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State, Utilities look to savings from natural gas vehicles

By: NED B. HUNTER
February 15, 2013
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photo - Rayce Delzer, left, and Chad Roberts of Benchmark Electrical Solutions out of Fort Collins wire the compressors for a natural gas fueling station Tuesday, Feb. 5, 2013, at the Colorado Springs Utilities office on Circle Drive.  Photo by CHRISTIAN MURDOCK, THE GAZETTE
Rayce Delzer, left, and Chad Roberts of Benchmark Electrical Solutions out of Fort Collins wire the compressors for a natural gas fueling station Tuesday, Feb. 5, 2013, at the Colorado Springs Utilities office on Circle Drive. Photo by CHRISTIAN MURDOCK, THE GAZETTE 

Colorado is among several states looking to reduce the nation’s dependency on foreign oil and ease transportation costs by tapping the abundance of natural gas resources within the United States.

Colorado Springs Utilities has joined the effort with plans to build a compressed natural gas fueling station that would become part of a multi-state, public-use infrastructure.

The station will be located in two parts at Colorado Springs Utilities’ service station at 701 N. Circle Drive. A natural gas service station intended for utility vehicles only is being added to the existing fueling station. The utility also hopes to partner with a private investor to construct an additional natural gas refueling section for public use on the station’s north Tijuana Street side by summer’s end, said Mark Johnson, Utilities’ north work center manager. 

When completed, the station will become part of a natural gas corridor that will run north along Interstate 25 from Trinidad to Wyoming, east along Interstate 70 from at least Denver to Grand Junction and encircle Denver.

Colorado Springs Utilities has about 1,500 vehicles in its fleet, spokesman Eric Isaacson  said via email. Only one of those runs on compressed natural gas.

The utility, though, is scheduled to convert six gasoline-powered vehicles to natural gas this year at a cost of $8,00 to $10,000 per vehicle, Johnson said. The conversion is being performed on three-quarter- and one-ton pickup trucks that average about 15,000 miles annually and run all day, he said.

The utility company could eventually convert about 30 percent of their vehicles to natural gas engines through attrition, Johnson said. It will take between eight and 10 years to recoup the conversion costs for each vehicle, depending on the amount of fuel used and the price of gasoline vs. compressed natural gas. A gallon of compressed natural gas usually runs about $1 less than a gallon of regular unleaded gasoline, Johnson said.

Utilities’ fuel budget for the 2012 fiscal year was $3 million, Isaacson said.

“We like the differential in gas prices,” Johnson said. “We believe it is advantageous and makes it the right way to go.”

Fourteen states have signed memorandums of understanding aimed at constructing a natural gas corridor and increasing the use of natural gas vehicles in state and privately operated fleets, such as UPS, said Denise Stepto, communications director for the Colorado Energy Office. Colorado Gov. John W. Hickenlooper signed the memorandum in November, she said.

One priority of the coalition is to drive down natural gas prices when sold in bulk to states, she said.

“He wants Colorado to incentivize using compressed natural gas vehicles,” Stepto said of Hickenlopper. “He doesn’t understand the reluctance, which seems primarily to be based on past price fluctuations.”

The state does not operate any compressed natural gas vehicles, but plans to purchase at least two this year, Stepto said.

As of July, there were 800 compressed natural gas vehicles registered within the state, she said. However, Stepto said it is impossible to track the exact number of compressed natural gas vehicles in Colorado because many, such as UPS trucks, are private fleet vehicles registered in other states.  

Natalia Swalnick, who represents the Clean Cities Coalition in Denver, said the organization is working with natural gas providers and others to encourage the development of infrastructure. She said there are 17 public fueling sites within Colorado. That number does not include private fueling stations restricted to business or government users. She said the number of stations is a good start, but more need to be constructed to encourage the purchase of compressed natural gas vehicles.

Dan Genovese, manager of market development for Chesapeake Energy Corp., said Colorado could become the nation’s premier example of how to build a statewide natural gas infrastructure. Chesapeake is an Oklahoma City-based natural gas and oil exploration and production company. It owns interests in approximately 45,700 natural gas and oil wells that produced approximately 3.5 billion cubic feet of natural gas equivalent per day, as of Dec. 31.

“We are really hoping that Colorado may be a demonstration point for a pretty broad and affordable (infrastructure) buildout,” Genovese said. “It is a great way to find out how much capital will cover how much area.”

Genovese said his company is working to reduce construction costs of natural gas pumps that could be added to existing stations and convenience store that could include 7-Eleven, Circle-K, Kum & Go and others.

“There are so many economies of scale,” he said, “and we can just swap out one gas dispenser for a natural gas one.”

There are about 1,000 natural gas fueling stations across the U.S., according to America’s Natural Gas Alliance website. Those stations, many of which are private, are the only ones available to serve the nation’s motorists who drive the country’s estimated 4 million miles of public roads. Getting the needed infrastructure in place is imperative to the future sales and use of natural gas vehicles.

Or is it?

“It is the chicken and the egg problem,” Johnson said. “Will the vehicles come before the infrastructure or after?”

This is not the first time the nation has attempted to create a natural gas infrastructure. Like solar and wind power, the nation made a push toward natural gas about 20 years ago when oil and gasoline prices began reaching all time highs at that time. Then the bottom fell out, gasoline prices fell and alternative fuels projects were put on the back burner.

What’s different this time, Genovese said, is the ability to remove natural gas from shale through the use of hydraulic fracturing, or fracking. The drilling technique forces a mixture of water, sand, and chemicals into underground rock formations at high pressure, cracking the shale and creating pathways to extract the natural gas. The technique has allowed petroleum companies to reach vast amounts of natural gas reserves, stabilized natural gas prices and created a new demand for natural gas as an alternative energy source. Colorado has the third largest proven natural gas reserve in the nation and is the nation’s fifth biggest producer of natural gas.

Meanwhile, engine performance and longevity in natural gas vehicles has improved since the early 1990s, Johnson said. And companies are reducing infrastructure development costs by refurbishing equipment once used in the early 1990’s.

“We are rebuilding some compressors and upgrading the technology,” he said.
 —
Contact Ned Hunter: 636-0275.

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