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April 27, 2014

Conversion costs make some wary of natural-gas fleets

(Continued)

“There’s not a lot of great information out there in terms of this,” said David Ross, vice president of demand development for Pittsburgh-based EQT Corp. “It’s all subject to the National Fire Protection Association. Those rules are all subject to interpretation by the local fire marshal. Each fire marshal could, in a sense, have a different opinion.”

Putting more CNG vehicles on the road is important to natural gas developers because an increase in demand would boost prices and revenues. With natural gas exporting capability still several years away, increasing domestic demand could help raise natural gas prices that have thinned margins for energy companies that extract gas from the Marcellus Shale region that includes much of Western Pennsylvania.

CNG usually costs significantly less than a gasoline or diesel gallon equivalent at the pump. Diesel fuel currently costs about $3.97 a gallon, while gasoline averages $3.68 a gallon nationwide, according to the U.S. Energy Information Administration. The average cost for a comparable “gallon” of CNG is $2.30.

For the average driver, it is not cost-effective to switch a car from unleaded gasoline or diesel to CNG, according to a Carnegie Mellon University study released in spring 2013. The life expectancy for personal-use vehicles is too short to reap the returns from fuel savings, the study concluded.

Where it does make financial sense is for high-mileage fleet vehicles — taxis, transit buses and trucks. It especially makes sense for trains, barges and boats, said Deborah Stine, a faculty adviser on the student-led study.

CNG has a side benefit in that it burns cleaner than diesel and gasoline, decreasing carbon emissions.

Even before taking the garage issues into account, fleet conversion from diesel vehicles to CNG is not cheap.

When Waste Management Inc., a Houston-based trash-collection company, started buying CNG vehicles in 2011, it spent $30,000 more per vehicle over a similar diesel model. The costs are similar for transit buses and semi-tractors, though they have decreased by nearly 50 percent in the past five years, Ross said.

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