Motor fuel retailers are cautiously betting that the filling station of the future will offer a broader range of options than what is available to today's gas-and-go drivers.
The change is coming with the integration of tens of thousands of alternative-fuel vehicles into the global motor fleet, including those powered by natural gas, hydrogen, biofuels and electricity.
In the United States, truck stop chain TravelCenters of America LLC revved the alternative fuels market this summer when it said it would soon offer liquefied natural gas (LNG) at the same islands where owners of gasoline- and diesel-powered vehicles have long held sway.
The LNG fueling lanes will be installed at roughly 100 TA and Petro Stopping Centers along interstate highways under a memorandum of understanding reached earlier this year between TA and Shell Oil Products U.S.
On a conference call with investors last week, Tom O'Brien, TA's president and CEO, said the terms of the agreement allowing Shell to sell its LNG fuels at TravelCenters and Petro centers were progressing.
"The market for natural gas as a fuel for long-haul trucks is still in its infancy, but we're excited to be discussing this arrangement on an exclusive basis with Shell, one of the largest energy companies in the world, to join our efforts to create the infrastructure necessary to provide our customers with this alternative fuel choice," he said.
Elen Phillips, Shell's North American vice president of fuel sales and marketing, said the use of LNG as a transportation fuel "gives truck fleet operators a new strong advantage because it's abundant and affordable and a viable alternative to diesel."
"Where it makes sense and where there is customer demand, we will innovate to deliver LNG as an additional fuel offer to our customers across America," Phillips said. The oil giant launched a similar program in 2011 to install LNG pumps at Flying J truck stops in Alberta.
Up-and-down growth curve
Natural gas, while not a new transportation fuel, has experienced a roller-coaster demand curve in the United States, beginning with the advent of compressed natural gas (CNG) adopted mostly for fleet vehicles. More recently, LNG has emerged as a niche fuel for heavy-duty and long-haul trucks, and some believe it holds promise as a replacement diesel as engine makers and trucking companies prepare for tighter restrictions on combustion pollutants, including carbon dioxide and other greenhouse gases.
According to a recent market sector analysis done by TIAX for America's Natural Gas Alliance, CNG fuel pumps began appearing at U.S. service stations 20 years ago with the passage of the Energy Policy Act, a growth trend that peaked in 1997 with more than 1,400 locations nationwide.
The market contracted from 1998 to 2008, a period that largely coincided with below-average oil prices, then began growing again with higher gasoline prices in 2008 and the Obama administration's promotion of alternative fuel vehicles as part of its green energy economy.
Today the United States has roughly 260,000 natural-gas-fueled vehicles on the road, including large CNG fleets maintained and operated by companies such as United Parcel Service Inc. and Waste Management Inc. That compares with more than 254 million gasoline- and diesel-powered passenger vehicles registered in the United States, which are supported by a network of 119,000 retail fueling stations.
Demand for CNG fuel for 2009 in the transportation sector was estimated at 3.2 billion cubic feet, or roughly 27.7 million gallons of gasoline equivalent, according to the ANGA analysis. Gasoline and diesel sales for the same year were estimated at 172 billion gallons, according to the Federal Highway Administration.
But if the natural gas vehicle market is to grow, significant investment will need to be made in pumping stations, according to ANGA, whose recent analysis estimates the cost for installing CNG pumps ranges from $600,000 to $1 million per station, depending on the number of pumps and their configuration.
CNG pumps are different from conventional pumps, the analysis states, in that they "include unique components such as gas dryers and high-pressure storage systems and are built to codes specially developed for high-pressure gas."
Kirk McCauley, director of member relations for the Service Station Dealers of America/National Coalition of Petroleum Retailers and Allied Trades, described the level of interest among gasoline retailers in natural gas pumps as "small but growing."
"There are some [owners] that are putting natural gas or electric [vehicle] stations in by themselves. But the vast majority of this is being funded by government programs," McCauley said. "In the case of Shell, obviously they want to get their product out there."
Indeed, Shell has been among the most aggressive in advancing the expansion of alternative fuel stations in the U.S. market. Last month, the company rolled out its fourth demonstration hydrogen pumping station in Newport Beach, Calif.
The 24-hour Shell station will provide drivers of hydrogen fuel cell vehicles with specialized training on how to dispense the fuel using personal access codes. Initially, Shell expects 10 to 12 drivers to fill their tanks each day at the site's two pumps, according to a company news release.
"Demonstration hydrogen filling stations allow us to evaluate a range of different technologies and learn valuable lessons about costs, consumer behavior and how to dispense it efficiently to different vehicles," Matias Sanchez Cane, North America commercial manager for Shell Alternative Energies, said in a statement.
Some states have also worked to help promote natural-gas-fueled vehicles. New Jersey, for example, recently launched a $10 million effort to help construct as many as seven new CNG fueling stations in three counties, McCauley said. The state is also home to one of the nation's leading gasoline-to-CNG conversion firms: Clean Vehicle Solutions of East Brunswick.
'Fracking' opponents form ranks
While the switch to alternative-fuel vehicles has generally been lauded by environmental groups concerned about air emissions and the climate change impacts of oil, a renewed emphasis on natural-gas-fueled vehicles has drawn scorn from some critics.
In a June blog post responding to the agreement between TravelCenters of America and Shell, the nonprofit coalition Root Force, which calls itself an "anti-infrastructure" movement, issued a statement positing that Shell's efforts to boost LNG consumption in the transportation sector were an outgrowth of the natural gas boom spurred by hydraulic fracturing.
Reposting the entry, environmental group Earth First suggested the announcement may open another front for opposition to the controversial drilling practice, which involves injecting water, sand and chemicals into underground seams to loosen gas from tight rock formations.
"For anyone opposed to fracking, this is an emerging market for gas use that can be stopped before it starts," Earth First said.