Operating at “fleet” efficiency

0813GAIN-station

Businesses finding savings on fuel, maintenance in turning to compressed natural gas

Story by Lee Marie Reinsch

Some companies and organizations with fleets of vehicles think they may have found the answer to the problems of diesel and gasoline fuel: compressed natural gas. Although it’s not a household term yet, compressed natural gas orCNG for short has been around for decades. It’s been used in some engines for that long, too.

“It never really took off like it has today,” said Joel Hirschboeck, superintendent of alternative fuels for the La Crosse-based Kwik Trip Inc., which has a network of several dozen locations across northeast Wisconsin. “The reason there’s so much more momentum is that basically, through horizontal drilling, we’ve been able to secure a 100-plus-year supply of natural gas, and ultimately it’s driven the cost per gallon to levels so low that now you’re getting $2 per gallon-equivalent savings at the pump.”

CNG is the same kind of natural gas that heats our homes, only it’s compressed into a smaller space, according to Hirschboeck.

On the green side, CNG pollutes less than gasoline or diesel, according to the U.S. Environmental Protection Agency’s Alternative Fuel Data Center.

Because it’s lighter than air, CNG evaporates quickly. So if it gets spilled in an accident, it’s less likely to burst into flames, making it safer to handle.

And it comes from the United States, rather than being imported from abroad.

Karen Smerchek, president of Veriha Trucking, Inc., of Marinette, said her decision to test-drive CNG came after looking down the proverbial road.

“It wasn’t just a matter of cost, it was a combination of what does the future hold from a diesel-price standpoint as well as clean air for the environment,” she said.

So far, her over-the-road hauling company has upgraded 15 of its 250 trucks with CNG-fueled versions and has another 10 on order.

Still the underdog

So if it’s so much better than gasoline and diesel, why isn’t it the No. 1 fuel for cars and trucks?

Back when regular gasoline became the norm for cars and trucks, the supply of gasoline was high and the price was low, according to Hirschboeck.

And regular gasoline was more convenient: “Being a liquid fuel (and more dense than natural gas), gasoline can be stored in low-pressure tanks and take up less space in the vehicle,” he said.

CNG needs to be stored in large, high-pressure tanks that can accommodate 3,600 pounds of pressure per square inch. It’s measured in what’s known in the industry as “gasoline-gallon equivalents,” or GGEs.

Although the gas mileage (or GGE-mileage) for CNG-fueled heavy-duty trucks is slightly lower than with diesel or gasoline (about 5 to 10 percent lower, according to Hirschboeck), light-duty vehicles and passenger cars get the same mileage per gallon-equivalent as their gasoline-fueled counterparts.

For companies like Paper Transport, Inc. of Green Bay, whose fleet travels 36 million miles per year, a savings of $2 per gallon-equivalent has the potential to add up. But PTI isn’t diving into CNG head first. So far, it has replaced 35 of its 390 trucks with CNG-burning trucks.

“We’ve been looking at CNG since 2009,” said Jeff Shefchik, president of Paper Transport. “We’re looking at it on a customer-by-customer and also line-of-business basis – where can we run the trucks, where is the fueling infrastructure, whether or not it makes economic sense. A lot of factors go into it.”

Making fueling more convenient

It turns out infrastructure is a pretty important detail. You can’t just fill up a CNG-fueled vehicle at a regular old gas station. That little caveat affects where your route can take you.

Kwik Trip is in the process of installing CNG fueling sites in Wisconsin, Iowa and Minnesota.

“Oshkosh will have the heaviest concentration of stations,” Hirschboeck said. “We’re about to open a second one in Oshkosh, one in Appleton, and we’re looking at another one in that area.”

Kimberly-based U.S. Oil – which is best known to the general public for the Express Convenience Centers it operates across northeast Wisconsin – is also developing a network of CNG filling stations east of the Rocky Mountains, according to Bill Renz, general manager for Gain Clean Fuel, Inc., a division of  U.S. Oil.

“We’re reaching out to fleets throughout the nation and asking them to partner with us to get them to convert to CNG from diesel,” Renz said. “We say, ‘If you’re willing to switch your fleet or a portion of it, we’ll come in, install and pay for the CNG stations, since we’re the experts. We maintain it, we do the sales marketing to help grow the site.’ We provide them fuel for a good $2 savings per gallon fuel versus diesel.”

Both sides win, according to Renz.

“As part of a partnership, they allow us to get into the market, and we’re helping them to save money,” Renz said.

It doesn’t take that much radical infrastructure to put in a CNG station: it ties right into the natural gas pipelines already in existence, Renz said. For light-duty and passenger CNG vehicles, owners could potentially fill their tanks at home, from their natural gas pipeline. All they need is a small compressor.

“I could put a station in your backyard; it’s readily available,” Renz said. “However, we want to create a network across the nation. Everybody wins if it’s public.”

Since each CNG filling station costs around $1.5 million to install, the bigger a sales volume a station can do, the better, Renz said.

Quieter engines, money saved

The City of Oshkosh got its first few CNG vehicles last fall when it invested in fuel-efficient refuse vehicles.

Kevin Uhen, superintendent of streets and manager of the central garage for the city, said he’s pleased with the results so far.

“We’re seeing 60 to 70 cents per mile savings with CNG over our diesel sanitation vehicles” in combined fuel and maintenance costs, Uhen said. “Our CNG cost per mile is about $1.25, and for diesel it’s $1.58 per mile, so we’re saving almost 35 cents per mile on fuel.”

The city decided to buy CNG-powered trucks at the same time it went to automated refuse collection, Uhen said. As for the logistics of fueling those trucks, serendipity worked in its favor.

“The cost for a city-owned fueling station is one of the determining factors, as we were in the process of finalizing plans for building a new public works field-operations facility,” Uhen said. “At that point, we were fortunate enough that Kwik Trip was looking to develop a network of CNG stations – and one of the first was in Oshkosh. The timing of it was perfect with the arrival of our first five trucks, so we’ve been relying on them for our fueling needs.”

Uhen said the CNG vehicles operate more quietly than the diesel vehicles, especially during idling.

“We haven’t seen a loss in power with CNG engines, and the reduced emissions and environmental benefits have been positive as well,” Uhen said.

Actual costs unknown

The jury’s still out on the cost-per-mile numbers at Veriha Trucking, according to Smerchek.

“There are a lot of unknowns at this point as to the maintenance of the equipment, because we haven’t seen the end of life (of a CNG-burning truck) so we don’t know a true cost per mile,” Smerchek said. “Everyone has figures but nothing has been confirmed.”

She said she’s found the vehicles to be “cost neutral” rather than cost saving at this point.

The higher price tag of CNG-fueled vehicles skews the math calculation, she noted. A regular diesel truck – the big kind with 18 wheels – costs around $125,000, whereas a truck powered by CNG runs around $185,000.

Kevlar-coated composite storage tanks for the CNG add to the cost of the trucks, Hirschboeck said.

Paper Transport’s Shefchik said it will take about four years for his trucks to pay for themselves in gas savings, depending upon the price of the fuel they otherwise would be using.

“If diesel comes down (in price), the payback is longer; if diesel goes up to $4 a gallon, then the payback time is better,” Shefchik said.

Shefchik described the savings so far as “pretty minimal” due to the bigger price tag on the CNG trucks.

Yet the potential savings is what drove his company to switch over to CNG vehicles.

“There are three reasons you switch to CNG: It’s American fuel versus foreign oil; it’s cleaner for the environment; and for the economic reasons,” Shefchik said.

But not necessarily in that order.

“At the end of the day, when you’re making business decisions, 95 percent of business decisions are economic,” Shefchik said. “Everyone wants to be green, but very few people are willing to pay significantly more to be green. If it’s cost-neutral, then sure, we’ll go green, but with the fluctuating cost of fuel, there’s a lot of risk in that.”

Shefchik indicated Paper Transport Inc. is still planning on buying diesel trucks as well as their CNG-fueled counterparts.

“We think the payoff will get better in the future as natural-gas trucks become more fuel efficient and hopefully the cost of natural-gas trucks will come down to reduce that $60,000 upcharge.”

Change can be scary

Reservations about CNG aren’t uncommon, according to Gain Clean Fuel’s Bill Renz.

“Fleets have been using diesel forever; it’s something they’ve always known,” Renz said. The challenge lies in getting company owners to switch to something new.

“It’s new, and on paper it looks like a no-brainer,” Renz said. “If they (fleets) are running 100,000 miles and burning 20,000 gallons a year, the payback comes in less than 2 years, and it’s all profit after that. It’s an investment for them as well, but given the economics of natural gas versus diesel, it’s well worth the investment.”

Seeing is believing, Renz said.

“Once they commit to the minimal level up front, it’s to their and our advantage if we do more and more and more,” he said. “Once they see it (the savings), then they believe it. They think ‘Holy cow, this is for real!’ They see that the savings aren’t just on paper – that’s when they get excited.”

Lee Reinsch writes and edits from Green Bay.