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Creative Destruction: Electric Cars May Be Toast As Natural Gas Vehicles Accelerate

‘It’s the biggest no-brainer for the American public today. It’s cheaper, it’s cleaner, it’s more abundant and it’s in our own backyard.’

Movement toward natural gas-fueled vehicles finally appears to be firing on all cylinders.

The surge in U.S. natural gas production from prolific shale formations has created an abundance of the blue-burning fuel.

Middle East turmoil and a recovering global economy are putting energy security and high gasoline prices front-and-center in consumer minds.

Legislative efforts to reduce pollution and greenhouse gas emissions are mired in partisan bickering.

And President Barack Obama provided a timely rallying point in a speech this week, giving a positive nod to government incentives for natural gas vehicles as alternatives to ones powered by higher-emission, oil-based fuels.

Next week a bipartisan group in Congress plans to introduce the “New Alternative Transportation to Give Americans Solutions” (NAT GAS) Act, which will offer tax credits to promote production and purchase of natural gas vehicles.

Texas lawmakers have proposed a bill to encourage the build-out of compressed natural gas stations along the “Texas Triangle” linking Houston, San Antonio and Dallas-Fort Worth. It would be funded through the existing Texas Emissions Reduction Plan, which draws from fees tacked on some vehicle titles, commercial vehicle inspections and other sources.

The City of Houston and oil and gas producer Apache Corp. today will announce a smaller effort closer to home — a $1.5 million compressed natural gas station at Bush Intercontinental Airport. It will fuel a fleet of gas shuttle buses to run between the city’s economy parking lot and the terminals.

25% lower CO2

The deal encapsulates many of the benefits of compressed natural gas vehicles that proponents have been touting – lower emissions from the fleet of 30 buses that cover a combined 900,000 miles per year, as well as lower fuel and maintenance costs.

Compressed natural gas vehicles get about 20 percent lower fuel mileage than diesel engines, according to Bernstein Research, but carbon dioxide emissions are about 25 percent less and smog-producing emissions up to 90 percent lower.

And while diesel now averages around $3.79 a gallon in Houston, a comparable amount of compressed natural gas costs $1.70 to $1.90.

Compressed natural gas vehicles also tend to have lower maintenance costs.

Apache will build the fueling terminal and donate it to the city. It will be operated by New South Parking, the contractor that runs the city economy lot – which will be rebranded as Ecopark.

Apache CEO Steve Farris doesn’t expect natural gas vehicles to replace all gasoline and diesel vehicles, but to be part of a wide range of solutions.

“It’s the biggest no-brainer for the American public today,” Farris said in an interview Thursday. “It’s cheaper, it’s cleaner, it’s more abundant and it’s in our own backyard.”

About 11.4 million natural gas vehicles operate worldwide, representing about 1.1 percent of all vehicles, according to Bernstein Research. That’s up from just 0.17 percent a decade ago. Combined, these vehicles consume about 1 trillion cubic feet of gas per day, 1 percent of global gas consumption.

Only about 122,000 are in North America, while Pakistan leads the world with about 2.3 million, according to the International Association of Natural Gas Vehicles.

While cost, emissions and availability of the fuel are part of the reason for gas vehicles’ success abroad, they also aren’t competing with an existing gasoline vehicle infrastructure like the U.S. has built up over many decades.

Some critics point to the difficultly of trying to build out a nationwide natural gas infrastructure, but Farris noted the U.S. already has the most extensive network of natural gas pipelines in the world.

Lowest-hanging fruit

And use of natural gas vehicles can expand in the U.S. without drawing in individual consumers.

The Houston airport project is an example of the lowest-hanging fruit – government- or company-owned fleets of heavy vehicles, such as buses and garbage trucks, that operate in well-defined routes or regions.

Houston-based Waste Management makes extensive use of compressed natural gas for its garbage trucks nationwide, while a number of airport bus systems have converted to natural gas.

Apache’s Farris, however, is bullish on compressed natural gas vehicles reaching a broader segment of the American driving public.

“Unless you find a way to turn the water into wine, we’ll be using CNG for passenger cars,” Farris said. “It can just be so significant for American economic and energy security.”

Houston Chronicle, 1 April 2011