Natural gas is cheaper than diesel, cleaner-burning and domestically produced. It’s also quite abundant in the sense that the U.S. won’t be running out of it any time soon, but not in the sense of being readily available for use in many places. It’s something of a chicken-and-egg problem. Companies can’t convert their fleets until there’s a supply, and no one wants to invest in treatment and fueling facilities until there’s a demand.
This is the problem GoCH4, a company specializing in natural gas fuel, ran into recently in North Dakota’s Bakken. To determine whether it would be economical for them to set up a natural gas fueling infrastructure in the area, they put out a Call for Submission to gauge the level of interest among operators and fleet managers in converting their vehicles. The deadline was Dec. 31, 2013, and Wes Livingston, vice president of project development at the company, reports that although they got a lot of response it wasn’t enough to give them a clear answer. “We’re still evaluating whether we’re going to proceed at this time,” he says.
Financial benefits
Livingston acknowledges that most companies in the Bakken are so busy right now they don’t have time to even consider converting their fleets, regardless of the down-the-road advantages. “But the economics are there,” he says.
Reb Guthrie, co-founder of Fuel Solutions Inc., a natural gas consulting firm, agrees.
“There’s two reasons to consider alternative fuels,” he says. “One is the social benefits — you reduce dependence on foreign oil and reduce emissions. The other is just plain old dollars and cents. You can knock your fuel bill down by 60 percent.” He says supply is plentiful. “We’re talking 15, 20 years before we could even remotely start to make a dent in proven reserves. It’s off the charts how much gas has been discovered. Prices will be low for a long time.”
Converting engines that run rigs would cost about $200,000 to $300,000, Livingston says. Converting a vehicle would be about $30,000. “Conversion costs are less than buying new dedicated NG engines for your trucks which could add maybe $80,000 on top of the regular cost of a new diesel engine,” he explains. “But you get maximum fuel offset with a dedicated engine versus only 60 percent diesel replacement with a converted dual-fuel system.” He says either way the investment is quickly recouped — usually one to two years.
Performance matters
The change in fuel would not affect performance, Livingston says. “The full horsepower output will be maintained. Over the long term it should have no increased maintenance costs. But in the beginning some specialized training and equipment would be needed to work on the engines.”
Livingston says that perhaps what’s needed is someone — maybe them — willing to take a “build it and they will come” risk in the area. “I think that’s what it’s probably going to take up there for people to get serious about it,” he says. “But this is definitely the wave of the future. It just takes a little time. You’ve got to get all the players synchronized and on the same page. The economics are going to be there for a long time to see this through.”
Although GoCH4’s Call for Submission deadline has passed, if you have questions or want to express an interest, contact Livingston at [email protected].
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