UPS to Spend $50 Million For 9 More LNG Stations

This story appears in the Oct. 14 print edition of Transport Topics.

The use of natural gas as a trucking fuel was back in the spotlight last week, as the largest U.S. trucking company and a key fuel supplier announced new investments.

UPS Inc. said it will spend $50 million to build nine more liquefied natural gas fueling stations to fuel its trucks, bringing the company’s total stations to 13. All of the facilities are due to be operating by the end of 2014.

Meanwhile, Clean Energy Fuels Corp. announced a project to offer fleets across the country a renewable form of natural-gas fuel produced from organic waste, and to distribute it at 35 public retail fueling stations in California.

In addition, a number of trucking fleets announced they also are boosting their natural-gas fleets. “This is indicative of what’s happening in the industry,” said Richard Kolodziej, president of NGVAmerica, which promotes use of natural-gas vehicles. “Fleets are recognizing they can save a lot of money for years, if not decades, with innovative natural-gas infrastructure projects.”

He added, “We’re seeing more and more of it in the over-the-road market,” after years of widespread use by trash and other haulers.

UPS said its stations will support about 1,000 LNG tractors that will displace more than 24 million gallons of diesel fuel annually. The company has 115 LNG Class 8 tractors, which means it will add 900 LNG power units by next year.

UPS announced plans in April to add 700 LNG units. It operates LNG tractors in Las Vegas; Phoenix; Beaver and Salt Lake City, Utah; and Ontario, Calif.

“The natural-gas industry needs companies to commit to using natural gas to help establish a reliable alternative to traditional fuel, and that is just what UPS is doing,” said David Abney, chief operating officer of the Atlanta-based company.

“LNG is becoming more readily available,” he said.

Its expansion will include stations in Florida, Illinois, Indiana, Mississippi, Missouri, Ohio, Pennsylvania, Tennessee and Texas.

 “We’ll have it all on board by the peak [shipping] season next year,” UPS spokeswoman Susan Rosenberg told Transport Topics.

“We plan to experiment with CNG for tractors, too,” she said, noting that about 1,000 of its package-delivery vehicles use alternative fuels.

The new LNG facilities, which will be on-site private stations, are being built by Columbia, Md.-based GP Strategies, which has been involved in the design, engineering or construction of more than 60 alternative-fuel stations since 2001.

The deal is GP’s “biggest multiple order,” said Mike Mackey, vice president in charge of the firm’s alternative fuels division.

“With natural gas being cheaper than diesel, we’re getting customers like UPS that are doing it for both environmental and economic benefits,” Mackey said.

Last year, GP Strategies built a public LNG fueling station for trucking at a Wisconsin Kwik Trip station, he said.

Meanwhile, Clean Energy said its new fuel offering, dubbed “Redeem,” is made from methane collected from waste streams such as landfills, large dairy operations and sewage plants.

CEO Andrew Littlefair said Clean Energy aims to produce and distribute 15 million gallons of Redeem by the end of the year, “which can make significant progress towards achieving California’s climate change goals and prove that this is a viable, cleaner and abundant alternative fuel source for our future.”

To launch the fuel, Clean Energy is selling Redeem at its California retail stations on an “as available” basis at the same price as conventional natural gas, company spokesman Patric Rayburn said.

Separately, the company announced a multiyear natural-gas fueling agreement to support 36 new LNG trucks deployed by Raven Transport Inc. It is opening new stations in Jacksonville, Fla., and Franklin, Ohio.

Redeem is derived from the methane naturally generated by the decomposition of organic waste. Clean Energy said it extracts methane gas from landfills and other waste streams, purifies it and then delivers it via pipeline.

Redeem produced from landfill gas can enable fleets to achieve a 90% reduction in carbon emissions when replacing diesel or gasoline, compared with a 25% to 30% reduction from diesel or gas with natural-gas fuels from conventional sources.

The increased greenhouse-gas reduction is due to its source — waste gas that would have flared into the atmosphere anyway but is now being put to use as a transportation fuel, Rayburn said.

The fuel’s performance is the same as that of natural gas from other sources, he said.

Redeem is more expensive to produce than natural gas from conventional sources, but Clean Energy said it can still sell the fuel for roughly $1 cheaper than current diesel prices on a per-gallon equivalent basis.

Clean Energy is producing Redeem at facilities in Dallas and Canton, Mich., and is building a third facility in Millington, Tenn.

Dedicated carrier Lily Transportation Corp. is using Redeem to fuel the eight CNG-powered tractors it operates in Southern California.

“I don’t think you can be any better for the environment in the trucking business than you can by running this fuel,” said John Simourian II, president of the carrier.