March 29, 2016 10:50 AM, EDT
Trillium, PennDOT Strike $84.5 Million CNG Agreement
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Trillium CNG, the compressed natural gas company for Love’s Travel Stops, was selected by the Pennsylvania Department of Transportation to design, build, operate and maintain 29 CNG facilities in the state — calling it a record-setting public-private partnership.

Trillium said the $84.5 million contract will be finalized over the next month or so.

Bill Cashmareck, general manager of natural gas for Love’s, told Transport Topics, “This is the largest project of its kind. There hasn’t been a larger department of transportation project for CNG ever in the United States.”

Using the public-private-partnership procurement mechanism allows PennDOT to install the fueling stations faster than if a traditional procurement mechanism were used for each site, resulting in significant estimated capital cost savings of more than $46 million, the department said.

Seven of the 29 stations will have public access dispensers to fuel vehicles of all types, including heavy-duty trucks, Cashmareck said.

The other 22 locations will supply CNG to more than 1,600 CNG buses at transit agencies across the state, Trillium said.

“With Pennsylvania’s natural-gas resources, this project will not only bring efficiencies for transit agencies and the state, but we’re also helping establish a foothold for the CNG transportation market in areas that may not have seen this opportunity for some time,” PennDOT Secretary Leslie Richards said in a statement.

The department also said it expects transit agencies and itself to see significant savings due to the project.

Based on current CNG, diesel and gasoline prices as well as fuel usage, agencies can save more than $10 million annually, PennDOT said. Due to these expected savings, transit agencies’ sustainability is increased and dependency on state operational subsidies is reduced.

After 10 years, estimates are that the project will pay for itself with the estimated $100 million in savings, PennDOT said.

Asked how much business he expected from trucks at those public stations, Cashmareck said, “The 20-year term of the contract gives quite a bit of runway to generate significant volumes throughout the stations.”

He said Love’s in-house fleet sales team and other CNG marketers in the company are working to generate business and increase the volume. “We are ambitious, and we will see where we end up.”

Under the pending contract, PennDOT said it would receive a 15% royalty, excluding taxes, for each gallon of fuel sold to the public, which will be used to support the cost of the project — with a guarantee of at least $2.1 million in royalties over the term of the agreement.

The locations will be constructed over the next five years, and Trillium also will also make CNG-related upgrades to existing transit maintenance facilities. According to the Alternative Fuels Data Center, Pennsylvania has 61 CNG facilities, 35 of which are open to the public.

Love’s Travel Stops said it operates five locations in Pennsylvania, none of which offers CNG, while Trillium operates three CNG facilities in the state, the company said.