CNG vs LNG: Which is the Best Solution? | Utilimarc Fleet FYIs

Gretchen Reese (00:24):

Hey there, welcome to the Fleet FYIs Podcast, the weekly podcast by Utilimarc, that reveals how you can make the most of your data for smarter fleet management. My name is Gretchen, and every week, you'll hear from me or some of the industry's finest in candid conversations that will not only shed some light on over two decades worth of fleet data insights, but also some of the industry's hottest talking points and key metric analysis with the aim to help you better understand your fleet from every angle. 

(00:52):

But before we begin, if this is the first time you've heard our show, thanks for stopping by. I'm so glad you decided to come along for the ride with us. But I've got a quick favor to ask you. Once, you finish today's episode, if you could take a few minutes to leave us a review on your favorite podcasting platform. We would really appreciate it, give us a rating, five stars, I hope, or tell us what you liked or leave us a comment or question about what you've heard in today's episode. If we haven't yet covered a topic that you're interested in hearing more about, let us know. We would be happy to go over it in detail in a later show.

(01:34):

Hello, everyone, and welcome back to another episode of the Fleet FYIs Podcast. Before I get into today's show, I wanted to make a quick note that the Utilimarc team will be attending and exhibiting at the NAFA INE next week, you'll remember Michael Carr and Paul Milner, two of my colleagues that have been on Fleet FYIs before them, as well as myself and a couple others will be at booth 943, 943. If you'd like to stop by and have a catch up, we will look forward to seeing you there. But anyways, back to the topic at hand. Today, I wanted to chat a bit about natural gas, because it's, I think, a very interesting topic. And it's also the fastest growing fossil fuel of the past decade, and natural gas is becoming an increasingly popular alternative to diesel and gasoline. 

(02:23):

Natural gas occurs, well, naturally (laughs) deep below the earth's surface due to the decomposition of plants and animals over millions of years, just so you know how it's created. And over this time, the high pressure and the heat changed these materials into petroleum oil and natural gas. There you have it. Varying methods of extraction and purification then turns these raw materials into different types of fuel with many common uses. Now, like all fossil fuels, natural gases are unfortunately non-renewable, with supply estimated to run out in about 50 years, give or take. However, natural gas is far greener than its petroleum counterpart, making it a more favorable option in terms of environmental friendliness. Natural gas can be stored and used in different states, but each type burns cleanly and emits less than half of the amount of greenhouse gases as regular oil or coal, which is kind of fascinating.

(03:18):

And as we head toward the inevitable depletion of natural gas supply, it will become trickier to depend on natural gas as a solution for a low-carbon future. Currently, more than half of homes in the US depend on natural gas, fewer stoves, heaters, clothing dryers, and other appliances in the home often use it. It's also used for heating itself, cooking, air conditioning and buildings like schools, hospitals, offices and restaurants. And it's also essential in the industrial sector, serves as a fuel source and a key material for countless products outside of transportation and outside of fleet. Natural gas fuels the production of everyday materials like paper, metal, glass, petroleum and clay, and additionally, it's used in the manufacturing of products like paint, plastic, fertilizer and different medicines. 

(04:04):

In the ongoing quest as we call it to decarbonize transport, natural gas is slowly gaining popularity for fueling vehicles. You might have seen some CNG refuse or trash trucks driving around your neighborhood. We have quite a few in Minneapolis as it stands. But as the natural gases above have high energy in it... have high energy density, so CNG here or even LNG, more vehicle fleets are moving towards natural gas for its energy efficiency, sustainability factor and lower fuel costs. It's also especially useful in heavy-duty vehicles where EV options just aren't yet available, or it's not as cost-effective or even efficient to use an electric model. Now, unfortunately, making a major switch to natural gas can only be a temporary solution like we were just talking about a few minutes ago. But whilst natural gas offers fleets many benefits in the short term, there's a lot of managers seeking to convert their vehicles and needing to consider the long term plans as well.

(05:03):

But we're here to talk about CNG and LNG today, not the future of what will happen once they run out. So let's dig into that. So CNG and LNG. Well, like we previously stated CNG and LNG are different forms of natural gas, which is that naturally occurring fossil fuel recovered from deep below the Earth's surface, and I will spare you going into how it is created over millions and millions of years yet again. But to dig into what CNG actually is, we're talking about compressed natural gas here. It's the most commonly used natural gas and acts as again the alternative to both gasoline and diesel. It's made up of methane, nitrogen, carbon dioxide and propane, and can be stored and distributed in hard pressurized containers. 

(06:22):

CNG is produced by compressing natural gas to less than 1% of its original volume. So I thought that was kind of interesting, especially when you look at how its transported all over the US. But there's a lot of benefits that I wanted to dig into about using CNG over other fuels. The first is that CNG is odorless and non-toxic, so it burns cleanly with far less GHGs than other fuels, and this is a lot of times what makes it that preferred green fuel option for a lot of fleets looking to decarbonize. Secondly, CNG can cost as little as half the price per gallon compared with gasoline, meaning huge savings for drivers, which is great, and lastly, CNG reduces maintenance costs associated with a vehicle. Since the fuel burns cleanly and contains no additives, there's no byproduct left behind that could potentially contaminate your engine oil and your spark plugs down the line. I mean, we all know how those trips to the maintenance shop go. They're not always fun. 

(07:21):

But what's 98% of natural gas in the US coming right from North America, it means that CNG prices will stay relatively stable compared to commonly imported fuels, like we've seen in the last few weeks, that can have a little bit more of a volatile price range depending on what's going on worldwide. Now, like any fuel, because it is not, you know, the best thing that could ever (laughs) happen here, right? There's always some challenges that are associated with different fuels, different fuel types, um, and how they work, and how they're used. So using CNG does have some challenges that have inhibited the fuel from gaining popularity over more traditional options like petrol and diesel. And first, in terms of performance, CNG just doesn't deliver the same amount of power as diesel. So CNG vehicles might not be considered as fuel efficient. 

(08:11):

This means that drivers will have to stop more often to fuel up than they would in a traditional internal combustion engine. Um, if you remember from the fuel cell comparison how we were talking about that, you really only get 40% of fuel efficiency of a full tank. Basically, it just means with the amount of levels of electrolysis that this fuel has to go through before it creates the reaction that powers the engine, it loses its energy efficiency over time. That's really what that means. 

(08:40):

Now, the second challenge associated with CNG is that finding a station with the fuel type in general can be a major challenge and deterrent, uh, for drivers looking into CNG fueled vehicles. The majority of CNG fueling stations are currently in New York and in California. So it's less practical for drivers in other states to consider CNG as an alternative fuel for their vehicle unless their fleet yard has a fueling station where they actually supply it on site. Now, three, whilst both are very safe options, CNG is a little less safe than liquid natural gas or LNG, which I'll get into in just one second, and the reason is, is simply because it's a gas. So that means that it's more prone to leakage and it's more prone to catching fire because we all know, you know, hold up a match to any area where there's gas. It's why they say don't light anything like a candle or anything along those lines if you think you have a gas leak, because it could explode, and no one wants that.

(09:33):

But i- if we're looking at how it can actually be used because that's, that's the big question here, right? It's how can CNG be used? How can LNG be used, and why are we even talking about this in the first place? Well, CNG can be used in a variety of light to heavy to duty applications, so long as it's used in CNG dedicated vehicles or equipment. It can't be something that you would put into an, uh... a traditional internal combustion engine because it could ruin the motor. But it vehicles can be professionally converted to be CNG compatible with just a few minor tweaks, but there's also options made specifically for CNG fuel as well. 

(10:09):

Pickup trucks, buses, trains, cars, they can all run on CNG as long as daily fueling is easily accessible. Many national companies like FedEx, UPS and Coca Cola already use CNG for their fleets as part of a partnership with Clean Cities, which is kind of cool, and [inaudible 00:10:23] from inside the vehicles, CNG is actually commonly used in homes for heating and appliances. So that would be your home appliances like water heaters, stove tops and clothing dryers, they could all use CNG as well.

(11:09):

Next, let's chat about LNG. So liquefied natural gas or LNG is the result of liquefying and cooling compressed natural gas, CNG. So like CNG, LNG is nearly all methane with other elements including nitrogen, ethane, and carbon dioxide. And in the process of making LNG, natural gas is cooled until it becomes a liquid, and at this point elements such as water, hydrocarbons, carbon dioxide, and mercury become frozen and need to be extracted. The result is a liquid gas, 600 times reduced from its previous form. And once at its destination and returned to natural gas, LNG can serve all of the same functions that CNG can. Now, if we wanna look into some of the benefits of using LNG over CNG. Well, firstly, the energy density is more than three times greater than CNGs. So just one cubic meter of LNG can produce 600 cubic meters of natural gas once it's returned to a gaseous state. 

(12:05):

In similar volume, or its similar volume makes LNG much more cost-effective to store and transport across long distances where direct pipelines are not a viable option, which is always good. Um, it's cheaper to produce than any other fossil fuel and the process is actually simpler too. Its stable price is also an advantage for businesses that are looking to estimate yearly energy costs a little bit more accurately and be able to project those in the budget. Number four, it's even safer than CNG because like we were just talking about with being able to ignite in its gaseous state, LNG cannot ignite whilst it's in its liquid form, and this make it... makes it completely safe for transport and storage, which is a massive, massive benefit. 

(12:47):

And lastly, like CNG, LNG is a great environmentally friendly fuel option. It produces minimal greenhouse gas emissions and virtually no ash when it's combusted, which is also kind of cool. But again, as it comes with its benefits, it's really important to take into account the challenges as well, because like we just said, every fuel type will come with its own challenges. So as a fossil fuel, the depletion of LNG and other natural gas is inevitable. This is something to keep in mind for bigger companies implementing natural gas into their fleet strategies, as it could only be a solution for the near future. That almost begs the question is LNG or CNG, is it a stopgap solution? Is it worth investing in if your end goal is electric? Let me know what you think. I'd love to hear your thoughts on that, and actually, that might turn into an episode later on in the future. Let me know if you'd be interested in hearing one on that. 

(13:40):

But the next piece of this is that as a capital investment is often required, I mean, obviously no such thing as a free lunch here, LNG requires special materials for storage and handling. That's also true for the installation of LNG compatible engines. But again, we all know this, for every fuel type, there's special equipment, there's special materials for storage, and there's just different ways to install your infrastructure to be able to actually use the fuel type. So that's not really too different here. But whilst LNG is a great option for remote areas, it typically isn't a feasible option for islands, for example. LNG is shipped in massive bulk quantities that most island economies cannot afford to absorb, in addition to the expensive regasification... Regasification, that's an interesting word for you, the expensive regasification and distribution processes. It just can be a little bit of a lot. 

(14:31):

Well, and if you're trying to use LNG, ultimately at smaller volume makes LNG much more cost-effective to store and transport, like we were talking about, you know, where direct pipelines aren't a viable option, but it also serves as emergency fuel in remote areas that cannot readily access other fuel types. Once it's returned to its gaseous state, LNG serves all the same purposes. And again, you can use it to manufacture products like fertilizers, paints, medicines, and obviously it's used in transport too, and actually a more recent development has been the introduction of LNG as a Marine fuel. It's low environmental impact and lightweight characteristic has made it a top competitor to the traditional heavy oils commonly used in ships. Fascinating, no.

(15:47):

So I wanted to move into just to wrap this episode up, how these processes work for refining and recovering these types of fuels and also how they're actually used in fleets? And let's start by how these fuels are recovered and refined. So natural gas can be produced in two ways, the traditional way and the renewable way, which sounds a little confusing, because I know I just said that natural gas is non-renewable, but bear with me here for a second. So like other fossil fuels, natural gas is traditionally recovered from the underground reserves that have formed over millions of years. And again, I won't go into the specifics for how it's formed. But basically, after all of this sediment and animal matter and plant matter were buried for millions of years and converted into natural gas, it needs to be recovered. So recovering it means that drilling is done deep into these underground deposits, and total recovery of all of the natural gas in the reserve is not common, and it's not reasonable. 

(16:47):

Many factors, including the porosity or the porousness of the rock and the viscosity of the deposit affect how easily it can be recovered. And with today's technology, about 60% from each reserve is recovered on average. Just to give you a little perspective. The initial mixture recovered from a well is made up of oil, water and gas, and heating the mixture helps separate out the water whilst the gas rises to the top and is removed for further processing. At this point, the natural gas is still mixed with water vapor and natural gas liquids like ethane, propane and butane. Thus, the gas goes in through the dehydration and other processes to remove these liquids and to reach the pure state that is then sold as CNG or LNG. A newer, more renewable method of producing natural gas involves capturing the methane produced at landfills and wastewater treatment plants. 

(17:39):

Now, the idea here is the same as in the traditional way, organic matter breaks down and releases this bio gas called methane. It's the same thing that, you know, when you hear about, "Oh, livestock are so polluting." It's because they're producing a lot of methane as their bodies go through the digestive process. Um, but getting onto it, basically, this methane is gathered and purified to create natural gas. The environment benefits here are twofold as co- completely renewable gas is created, but also the atmosphere is spared from being polluted with more methane, which is a major contributor to global warming, which is kind of interesting if you ask me. And in theory, natural gas can be used in all types of fleet vehicles, especially for cities, and moving on to again how this fuel is actually used rather than just how it's recovered.

(18:31):

The most common uses are in garbage trucks and city buses. Like I said, um, Minneapolis has quite a few of those which is quite cool to see driving around, and perhaps you have some where you're located as well. But according to natural gas vehicles for America, more than 17,000 garbage trucks run on natural gas in the US alone, and this number will grow significantly in the coming years especially with waste management's commiment... commitment to transition entirely from diesel-powered trucks to CNG-powered trucks in the near future. 

(19:00):

CNG is a great option for heavy duty garbage trucks or refuse trucks as these fleets can save a ton of money on fuel and maintenance. They can significantly de- decrease their emissions and can benefit from quieter operation. I'm sure, you know, we all know that if you wake up early in the morning to (laughs) the trash guys that are out in the back, and they're picking up all the bins. I mean, it can get a little bit loud and typically hear the engine before you hear them. At least I do, granted I live in a city and the alley is quite close, but it would be kind of nice to have a slightly quieter truck, I think.

(19:32):

Um, (laughs) but according to a waste management employee, for every single truck converted to natural gas the company actually reduces their diesel fuel consumption by about 8000 gallons per year and greenhouse gas emissions are reduced by 22 metric tons, which is awesome. Natural gas is also a popular alternative fuel for city buses that normally polluted city air with a ton of exhaust because they are constantly running. And New York's Metro Transit Authority buses have taken it even one step further by switching from regular CNG use in their city buses to using only renewable natural gas. 

(20:06):

The city is working together with Clean Energy Fuels Corporation to fuel their 800 buses and the benefits of this change are s- very noteworthy. The agreement for 25 million gallons of renewable natural gas or RNG is expected to reduce the city's fl- oh, the city fleets greenhouse gas emissions by over 25,000 metric tons each year, which is the equivalent of removing 5,477 gasoline-powered vehicles from the road, which is huge, right? But I'm curious to hear what you all think of natural gas, specifically CNG, LNG and the renewable option RNG that we're starting to see pop up especially in New York City. What are your thoughts? Do you like it? Are you intrigued by it? Do you think it'll be a viable option for fleets in the future? Let me know. Send me an email tagged me on LinkedIn, use the hashtag Utilimarc Fleet FYIs, or you can even send me a carrier pigeon. We all know, I don't judge here, (laughs). 

(21:01):

But that's all for me this week. I will look forward to catching up with you all at NAFA next week in Columbus, Ohio at booth 943. So make sure you stay tuned for our conference recaps, ciao. Hey, there, I think this is the time that I shook you the virtual high five because you've just finished listening to another episode of the Fleet FYIs Podcast. If you're already wanting more content, head over to utilimarc.com, which is Utilimarc with C, U-T-I-L-I-M-A-R-C.com, for this episode, show notes, and extra insights coming straight from our analysts to you. That's all from me this week. So until next time, I'll catch you later.