If you are involved in the Construction & Aggregate (ConAgg) industry, it is very likely you have heard of Natural Gas Vehicles (NGVs). ConAgg fleets are increasingly turning to Compressed Natural Gas (CNG) and Liquefied Natural Gas (LNG) as an alternative to diesel fuel. Natural gas is a clean, abundant fuel that is less costly than petroleum fuels. The popularity of this option arises from a few key advantages, but it is important to understand the challenges of the transition as well. You will see this fuel increasingly more in the mines, on the roads, and delivering concrete to jobs around the country. Here is what you need to know.
1. Natural Gas Will Lower Your Fuel Costs
Natural gas typically offers fuel savings of 40-60% compared to diesel fuel. Economics is the primary driver of this transition. Most ready-mix concrete trucks consume an average of 40 gallons of diesel fuel each day, or around 10,000 gallons annually. With diesel fuel currently averaging around $3.60 per gallon, fuel savings of 50% yields annual savings of $18,000 for each truck. However, natural gas trucks tend to have lower fuel economy, so we will reduce this figure by 20% to $14,400 as an annual cost savings figure. If you operate a batch plant with 20 ready-trucks running on natural gas, your operation costs will be $288,000 lower than your competition, who is most likely using diesel fuel. If you are running sand & gravel trucks, the economics are even more attractive. Most aggregate trucks use closer to 20,000 gallons of fuel each year. The fuel savings with a fleet of 20 trucks (including the fuel economy hit) jumps all the way to $576,000. So the clear message here is take a close look at your fuel figures when beginning a natural gas evaluation. The more fuel you burn, the more likely it is that you are a good candidate.
The final consideration of your cost savings estimate is going to be the incremental truck cost. Natural gas trucks carry an incremental cost between $30,000 - $70,000 depending on fuel storage specifications. The more fuel you carry, the more expensive the truck will be. Costs also vary widely between dealers, so make sure you shop around. It typically takes 2-3 years to recoup this additional investment before you can bank the fuel savings. Increasingly, states are implementing natural gas grant programs to buy-down this incremental cost. Colorado, for example, has up to $42,000 available for the purchase of a heavy duty CNG truck. Texas and Pennsylvania have similar programs. You can find all the incentives by state here. Most fleets are making the shift without truck incentives, but if they are available don't miss out.
2. Natural Gas Trucks are Typically Heavier
Natural gas trucks often weigh more than diesel units do. We have previously written a detailed outline of the weight story and the difference between CNG and LNG. There are currently two Cummins engines available for concrete mixers and tractors, a 9L and a 12L. The vast majority of fleets opt for the larger, heavier 12L engine. For most applications, this is the right decision. However, you may want to look at the life cycle of the smaller engine as well. The smaller 9L is certainly no powerhouse, but there are numerous mixers in the field using this engine today. Why? Some fleets decide to use the smaller engine due to lower weight, specifically I mean weight that is lower that diesel trucks. A 9L powered mixer can often allow you to add as much as 1/2 yard of concrete to every delivery, which adds up quickly. So while this engine may be small, if you run on flat terrain it is worth including in your evaluation. Combined with the fuel savings it may be very profitable to use a smaller engine and simply plan for a shorter truck life.
3. You Will Need New Fueling Stations
Most fleets will require new fueling infrastructure at batch plants or along regular delivery routes. Fueling stations have continued to come down in cost the past few years, and now range from $500,000 to $1.2 million depending on size. You can certainly purchase and own a new fueling station, but most fuel providers are also willing to invest the capital for the station in return for fueling agreements. Low interest operating leases are also becoming common if you prefer a simply monthly payment for your station. You can also investigate public access stations in your operational areas that can accommodate heavy duty trucks. Natural gas is primarily a heavy-duty fuel and more and more truck stops are offering natural gas. You can research them here.
There are numerous on-site fueling technologies that are well suited to the ConAgg industry. Vehicles can be fueled quickly (fast-fill) or overnight (time-fill) -- we previously posted a description of CNG station options and how to get started on an evaluation. The NGV fueling industry has developed mobile stations as well as small modular stations that are a great fit for batch plant operations. There is a lot of information available on the station side, so I recommend you start by meeting with local fueling station providers such as Clean Energy, Trillium, and TruStar. Station providers can provide a host of other important services as well, such as bulk commodity buying, station operations and maintenance, extended warranties, safety plans, and even royalties for selling fuel to third parties on your property.
4. You Can Use Natural Gas Programs to Improve Sustainability and Win Business
Natural gas is a very clean fuel that produces lower greenhouse gas emissions than diesel fuel . If you are seeking to improve your sustainability program, natural gas can help. Most natural gas programs are based on fossil fuel, but you can also run your trucks on Renewable Natural Gas (RNG). RNG is biogas harvested from landfills, wastewater treatment plants, and dairy farms. The gas is cleaned and re-injected into the pipelines where it can be nominated to any fleet or fueling operation around the country. This will generate Renewable Identification Numbers (RINs) nationwide and Low Carbon Fuel Standard (LCFS) credits if you are in California. Both of these credits can potentially be monetized in different ways. Most importantly, if you are bidding on concrete jobs for LEED buildings or "green" construction projects, you can use CNG, LNG or RNG to increase you sustainability scores and help you win the deal.
5. This is the Just the Beginning
If you think natural gas fueling is limited to trucks, think again. If an engine is big...it's going natural gas. This is the beginning of a VERY large fuel transition that is much broader than on-road vehicles. Caterpillar is already rolling out a variety of LNG systems for yellow iron in coal mines. They are starting with the largest units and working their way down in size. Many quarries and mines rely on rail to move their product to market. The first rail cars running on CNG and LNG are now on the tracks with the backing of GE, BNSF and Union Pacific. Future station programs will involve fueling yellow iron in the pits, railcars in one lane, and delivery trucks in the next.
One final consideration that is now gaining traction is natural gas as an alternative for remote asphalt plants. Most of these plants are running on waste oil or diesel fuel, but they often come equipped to run on natural gas as well. Both CNG and LNG can be trucked to remote or short term locations at a substantial savings. If you regularly see $500,000 fuel bills to run your asphalt plants, you may want to consider natural gas. New business operators, such as NGAdvantage, have developed CNG solutions targeted specifically at asphalt plants. Traditional LNG operators can compete for this business as well.
The ConAgg inudstry is quickly transitioning to this new fuel. Don't make the mistake of ignoring an important change that can add profit to your bottom line. ConAgg is a highly competitive business where small differences can have a huge impact. Don't allow yourself to lose business because competitors are bidding jobs at a lower cost due and marketing themselves as a green operator. Take action. Get educated, determine where natural gas might fit in your operation, and get moving on your first project. Feel free to reach out to me with any questions you may have on implementing natural gas fleet programs.