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Page added on February 16, 2014

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Is This Already the End for Natural Gas Vehicles?

Is This Already the End for Natural Gas Vehicles? thumbnail

A joint study, published in the journal Science on Friday has revealed that natural gas as a transportation fuel provides no net benefit to the climate, when compared with diesel. The report, written by numerous researchers from some of the United States’ most prestigious universities, as well as NOAA and the Department of Energy, flies in the face of what most of us have come to believe about “clean-burning” natural gas. This could yield big problems for companies like Clean Energy Fuels and Westport Innovations that are carving out their niche in the space. Let’s take a closer look.

A truck fills up on natural gas at a Clean Energy station. Photo Credit: Clean Energy Fuels.

 

First and foremost, the scientists aren’t disputing that natural gas burns cleaner than diesel. That remains absolutely true, as natural gas, or methane, produces 30% less carbon dioxide than diesel when burned. The problem comes on the production end of things, where methane leaks during the drilling and extraction process negate the benefit of using the commodity as a transportation fuel. Methane traps 30 times more heat in the atmosphere than carbon dioxide, a dangerous level of potency despite the fact that methane doesn’t last as long in the atmosphere as carbon dioxide does.

The study also revealed that methane emissions are 25% to 75% higher than previous estimates by the Environmental Protection Agency.

So what does this mean for Clean Energy Fuels? The company is building America’s Natural Gas Highway and its success very much depends on long haul trucks buying into the natural gas story. The same is true for Westport Innovations, the company that upfits many trucks with natural gas engines.

Here’s a quick recap some of the biggest story lines from the past year:

Bi-fuel Chevy Impala. Photo credit: General Motors.

In other words, there’s a lot of economic activity surrounding natural gas as a transportation fuel right now; dollars are saved, and jobs are created. Now that much of corporate America is finally embracing natural gas vehicles, does this study mean that it’s suddenly time to abandon ship?

Not necessarily. Methane leakage is an important issue, but it is also an addressable issue. The conclusion of the report suggests that investment by the oil and gas industry to prevent leakage during production and processing could significantly curb emissions. In fact, USA Today has reported that a previous survey of natural gas processing plants revealed that of the 75,000 components at such facilities, 50 faulty parts result in roughly 60% of the methane leakage.

That said, it would be a mistake to dismiss the findings of this report out of hand. Again, this is a preventable problem, and it would behoove the industry to begin addressing it very quickly — and very publicly — on account of the sheer number of businesses and state governments that have made a significant push for natural gas vehicles. That should be the way forward.

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27 Comments on "Is This Already the End for Natural Gas Vehicles?"

  1. Davy, Hermann, MO on Sun, 16th Feb 2014 2:25 pm 

    Nothing new here!

    I wonder why freight trains are not using gas more. Deisel motors convert over to NG very inexpensively. This is especially true in the large motors in trains. There is plenty of room to carry the gas too.

  2. Nony on Sun, 16th Feb 2014 2:30 pm 

    Maybe it still happens for economical reasons.

  3. Makati1 on Sun, 16th Feb 2014 2:53 pm 

    NG is going to be as expensive as any other fuel soon. No advantage to switch to something harder to find at the local gas station.

  4. Nony on Sun, 16th Feb 2014 3:04 pm 

    bahaha. NG is cheap for many years. Look at the futures market.

  5. Arthur on Sun, 16th Feb 2014 3:50 pm 

    NG for transport will probably happen for a decade or two, for availability reasons.

  6. rollin on Sun, 16th Feb 2014 4:00 pm 

    “A joint study, published in the journal Science on Friday has revealed that natural gas as a transportation fuel provides no net benefit to the climate, when compared with diesel.”

    Net benefit to the climate? The only net benefit to the climate that any fossil fuel provides is global warming and climate change. Since these have been determined as a negative and harmful state, the initial paragraph is definitely a Fool’s statement.

  7. MSN fanboy on Sun, 16th Feb 2014 4:19 pm 

    NG is going to be as expensive as any other fuel soon
    ….
    Im going to laugh when your predictions wrong.

  8. rockman on Sun, 16th Feb 2014 4:32 pm 

    NG futures do not predict the future well head price for NG. Easy enough to prove: pull up the 36 month NG futures contracts taken 3 years prior to well head prices hit $12/mcf. Futures are just what someone is betting prices will be. And for ever contract written betting $X/mcf there’s someone betting it won’t be $X/mcf. The physical commodity owners work in the futures market but they are a very small minority. Last time I looked about 98% of the oil in those futures contracts doesn’t physically exist. Just numbers on a piece of paper…or a computer spreadsheet.

    As I’ve said before: if one believes in the predictive value of futures contracts (and if it’s true) they can become a multimillionaire in just a year. All they need do is put their money where their mouth is. LOL.

  9. Nony on Sun, 16th Feb 2014 5:10 pm 

    They don’t predict price deterministically. Could be lower, could be higher. Will have a lot of noise regardless. but the MONEY IS ON THE TABLE behind the prediction of 4.75 gas for several years in a row. That means a lot more than some doomer commenter (Makati). You (or he) think it will be 12, then make some easy money.

    And it’s frigging irrelevant that few providers are betting in the market. Heck, it makes it a better market since there is more action (more money on the table).

    Oh…and I should not have to make a caveat about an imperfect predictor (stochastic variation) versus expected means. Sheesh.

  10. Northwest Resident on Sun, 16th Feb 2014 6:06 pm 

    Nony — It never ceases to amaze me how much credibility and faith you put into the energy futures market. What makes you think that some of those trillion$ being printed by the Fed every year aren’t being bet on the energy futures market, with no other purpose than to make the future look rosier than it actually is? In case you hadn’t noticed, the entire “market” is inflated far beyond its real value and bears no resemblance to reality. Again, it just amazes me how you frequently cite futures market prices as something that is even slightly relevant.

  11. Northwest Resident on Sun, 16th Feb 2014 6:15 pm 

    Nony — Just to hammer a little more on the point I just made:

    “With these uncertainties in even short-term projections of future production whether it be corn, ethanol or crude it is perhaps wise to continue a somewhat cynical view of projections over a longer time period. Although the bounding bar of a decline in existing field production continues to exist and will continue to require an offset in increased production from new wells to offset. Perhaps that lady in the tent of my youth (a fortune teller) may prove as prescient as some of the more optimistic forecasts that we continue to see.”

    http://oilprice.com/Finance/the-Markets/Long-Term-Market-Forecasts-Becoming-Ever-More-Unreliable.html

  12. GregT on Sun, 16th Feb 2014 6:21 pm 

    It truly is a sad state of affairs, when so many people care more about money, than they do about life.

    Just like the front page headlines of our local newspaper today:

    “B.C. ski slopes face an uphill battle. Climate change among the huge challenges threatening resorts.”

    I wonder how long it will take people to wake up to the fact, that snowpack is where we get our drinking water from?

    Somehow I don’t see many people laughing it up, when they are dying of thirst and hunger.

  13. bobinget on Sun, 16th Feb 2014 7:59 pm 

    How long GregT?

    Irrigation, drinking water? This is an energy forum. With negative snowpack we in the NW get too little hydro electric power.

    Try this coming growing season. Spoiler Alert: Dry..

    http://www.wunderground.com/resources/climate/abruptclimate.asp

  14. DC on Sun, 16th Feb 2014 8:14 pm 

    NG for ‘rigs’ and trains, what a scam. Sure, ‘rig’s and trains can run on NG, buy why? Diesel engines, like it or no, are still vastly more efficient at moving large lumbering objects around then NG can ever hope to be. The argument that ‘rigs’ and trains should run on NG because it is ‘less polluting’, has always been a red-herring. None of those guys involved gives a rats-ass about pollution. Right now, a (few) people are sitting on temporary gluts of radioactive toxic frak gas that a saturated and contracting economy doesnt really want or need. So they are desperate to green-wash there mini-gluts and sucker people into thinking substituting one fossil-fuel for another for no real benefit is in everyone’s interests.

    NG has never provided any ‘benefits’ to the environment, and operationally, your ‘train’ wont get very far on a gallon of NG vs diesel. Its all about economics-not the environment. The only reason you would have for switching over to NG over diesel is if your ran out of diesel. Otherwise, your better off sticking some pollution controls on the diesel and leave it at that. Or if your really forward thinking-which we most definitely are not, you electrify your train networks and move all your goods that way. Then you aren’t wasting EITHER non-renewable resource moving coal and plastic garbage around. As opposed to fantasies about converting millions of ‘rigs’ shuttling salad shooters, bottled water and plastic hair-dryers to Us big box stores 24/7 to NG.

    I really have to LoL@that picture-Clean Energy? Seriously? They can get away with that? If we had in truth in advertising laws, or any truth at all, that station would be called

    -A Different Kind of Dirty Energy
    or
    -Slightly Less Dirty Energy
    or
    No CleanEnergy Here

  15. rockman on Sun, 16th Feb 2014 8:29 pm 

    “but the MONEY IS ON THE TABLE”. Yes it is…and exactly the same amount of money on the table betting that won’t be the price of NG. For every person that bet Denver would win the Super Bowl another person bet the would lose. Obvious only one will be predicting the correct future. Just like with commodity futures.

  16. Nony on Sun, 16th Feb 2014 8:33 pm 

    Don’t you get that I get that (already)?

  17. Kenz300 on Sun, 16th Feb 2014 8:54 pm 

    Electric, hybrid, biofuels, CNG, LNG and hydrogen will all be part of the transportation fuel systems of the future. And that is a good thing. We need to end the oil monopoly on transportation fuels.

  18. Nony on Sun, 16th Feb 2014 8:55 pm 

    Not only do you have equal dollars pushing for higher than 4.5 and lower than 4.5, you actually have some people betting that it will be much higher or much lower. You can actually use that information to show what the market as a whole prices as the likelihood that different scenarios will take place (how [un]likely is $12 gas for instance.

    Here is a really cool chart:

    http://www.eia.gov/forecasts/steo/images/Fig4.png

    Note, that this is NOT an estimate from the Ouija board writers at EIA. It’s derived from the market for different futures contracts. The “bookies” are laying odds that it is less than 2.5% chance that the gas price is over 6 (or less than 2.5% under 2) in JAN2016.

    Now…sure, they could be wrong. Maybe commenters on the peak oil blog know more than the hedge funds, Goldman sluts, and efficient market hypothesis. But would you bet on it? Would you bet on 12 gas? 😉

  19. Arthur on Sun, 16th Feb 2014 9:08 pm 

    http://tegenlicht.vpro.nl/afleveringen/2013-2014/hoe-raken-wij-de-auto-kwijt.html

    Not sure if people outside Holland can watch this documentary I just watched, with more than half of the time interviews with English speakers… one important realization is that on average 98% of the time cars simply stand still, which is a terrible waste, if you compare that with trains and planes, that move most of the time. The trend is that young people, certainly in the US are distancing themselves ever more from the car, especially if they live in the cities. The breakthrough is that they are glued to their smart phones all the time, which gives them near total information awareness, enabling them to participate in all sorts of car sharing schemes. If you let go of the ritual of car ownership and learn to see a car as just another means of transportation, like a bus or train, the energy and cost efficiency of car travel can be increased enormously, thanks to location aware smart phones. The result will be far lower cost for the same transportation pattern. If cars are moving all the time, far less cars are needed to be built.

  20. Arthur on Sun, 16th Feb 2014 9:12 pm 

    Full program, not just trailer:

    http://www.npo.nl/hoe-raken-wij-de-auto-kwijt/16-02-2014/VPWON_1209782

  21. rockman on Sun, 16th Feb 2014 9:22 pm 

    For example on 13 Dec 2005 the 30 day contract was priced at $15.39/mcf. And then 27 Dec 2005, just two weeks later, a 30 day contract sold for $11.02/mcf. And during the January settlement month for those contracts Henry Hub (the price benchmark) NG prices averaged $6.15/mcf. Granted that was an exceptionally volatile period. But, none the less, the futures market predicted prices more than 200% higher then what they were. And now some folks want to believe in the ability of future “gamblers” to predict prices years in advance?

    I won’t repeat a post from long ago but I documented the volatility of NG prices in recent years with increases and decreases on the order of severe hundred %. And now we are to believe that all those factors that drove that dynamic are now no longer in play. That’s one heck of a prediction.

    BTW in just the last 6 month NG futures have increased almost 20%. And now the expectation prices will be about $4.75/mcf in 2 years. Such faith…must be a Catholic

  22. Davy, Hermann, MO on Sun, 16th Feb 2014 10:00 pm 

    @Nony – energy markets are nearly as manipulated as the gold market. No need to go into the details but an excellent read on the subject is from TOD by Rembrant – Naked Oil

    “The Platts window is the most abused market mechanism in the world”.

  23. Makati1 on Mon, 17th Feb 2014 1:27 am 

    I stand by my “NG will be the same cost as all other fuels” comment … made without the distraction of the Market Casino BS.

  24. Nony on Mon, 17th Feb 2014 1:54 pm 

    Maybe price oil will crater and make you correct. 🙂

  25. GregT on Mon, 17th Feb 2014 4:02 pm 

    Maybe that’s what Makati meant Nony. 🙂

    Kind of irrelevant, either way the implications to ‘the economics’ will not be so good. 🙂

  26. Vladimir on Mon, 17th Feb 2014 6:07 pm 

    Worrying about natural gas leakage in this country is a dollar chasing a dime. Natural gas leaking almost anywhere else on this planet is a whole different story. Try all of Africa, most of Russia and the Middle East is just a joke. Get serious fool!

  27. Kenz300 on Mon, 17th Feb 2014 10:56 pm 

    Bring on the competition for transportation fuels.

    Oil has had a monopoly on transportation fuels for too long.

    Monopolies are only good for the monopoly and not good for the consumer.


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