North America's largest provider of natural gas fuel for transportation announced plans Tuesday to use GE Oil & Gas technology as the basis for the coast-to-coast and border-to-border liquefied natural gas (LNG) fueling network it is developing for the trucking industry.
"The agreement announced today with GE is one of the most significant milestones in Clean Energy's history," said Andrew J. Littlefair, president and CEO of Clean Energy Fuels said in a press release. "As the long-haul trucking industry begins its transition to natural gas, it will be critical to have a reliable supply of LNG."
Under the agreement, Clean Energy will initially buy two "MicroLNG" plants from GE Oil and Gas and then use a standardized design of the GE technology to build subsequent plants as it expands its "America's Natural Gas Highway" LNG fueling network. By year's end, Clean Energy will have deployed its own LNG technology at 70 natural gas fueling stations nationwide -- primarily at Pilot Flying J retail outlets. Going forward, GE will be Clean Energy's partner as it seeks to grow its network exponentially.
"Clean Energy is an industry leader in pioneering a new way for America to fuel its vehicles and to further gain energy independence," GE Chairman and CEO Jeff Immelt said in the written statement.
"With an abundance of cleaner, more affordable natural gas here in the U.S., this is an important opportunity for GE to join Clean Energy in changing the way America drives," Immelt added. "It's also a critical step in developing a natural gas-for-transportation fuel model that can be easily exported to other countries interested in exactly these kinds of breathtaking projects."
Each of the "plug-and-play" modular MicroLNG units, which GE unveiled in January of this year, is designed to rapidly liquefy natural gas at any point along a gas distribution network while keeping a site's physical footprint to a minimum. The first two plants in GE's deal with Clean Energy will each produce up to 250,000 gallons of LNG per day, which equates to approximately 54 million diesel gallon equivalents per year. GE stated that each unit's production capacity can be scaled up to 1 million gallons per day as trucking industry adoption and demand dictate.
GE contends that its MicroLNG system can help a fleet operator reduce its fuel costs by more than 25 percent compared to diesel while ensuring comparable fuel economy. In addition, it maintains that the technology can be used to fuel approximately 28,000 heavy trucks while enabling fleet operators to avoid more than 139,000 metric tons of carbon dioxide emissions per year.
GE Energy Financial Services will provide up to $200 million in financing for the initial units. In addition, GE is providing turnkey process/plant construction and consultations on optimal plant location and power partner. The company's deal with Clean Energy also includes project installation, which entails liquefaction as well as process design from gas pre-treatment to the storage system.
"This is a nice template for us," Littlefair told DownstreamToday. He explained the GE financing, coupled with its input on building the plants and determining where to locate them, will help Clean Energy capitalize on projected dramatic growth of the LNG market for powering heavy trucks.
"We believe that many thousands of trucks over time will go to natural gas," Littlefair said.
He said that LNG's dramatic penetration rate into the refuse truck market offers a glimpse of the potential broader juggernaut to come as other heavy-duty fleets make LNG their fuel of choice.
"Look at the adoption rate of refuse trucks," continued Littlefair.
He noted that only 3 percent of the country's refuse trucks were powered by LNG four years ago. Now, he said that figure has skyrocketed to 55 percent and should reach 65 percent in 2013.
Littlefair told DownstreamToday that the specific locations of the two initial MicroLNG plants most likely would not be announced for another 6 to 9 months, but he added that two prime regions for the sites are the Upper Midwest and the Northeast. He said the sites will need good access to natural gas utilities and water as well as abundant power supplies.
"GE's built all these power plants so they know where this confluence of utilities is, and they've helped us do a nice, quick survey of what would be good for gas and power," Littlefair explained.
The Clean Energy CEO added that the two facilities will need to be near trucking and population centers.
"You don't want to haul LNG more than 250 miles," Littlefair explained.
Even after Clean Energy and GE announced the sites for the MicroLNG plants, they will need to secure permits before breaking ground on the projects. The companies anticipate the two LNG plants could begin operations in 2015.
GE's deal with Clean Energy is the latest instance of the U.S.-based conglomerate's ongoing efforts to expand the use of natural gas for transportation. In March of this year, GE and Chesapeake Energy Corp. announced that they were developing a plug-and-play "CNG In A Box" natural gas fueling system geared toward fleet and retail fueling stations. (Unlike LNG, which would be intended for heavy trucks, compressed natural gas would be used to fuel light-duty passenger vehicles.) In addition, GE researchers are participating in research to develop at-home refueling stations for natural gas-powered passenger vehicles.
"GE is committed to natural gas," stated GE Oil & Gas CEL Dan Heintzelman. "From extraction to transport to power generation -- we continue to develop solutions that infuse new technologies into the value chain and help improve every step of the natural gas development and deployment life cycle."
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