy Office in order to accelerate the adoption of alternative fuel vehicles (AFVs). The work being done under this grant includes:

• free energy coaching services for fleet managers, 
• discussions with auto dealerships about offering AFVs, and 
• monthly and quarterly working group meetings with different local fleet managers, car dealerships, and economic and community leaders. 

These working group meetings are an arena for knowledge sharing, networking, and AFV demonstrations with question and answer sessions. The energy coaching service offered to fleet managers involves in-depth quantitative and qualitative analysis of the fleet to determine which vehicles are most suitable for replacement with AFVs. At present, there are multiple fleet managers in the region interested in these vehicles and they are in the midst of analyzing the economic benefits and returns on investment for purchasing CNG and other alternative fuel vehicles.

4CORE is also working to create a business plan for the first CNG fueling station in Southwest Colorado. The idea is to develop a fueling station coinciding with CNG vehicle procurement by a number of fleets. The fueling station business plan will be shared with investors once it’s completed. It may not be long before we see CNG vehicles on the road, and a fueling station with pump prices reading $1.85/GGE. The chicken and the egg issue of natural gas as a transportation fuel in the four corners will be solved.

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About the Author
Sarah is a Colorado native who fell in love with the Durango area while earning her Bachelor’s in Anthropology at Fort Lewis College. After graduation in 2010 she earned a Master’s in Anthropology and Certificate in Sustainable Urban Infrastructure from the University of Colorado Denver. Sarah moved back to Durango in 2012 in hopes of starting a career in the field of sustainable development. After a grueling 11 month AmeriCorps service term installing weatherization upgrades to low income housing in Southwest Colorado, Sarah is excited to be working with 4CORE on improving the sustainability and resilience of our local communities.