Notes From Down South And Far West -- UPS/Clean Energy Fuels Agreement -- July 12, 2019

This seems like a pretty big story.

Let's see if the market agrees.

CLNE: maybe, maybe not. Wow, CLNE has fallen off a cliff the past five years.

Disclaimer: this is not an investment site. Do not make any travel, job, career, investment, financial, or relationship decisions based on what you read here or what you think you may have read here.

From the EIA, link here:

On May 22, 2019 United Parcel Service (UPS), a global provider of shipping and delivery services, announced that the company would increase its use of renewable natural gas (RNG) in the United States. UPS purchased 170 million gasoline gallon equivalent (gge) from fuel supplier Clean Energy Fuels to meet this commitment, which supports UPS’s sustainability goals. RNG consumption has increased significantly in recent years, and according to UPS, this agreement will be the largest commitment to RNG to date by any company in the United States.

On May 23 - 24, 2019, there appears to be a slight jump in CLNE but then it's been downhill ever since.

The sites are in the south and far west:

Wow, it seems like it's taking forever to get these NG corridors established. T. Boone Pickens has been at this since 1988.

• 1996: Pickens and Littlefair spin off a natural gas fueling business from Mesa Petroleum – 3 fueling stations, 1 employee and a repair truck. The new company is named Pickens Fuel Corp.
• 1997: Pickens Fuel Corp., forerunner of Clean Energy Fuels, opens doors in Seal Beach, CA. Pickens Fuel Corp buys SoCal Gas Company’s 33 natural gas fueling stations for $3.6 million. During the second half of the year, Pickens Fuel Corp. sells the equivalent of 2 million (GGEs) gallons of gasoline in natural gas fuel.

Natural Gas Pipeline Shortfall -- Platts -- November 20, 2017

Story here.

The Southeast natural gas market has a problem. Gas demand from LNG exports is expected to grow 10 Bcf/d the next five years, and in a high case, as much as 15 Bcf/d. To supply that growing demand, a massive buildout of pipeline capacity has been undertaken recently to move Northeast gas to the Southeast, with further capacity planned through 2019.

However, the actual new capacity from the Northeast that reaches these demand centers, specifically in Louisiana and East Texas, falls well short of the new demand.

Graphic:

It appears demand is 2.5x the current capacity.

Natural Gas Corridors In The United States

From The Wall Street Journal (the link will probably break soon):

Operators of some of the largest U.S. truck fleets, including Lowe’s Cos., Procter & Gamble Co. and United Parcel Service Inc., are accelerating a shift to natural gas fueled trucks, betting on new engine technology that promises to drop the cost of shifting from diesel fuel.

Home-improvement retailer Lowe’s wants its delivery company to shift all of its several hundred trucks to natural gas by 2017. P&G already has 7% of its trucks on gas and could reach as much as 20% within two years. UPS says it plans to buy 1,000 natural gas trucks by the end of next year. FedEx Corp. plans to shift 30% of its long-distance trucks to natural gas over the next decade.

For related stories, see the articles at the "tags." Natural gas corridors will now be tracked at "The Big Stories." 

2012 - 2013 Proposed Energy Corridor For The United States

At CleanEnergy. 

A Note To The Granddaughters

I always loved maps as a kid and the map at the link has me really excited. One just feels that the United States is the tipping point of a huge manufacturing burst due to the advantage we hold over Europe and Asia. It appears that no matter how hard the administration and activists try to slow the growth of the United States, America's growth will continue. Although the GDP was not great this morning, going from 0.4 percent to 2.5% is huge.

One could argue that there might be a "snowball rolling downhill" effect as each day passes and we get closer to the next presidential election. I'm not thinking of any actual policy changes, or changes coming out of Washington, but just a feeling of anticipation, excitement.

I assume that it is very much like the anticipation, enthusiasm that 47% (maybe more) of Americans felt when George W. Bush's second term was coming to an end. Right, wrong, or indifferent, many Americans were looking for a change. I think that the same anticipation and excitement will start to become more evident going forward. Even members of his own party, contemplating running for presidency probably understand Americans like "morning in America" speeches better than the "malaise in America" speeches, and that enthusiasm is infectious.

With OPEC no longer holding America hostage and cheap energy to boot, we certainly could be at a tipping point.

Or maybe I'm simply in a hyper-manic stage 'cause I'm back in Texas.

Which reminds me. I think I saw a headline over at Drudge linking Peggy Noonan. Here it is: the Obama fatigue factor, at the Wall Street Journal. I have not read the article, except what I saw in the first sentence while putting up the link, but my hunch is that her thoughts and my thoughts complement each other.

Almost As Good As The Bakken Oil Express Video -- The Chinese Coming To America To Fuel Our Trucks

A huge "thank you" to a reader for alerting me to the story. This is another big story. 

Reuters is reporting:

ENN Group Co Ltd, one of China's largest private companies, is quietly rolling out plans to establish a network of natural gas fueling stations for trucks along U.S. highways. 

With plans to build 50 stations this year alone, ENN joins a small but formidable group of players -- including Clean Energy Fuels Corp and Royal Dutch Shell Plc -- in an aggressive push to develop an infrastructure for heavy-duty trucks fueled by cheap and abundant natural gas.

Clean Energy is backed by T. Boone Pickens and Chesapeake Energy Corp. The move is yet another example of China's ambition to grab a piece of the U.S. shale gas boom.

Just last month, Sinopec Group said it would pay $1 billion for some of Chesapeake's oil and gas properties in the Mississippi Lime shale.

The natural gas bounty is also expected to help wean the U.S. transport industry off its dependence on diesel fuel made from imported crude oil, and the trucking industry is in a big push to use more of the domestically produced fuel.

Go to the link for a great photo.

I had trouble understanding the reason that "China" bought natural-gas heavy shale in America. It certainly makes sense now, doesn't it.

And who is going to use that natural gas? FedEx, for one. MSNMoney is reporting:

FedEx CEO Frederick W. Smith said he expects up to 30% of long-distance trucks to be powered by liquified (LNG) or compressed natural gas (CNG) over the next 10 years.

While there is ample research to show that the use of natural gas in transportation can reduce carbon emissions significantly, the high costs associated with these vehicles and relative scarcity of fueling stations have hindered their adoption up to now.

Here, we take a look at the key factors expected to drive adoption rates of CNG/LNG vehicles in the transportation industry over our forecast period. This trend is expected to improve EBITDA margins for the FedEx Ground segment, which makes up more than 67% of Trefis' current price estimate for the stock.

This story was also sent by the same reader, as the ENN story above.

Disclaimer: this is not an investment site; do not make investment decisions based on what you read at this site. 

Little By Little We're Getting There: LNG Corridors

I'm finally getting around to posting this; sorry for the delay.

The link is to a Westport Innovations press release. Westport Innovations identifies itself as the global leader in natural gas engines. Of note, the company offers 15-liter natural gas engines for the heavy-duty trucking market.

Others will be interested in the financial statement. This is why it interested me: it helps bring me up to date on natural gas corridors in the United States and in Europe:

US

The growth in natural gas infrastructure has been significant in 2012 compared to 2011.
Clean Energy Fuels has been actively developing the America's Natural Gas Highway with liquefied natural gas (LNG) and compressed natural gas (CNG) fuelling stations at strategic locations along major interstate trucking corridors. 

Shell and its affiliates have signed a memorandum of understanding with TravelCenters of America to sell LNG to heavy-duty road transport customers in the U.S. through TA's existing nationwide network of full-service fuelling centres. 

Other fuel providers such as Encana, FortisBC, and Gaz Metro have built permanent LNG refueling stations for Westport 15L fleets. 

New fuel providers such as Blu, have built two LNG stations in Utah. 

In addition, Conoco Phillips has expressed interest in building a small-scale natural gas liquefaction facility to manufacture up to 100,000 gallons per day of LNG to supply truck fleets in Dallas-Fort Worth, Texas.

EUROPE

A combined effort by major European gas companies, vehicle manufacturers and natural gas vehicle (NGV) associations have resulted in the Blue Corridor initiative to expand the NGV fueling station network in Europe. This 16 million Euros project is funded by the European Commission and 28 project partners.

In addition, in January, the European Commission announced an ambitious package of measures to ensure the build-up of alternative fuel stations across Europe. The proposal includes that by 2020, refuelling stations for trucks are installed every 400 km along the roads; and that by 2020 and 2025, LNG refuelling stations be installed in all 139 maritime and inland ports, respectively, on the Trans European Core Network.

I can't speak to Westport itself, but the buildout of American and European LNG corridors is exciting. Little by little, maybe we're getting somewhere. 

CNG Corridor From Denver to Wyoming Continues

The CNG corridor continues to expand. Two more CNG stations opened in Weld County, Colorado, near the Niobrara oil field, and about an hour north of Denver.

Two more stations were opened [in this county], in Fort Lupton and Kersey, bringing the total number of CNG stations to four, say officials.

The Fort Lupton and Kersey stations are owned by Zeit Energy. The two other CNG stations, located in Firestone and Greeley, are owned by SkyBlu.

Officials here want to see Weld become an alternative fuel corridor between Denver and Wyoming by opening a series of compressed natural gas stations throughout the county.

Fort Lupton and Kersey are on US Highway 85, south and east, respectively, of Greeley.

UPS Experience With LNG: Beaver, UT, to Salt Lake City, UT/Las Vegas, NV

The Oil Drum has a long article explaining liquid natural gas (LNG). Very, very basic. After reading it, be sure to read the comments. The best comment provided an overview of the UPS experience in Utah:

• 36 long-haul trucks 
• the day shift: from Beaver, UT, to Las Vegas, NV (225 miles) 
• the night shift: from Beaver UT, to Salt Lake City, UT (200 miles)
• US government kicked in $4 million for buying the trucks 
• biggest drawback, according to the drivers: frequent refueling
• with diesel, one full tank would nearly be enough for a complete round trip. Now they have to re-fuel at each stop. [Diesel tank about 200 gallons; one gallon of diesel = 1.7 gallons of LNG; total LNG capacity is 190 LNG gallons; translates to 111 gallons of diesel equivalent (DGE -- diesel gallon equivalent).]
• fueling: only with a certified individual; must wear a helmet with large plastic face guard to protect against splashing (-260 degrees temperature)
• typically a LNG truck will cost between $30,000-$100,000 more than a typical diesel semi-tractor
• the mileage these UPS trucks are averaging is about 5-5.2 mpg on gallon of DGE of LNG. It turns out to be about 8-10% less than typical diesel engines

Comment: some of the math didn't ring true for me (diesel truck tank, 200 gallons; barely enough to make a 400-mile trip?]. Other than that, seemed to be a great article and reasonable comments.

Comment: as "good"as CNG/LNG sounds, I just did not get a warm fuzzy for using CNG/LNG as a transportation fuel after reading this article and/or the comments. It really will be interesting to see how it all plays out in North Dakota with Heckmann/Power Fuels.

Another Milestone on the Road to a Natural Gas National Interstate System

Updates

December 23, 2012: The Colorado-to-Wyoming CNG corridor continues to expand. When I see these stories I am "thrilled" to see private enterprise doing this, but if the faux environmentalists and the current administration were serious about CO2, about addiction to oil, about Saudi imports, there would be a "Manhattan-like" program "to CNG" the nation.


October 17, 2012: Wyoming continues to push plans for CNG corridor.

A state legislative committee pledged support for two bills Tuesday which, if passed, could go a long way toward making Wyoming a leader in alternative fuels.

Meeting in Casper, the Joint Minerals, Business and Economic Development Committee first passed a measure that would slowly transition up to half of the state’s vehicle fleet to run on compressed natural gas by 2017. The second measure amends a state loan program to include compressed natural gas-related incentives.

October 11, 2012: "CNG in a box."

GE launched its “CNG In A Box” system this week, to expand fueling options for vehicles that run on compressed natural gas, the company has announced.

GE touts the all-in-one refueling system, developed in partnership with Chesapeake Energy affiliate Peake Fuel Solutions, as a plug-and-play solution that makes it quick and easy for retailers to expand their fuel selection.

At least 250 CNG In A Box systems will be distributed beginning this fall, the companies said.  CNG In A Box comes in an 8-foot-by-20-foot container, according to GE. The system compresses natural gas, delivered via pipeline, onsite and dispenses the fuel using a pump similar to that used at a traditional gasoline station.  

October 7, 2012: investment opportunities in natural gas as a transportation fuel; natural gas corridor; SeekingAlpha.com article.

May 15, 2011: Encana extends CNG corridor. This is from Rock Springs, WY, to Salt Lake City, UT.

Original Post

A great link sent in by "anon 1." This could compete for "top story" of the week. This story has so much on so many levels.

Shell and TravelCenters of America announced that starting in 2013, they plan to sell liquefied natural gas to on-highway customers through the existing network of full-service TA and Petro fueling centers. (LNG is viewed as a more suitable alternative fuel for long-haul operations because it has more range than compressed natural gas, or CNG.)

There's a  lot more at the link. Note the number of jobs that this initiative will generate. Politicians are having trouble coming up with ideas for jobs, but the private sector seems to be doing just fine.

See also this post on an update on the "natural gas national interstate system."

Later, Mike provided this link, asking whether GE's micro-LNG plants might not make sense for these refueling stations?

Chesapeake - Clean Energy Fuels Partnership: America's Natural Gas Highway

Link here.

From SeekingAlpha.com's transcript of Clean Energy Fuels' conference call on 2Q11 earnings:

One of our biggest accomplishments so far this year, is obtaining Chesapeake Energy’s $150 million investment in Clean Energy that will allow us to accelerate the formation of America’s Natural Gas Highway. 

Some data points:

• Backbone of the corridor: 150 natural gas stations
• Major corridors involved: I-10, I-5, I-40 and I-95 (not said on conference call, but I assume in California, Nevada)
• 250-mile separation
• Utilize many Flying J locations
• Clean Energy's Northstar subsidiary will play a major role in constructing the stations

National Fleet Program:

• Completing permitting on LNG station in Las Vegas; anchored by 48 UPS trucks
• Beginning to fuel the Dillon transport fleet in Dallas
• Also, Owens Corning in Chicago
• Expect to expand in Ohio 
• Coca-Cola and Pepsi: adding 50 vehicles for operations in Texas and California

Biggest Energy Story of the Week: EnCana Extends CNG Corridor

Readers interested in the compressed natural gas story should read this link first.

• Wyoming is converting its state government fleet to natural gas; first state to do this?
• UPS is setting up a natural gas corridor from Los Angeles to Las Vegas to Salt Lake City.

Now EnCana is setting up a natural gas corridor from Rock Springs to Salt Lake City. Incredible stuff.

I honestly think this might be the biggest energy story this week.

UPDATE / SPECIAL

After posting the above, I received the following from Anon 1 (see comments below for original comment; I have re-posted it here with minor edits):


These CNG corridors are happening in several places. Utah was way ahead, years ago.

Now, Oklahoma City, Oklahoma; Shreveport area, Louisiana; Bradford County, Pennsylvania; etc.

CHK announced major funding to support it. (Maybe in the last CHK earnings call.) Encana and others are doing a lot. All CHK vehicles will be CNG or LNG in 4 years or so. A huge fleet. Encana water disposal contractor in the Haynesville will be all LNG. A couple hundred trucks. Mobile fuel source. This is significant.

http://www.encana.com/news/newsreleases/2011/0405-lng-fueling-stations.html

Cross Canada corridor, west to east. A lot in OK. CHK has team to advise fleet owners, government or private. Movement in city bus and delivery service vehicles. Some in city and utility vehicles.

ATT.

IIRC.

It might be enough to largely solve the chicken and egg problem. But, the fleets need to use facilities open to the public to make it work. If government vehicles buy at public stations, in quantity, the problem may be solved. [I agree; out in San Pedro, California -- south Los Angeles -- where I spend a lot of time, there is a CNG station just a block from our house -- but it is used only be city vehicles; I've always thought it needs to be open to the public, but it's probably a liability issue and a low volume issue.]

A couple of GM vehicles. Ford coming. They make lots around the world where they sell.

Some stations are not close by. But, if you are in the area: https://foursquare.com/venue/10142931

Closer to home:


http://www.chk.com/news/articles/pressreleases/04-05-11%20800th%20vehicle%20conversion.pdf

http://www.investingdaily.com/tes/18600/a-big-month-for-natural-gas-vehicles.html

map: http://marcelluscoalition.org/wp-content/uploads/2011/04/MSC_NGV_Study.pdf

http://www.theautochannel.com/news/2011/04/25/529508-vehicles-are-lining-up-for-act-expo-2011.html

http://www.loves.com/AboutUs/MediaCenter/News/PressReleaseFeb252011.aspx

http://www.pennlive.com/midstate/index.ssf/2011/04/pa_getting_into_the_engergy_bu.html

Additional comment:

http://online.wsj.com/article/SB10001424052748704740604576301550341227910.html?ru=yahoo&mod=yahoo_hs

"An 18-wheeler can burn as much fuel in a year as 40 cars. What if it burned domestic natural gas instead of imported oil?"

The West Takes the Lead in Natural Gas Conversion

I don't know if the headline is accurate or just a perception based on the selected media that I read on a daily basis. But what I read suggests to me the western states are leading the nation in natural gas conversion. Today there is a report that the Wyoming legislature is taking baby steps to convert state vehicular fleet to natural gas. A spokesman said they wanted to mirror what the state of Utah was doing.

On top of this, UPS reported that it was setting up a natural gas corridor from Los Angeles to Las Vegas and into Salt Lake City for its brown trucks.

Recently XOM touted its changing outlook on natural gas. Of the majors, XOM has always seemed the most strategically focused.