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Which comes first?


Phil Bacharach January 11th, 2011

CNG proponents hope an anticipated increase in fueling stations will translate into more CNG vehicles.


Amid nationwide momentum for renewable energy, advocates of compressed natural gas are hoping that an increase of CNG fueling stations in Oklahoma will drive natural gas-powered vehicles, or NGVs, to become more popular with the public.

Natural gas is already popular with many for its environmental and energypolicy implications. It’s a clean-burning fuel, relatively inexpensive and abundant in the U.S., factors that make it an attractive alternative to petroleum. Moreover, CNG can translate into an economic boon for Oklahoma, which ranks third in the nation for natural gas reserves.

Still, NGVs remain something of a novelty. While their use has become commonplace in many countries, only about 110,000 are currently on U.S. roadways, according to trade association Natural Gas Vehicles for America.

Bolstering CNG infrastructure, particularly in the form of fueling stations, aims to change that.

“People say it’s a chicken-and-egg situation. Do you build the infrastructure, the refueling stations, or do you put a bunch of CNG vehicles on the road?” said outgoing state Deputy Energy Secretary Brad Williams.

“The point where people are getting to rather quickly is that you build the infrastructure first in order to create the demand among the general population for the vehicles themselves.”

There are nearly 40 public-access CNG fueling stations in Oklahoma, according to the U.S. Department of Energy’s Alternative Fuels Data Center. At least a dozen more stations are under development. The Association of Central Oklahoma Governments indicates that about 11 public-access stations are in the Oklahoma City metro.

ENCOURAGING PARTICIPATION
The spate of activity reflects, at least in part, state legislative efforts to make NGVs more palatable for consumers. In May of last year, Gov. Henry signed the Oklahoma Energy Security Act, a measure providing incentives for renewable energy development and use. But the bill also included a goal of placing CNG fueling stations every 100 miles along the Oklahoma interstate highway system by 2015, and every 50 miles by the year 2025.

Industry insiders contend that’s a tangible goal. Among those working to boost CNG is Oklahoma City-based Chesapeake Energy, one of the nation’s largest producers of natural gas.

“That goal announces to retailers nationwide Oklahoma is a place to invest,” said Chesapeake manager of corporate development Norman Herrera.

“You have retail providers that have said, ‘I want to participate in this market. I’m used to selling Twinkies and Slurpees, but at the same time I want to understand the fundamentals of a fuel that’s plentiful, that’s in a pipeline system and that has a customer base.’” Ensuring that customer base is critical for the development of CNG fueling stations, Herrera said, pointing to recent construction of fueling stations by OnCue Express, Love’s Travel Stops & Country Stores, Total Express and other retailers.

Fleet conversion has spurred the growth. An ever-expanding number of state and local government agencies — including the municipalities of Oklahoma City, Edmond and Norman — are reducing fuel costs and emissions by converting their fleets to natural gas. Similar efforts are being made in the private sector. Chesapeake Energy, for example, is working toward converting its entire fleet of light-duty vehicles to run on CNG.

Outgoing Oklahoma Energy Secretary Bobby Wegener said CNG conversion is especially cost-effective for fleets.

“Conventional wisdom supports the idea that you really ramp up CNG in your heavy-truck and your fleet, both public and private, across the United States,” he said. “Those are certainly the low-hanging fruit and certainly a ‘yes’ to CNG.”

INVESTMENT INCENTIVES
Tax incentives have also had a factor in the growth of CNG infrastructure, with Oklahoma offering a tax credit for up to 75 percent of costs associated with installing alternative fueling stations. “It’s laid the groundwork to develop an infrastructure, and it’s allowed a payback model for that initial investment (that) is higher than for a typical gasoline station,” said James Roller, Chesapeake marketing research coordinator. “It allows that payback model to be shortened to where return on investment encourages Love’s, OnCues — all these different investor types to invest in Oklahoma.”

Renewable-energy advocates said they believe the increase in CNG fueling stations is likely to spark consumer interest in NGVs, according to ACOG Clean Cities coordinator Yvonne Anderson.

“As John Q. Public sees those stations going in, they think, ‘I can fuel there. It’s close to my home or it’s close to my work,’ therefore making the possibility of utilizing natural gas much more convenient,” she said.

“One drives the other. I would say that fleet use drives the development, and then the public sees that those stations are available and where they’re located and then that leads to more (CNG vehicles).”

That would be no small feat. The only CNG passenger vehicle available in the U.S. is the Honda Civic GX. While many models and makes can be converted to run on CNG or a dual setup of both CNG and gasoline, the process is costly — upwards of $10,000.

But the growing CNG infrastructure and appeal of natural gas, some argue, is getting the attention of automakers.

“I think it’s an exciting time that wasn’t there before,” Herrera said.

“It will even be more exciting when you have the opportunities of the next summer of increased gasoline prices, and you have automakers coming to the table to provide a solution.”

 
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