Cheap natgas gains traction in US

2012-03-28 09:12

NEW YORK - Natural gas, whose price is at record lows thanks to a shale drilling boom, is gaining traction as an alternative energy source in the US and automakers are jumping on the band wagon.

Mark Hanson, an analyst at investment research firm Morningstar, claimed natural gas was "definitely starting to take off" in replacing petrol.

"The economics seem to work," he said, noting it was "just a question of what pace" the necessary infrastructure will take to develop.


Gas is in focus as a potential engine fuel because "it is tremendously good fuel" said David Cole, chairman emeritus of the Centre for Automotive Research.

Unlike petrol whose rising prices are causing pain at the pump for vehicle owners, natural gas is cheap in the US as supplies bulge from production in the country's vast shale gas formations.

In addition, natural gas generates less carbon dioxide than petrol when burned.

Thus, it is considered a "green" fuel, even though in its raw state the methane it emits is more destructive to Earth's ozone layer than CO2, and the fracturing of gas shales, known as "fracking", has drawn fire from environmentalists.

Several forms of natural gas are used to power vehicles. Compressed natural gas (CNG) is stored in a pressure vessel in place of a fuel tank.

Liquefied natural gas (LNG) is produced by chilling natural gas to about -162 degrees Celsius. It can be used as engine fuel for heavy ground or maritime vehicles.

In Europe, the fuel of choice for automobiles is liquefied petroleum gas, typically a mixture of butane and propane made from refined crude oil or natural gas.


Across the Atlantic, the three big US automakers are pumping out vehicles based on alternative fuels. Ford, the nation's second-biggest automaker, has the largest array of alternative-energy vehicles: eight are powered by natural gas.

The smallest US car maker, Fiat-controlled Chrysler, in early March unveiled a bakkie that can use liquefied natural gas and which will go on sale there in June.

Sergio Marchionne, chief executive of Fiat and Chrysler, views natural gas as having greater potential than electricity to power vehicles.

General Motors, the US giant at the top of the global auto industry, produces two vans that use compressed natural gas, the Chevy Express and the GMC Savana, and will begin production by the end of the year on two pick-ups running on CNG.

GM already has sold 1200 of the vans to US telecommunications titan AT&T and is working on a number of alternative fuels but particularly on electric vehicles. A spokesman said: "We think compressed natural gas offers a lot of potential. The technology is promising."

It is particularly appealing to businesses, especially service providers such as telecoms, package deliverers such as UPS, or to local governments, which operate trash removal or emergency vehicle fleets.


CNG vehicles operate over relatively short distances from a refuelling hub. The economies of scale for a large business or public body can potentially justify the cost of an investment in the specialised refueling equipment.

For individual consumers, the refuelling infrastructure is limited and compressed or liquefied gas is expensive and requires substantial storage capacity, restricting the vehicles' range.

Morningstar's Hanson said there were only about 400 CNG stations in the US.

Natural gas also is generating interest amid rising petrol prices but so far has only a small portion of the market.

In France, for example, it represents less than one percent of the vehicle fuel consumed and only 200 000 vehicles are outfitted for liquefied petroleum gas, of the 31-million privately owned.