Navistar Joins the Natural Gas Brigade
LISLE, Ill. — Navistar and Clean Energy Fuels, the leader in natural gas supply in the U.S., have launched a strategic partnership that will provide American truck buyers a commercially viable way to add natural gas powered trucks to their fleets. Without the usual and sizeable upcharge on the trucks themselves, and without government subsidy. Some Canadian fleets may also be able to join the party.
"Together, Navistar and Clean Energy have come up with a breakthrough program that offers customers a quicker payback on their investment plus added fuel-cost savings from day one of operation," said Dan Ustian, Navistar chairman, president and CEO, in a Chicago news conference this morning. He said his company will offer a broad range of medium- and heavy-duty trucks powered by natural gas engines. They'll include internally developed MaxxForce motors and the Cummins Westport ISL G.
Clean Energy chairman T. Boone Pickens also participated in the press conference.
"It's a big day for natural gas," he said. "And all this can be done without government help, though I would like to see the Natural Gas Act passed."
This announcement comes on the heels of a speech made by President Obama on Jan. 27 in which he proposed several federal initiatives favouring the use of natural gas for transportation, including getting more natural-gas vehicles on the road using federal fleets and helping local governments upgrade their fleets, offering new tax incentives to help companies buy more clean trucks, working with the private sector to help develop natural-gas fueling stations between cities, and launching a competition to encourage new breakthroughs for natural-gas vehicles.
In a nutshell, the partnership announced today means Navistar will supply trucks with no natural-gas upcharge (in most cases), Clean Energy will guarantee fuel prices at a significant reduction from diesel for a term of five years, and the customer will commit to buying a certain amount of CNG or LNG during that period.
The first customer would seem likely to be Jerry Moyes, chairman and CEO of Phoenix-based Swift Transportation, who took part in the press conference. He wants to be first to test the Navistar products, he said, though he has yet to sign a deal with the truck-maker and Clean Energy.
"We're very excited about the potential of natural gas," he said. "We like what we see."
And so he should, given that Swift uses a million gallons of diesel every day. With natural gas presently about $1.50 cheaper than diesel per gallon, the math would look attractive even if there weren't a way to waive the upcharge at the start. The usual extra cost for a natural-gas engine can range from $35,000 to $80,00.
Moyes said as much as 30-40 percent of his fleet could be running on natural gas within the next 3 or 4 years.
Clean Energy will ensure a comprehensive CNG/LNG fueling-station network, including at fleet locations if the demand is there. Company president and CEO Andrew Littlefair said the aim is to have stations no more than 250 miles apart on the interstate system.
Some Canadian fleets may be able to participate but the details on that are not entirely clear at this point, not least because Clean Energy's presence in Canada is so far limited to B.C. Navistar vice president Jim Hebe said arrangements can be made with Canadian operations running north/south routes, and since most of those are within a short distance from the border, this seems feasible on the face of it.
Ever the natural gas evangelist, Pickens broke into the discussion at that point and said that there are options other than Clean Energy across Canada. He noted Shell's recent announcement that it has joined with Westport Innovations in a 'co-marketing' program to develop the North American market for LNG vehicles and fuels.
Clean Energy recently unveiled a route plan for the first phase of 150 new LNG fueling stations for 'America's Natural Gas Highway (ANGH). The company has identified 98 locations and anticipates having 70 stations open by the end of 2012 in 33 states.
Many of the fueling stations will be co-located at Pilot-Flying J Travel Centers already serving freight haulers through an exclusive agreement with Pilot to build, own and operate natural-gas fueling facilities at agreed-upon travel centers.
Navistar is developing engines that will bring natural gas to every one of its model ranges except the TerraStar, from class 6 through class 8. By mid-year 2012, said Hebe, the company will offer TranStar models with the Cummins Westport ISL G engine, followed soon after by the WorkStar. The spark-ignited engine is presently available from 250 to 320 hp, and it needs no active aftertreatment by way of a diesel particulate filter or selective catalytic reduction.
The company will also offer International DuraStar and WorkStar vocational trucks with its own natural-gas version of the 7.6-litre MaxxForce DT, developed in conjunction with Navistar subsidiary Emissions Solutions. That work is almost done.
As well, Navistar has entered into a development agreement with Clean Air Power to create a diesel-pilot-injection LNG MaxxForce 13-litre engine for the ProStar, as well as WorkStar and PayStar vocational trucks. They'll come on stream before the middle of 2013, says Hebe. He hinted that a 15-litre engine won't be too far behind.
The price of natural gas is clearly critical here, but Pickens said it's very unlikely to go too high, and will never go as high as diesel.
"Right now this country [the U.S.] is overwhelmed by natural gas," he said. "You've got enough drilling to last another 20 years. And we have at least a 100-year supply of gas."