Thursday, March 22, 2012

'Where it makes sense'

“What the hell are we doing here, with five times the space of anyone else at MATS?”

These were the opening remarks of Jim Hebe, senior vice president of North American sales for Navistar, the parent company of International Trucks.

It soon became clear to the 700 Navistar customers and press gathered Wednesday evening in the company’s 78,000-square-foot area at the Mid-America Trucking Show.

“Because we have a lot to say … Because there really is an honest-to-God technology being developed right here in North America,” Hebe continued. “It’s not in Europe or Asia; it’s happening right here in North America – and it has to do with transitioning from diesel to natural gas, where it makes sense.”

For Hebe and others who joined him on stage for a panel discussion, including T. Boone Pickens and Pilot Flying J CEO Jim Haslam, natural gas is viable. And it’s coming.

In fact, Pilot Flying J is investing $300 million to add infrastructure to the fledgling natural gas fueling network in the next few years.

Jim Hebe, James Harger, Dan Ustian,
T. Boone Pickens, Jim Haslam and Tom Price Jr.
Rounding out the panel discussion moderated by Hebe were Navistar President and CEO Dan Ustian; Chesapeake Energy Senior Vice President of Corporate Development and Government Relations Tom Price Jr.; and Clean Energy Fuels Chief Marketing Officer James Harger.

Hebe said the group held a significant meeting last November.
“It was perhaps the turning point for natural gas in North America,” he said.

Vowing not to rely on Washington, DC, for answers, the businessmen formed a coalition and set out to solve what Hebe said have been the five biggest obstacles for natural gas.

“We brought the right group together,” Hebe said.

Pickens, the oft-quoted Texas billionaire and entrepreneur, says the U.S. can no longer wait to reduce dependence on imported oil. Pickens says the companies are taking their own initiative and not waiting on Washington, DC.

“You can’t have a five-minute conversation on energy in Washington,” Pickens said, “You’ll run out of what they know in less than five minutes.”

The group had five major issues to solve before the businessmen could commit to a partnership: The technology hasn’t been right; the cost to move to natural gas is way too high; there’s no infrastructure for the fuel; the move lacks a good business model; and there is no support for the vehicles.

In late January, just six weeks after that meeting, the group decided on a plan to remove all of those obstacles.

For Navistar, it means committing to producing an engine – in this case a brand-new MaxxForce 13 that will hit the market next year – that is nat gas compatible. When it lands in a new ProStar model, it will use diesel-pilot injection technology to start the engine. It will consume fuel at a ratio of 85 percent liquefied natural gas (LNG) and 15 percent diesel. The truck will have two tanks, a 119-gallon LNG tank and a 50-gallon diesel tank.

A Navistar rep told me just before the presentation that the truck is capable of running on just diesel, but that’s more of an insurance policy should the LNG tank run empty.

But Pilot Flying J has a plan to make sure truckers aren’t running empty with a gas-powered truck.

Haslam told me later in the evening that Pilot Flying J intends to have 35 fueling stations functioning by the end of this year, and 100 online sometime in 2014.

“We could be accelerating that,” he said.

The gas will come from Chesapeake Energy, the second-largest holder of natural gas in North America.

Price told the audience that just a few years ago everyone thought there wouldn’t be enough natural gas to make a move like this, that the supply was somewhere around seven years’ worth. But because of an oil and gas recovery method known as “fracking,” the supply in North America is now believed to be at least 100 years.

“We are enriched beyond belief in natural gas,” Price said.

Because of the volume, and a relatively low cost of production, the price for natural gas would be in the $2 to $2.50 range – a full $1.50 below the national average for a gallon of diesel.

“That’s for both CNG (compressed natural gas) and LNG,” said Harger.

The panelists, who Hebe referred to as a “coalition for the commitment to natural gas,” are serious about reaching energy independence.

And in fine form, the passionate 83-year-old Pickens led an exchange to drive home the point.

“How many vehicles worldwide run on natural gas?” The response from Harger was 13 million.

“How many in the U.S.?” The response was 100,000.

“Do we look stupid?”

While the infrastructure and trucks will still take years to reach mainstream numbers, a natural gas network isn’t far off, the panel concluded.

And when asked how truckers feel about taking the plunge to a relatively new fuel concept, Pickens was there again with a savvy point, referring to the $1.50 cost below the average diesel price.

1 comment:

  1. The time has come to ensure the resorsures we have are developed and used. It has been so in the past, making the USA a world leader. We need to buckle down - get "our chins up and kick some #**. Think this one of our chances. We have been to long dependent on the political structure to guide us.