CNG for tucks and buses – the compelling case

6th November 2014

John BaldwinManaging DirectorCNG Services Ltd

john.baldwin@cngservices.co.ukwww.cngservices.co.uk

07831 241217

Gas 2014“Sustaining Sector Momentum”

CNG for tucks and buses – the compelling case

1. CNG Services Ltd

2. NGVs in the UK – what is the opportunity?

3. CNG Trucks (dual fuel and dedicated)

4. Benefits of the high pressure gas grid

5. Shale gas

6. Gas industry and NGVs

7. Conclusions

CNG SERVICES LTD

CNG Services Ltd

• Supports projects to inject biomethane into the gas grid– Didcot, Poundbury, Vale Green,

Doncaster, Minworth, ReFood Widnes, Avonmouth etc

– Involved in 1.8TWh worth of projects (60 million therms)

• Bio-CNG as a fuel for trucks– Own UK’s largest CNG filling station– Sell Bio-CNG (20% biomethane)

• Supports onshore gas developments

We work on innovation in natural gas

Crewe CNG Station

• Filling dual fuel trucks for GIST/M&S, Brit European, Tenens, Waitrose

http://www.youtube.com/watch?v=orxBtoXyjos

Largest grid supplied CNG station in UK – now selling biomethane via Green Gas Certificates

NATURAL GAS VEHICLES IN THE UK –WHAT IS THE OPPORTUNITY?

Prices today

DECC Energy Price Forecasts

Natural gas has diverged from Oil price due to world-wide LNG trade and US Shale gas production and this underpins NGV for trucks – UK imports of oil by 2025 expected to cost >£20 billion a year.....we have to reduce this

UK Oil Production and Demand 1990 - 2020

UK oil production UK oil demand

This is the Elephant in the room......Question - How does UK plc afford this extra import bill of around £20 billion/year

DECC forecasts that by 2025, UK will be importing around 1 millionbarrels of oil per day, almost all for road transport

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Answer - we start by importing less oil - HGV sector provides the best opportunity for Natural Gas

Cars are not the target for natural gas – trucks are relatively few in number but use a lot of diesel and cause significant GHG emissions

Fuel options in each sector

Truck Market - DfT Funding - TSB Project

• TSB providing £11 million

funding 2012-15

• 13 consortiums trialling low carbon trucks

• 353 natural gas carbon trucks• 348 dual fuel trucks

• 5 dedicated gas trucks

• 26 new or upgraded refuelling stations

• CNG, LNG , Biomethane

CNG Services bringing 5 dedicated CNG Scania tractors to UK for project with Argos – these vehicles are transformational

Bus Market Development

• New CNG buses from MAN and Scania• 2013-14 – New high capacity CNG stations built at:

– Beccles, Reading, Runcorn, – Darlington, Sunderland, Lincoln

• Incentive for buses to use Biomethane and Green Gas Certificates

• 6 p/km payment for the certificates

UK NGV Filling Station Infrastructure

http://www.gasvehiclehub.org/

UK is the leading market in EU for trucks on natural gas

CNG TRUCKSDUAL FUEL AND DEDICATED

Dual Fuel Technology – Key Components

There is a worldwide dash for dual fuel technology underway driven by abundant world-wide gas resources

Hardstaff OIGI system exhaust including methane catalyst

250 bar CNG storage or LNG storage

Gas Injector Electronic Control UnitPressure Regulator

The Euro 6 Challenge for Dual Fuel

• From 2014, trucks need to meet the Euro 6 Standard

• Dedicated CNG/LNG in spark ignition can do it• Scania 340 bhp tractor

• Hard for dual fuel to meet it• Has to meet diesel standard and gas standard

• Difficult to do, temperature of methane catalyst

• May be possible with 30% gas, 70% diesel

• Prins conversion of MB Actros announced on 29th October 2014

No such thing as Chicken and Egg in UK – its all about the truck

Dedicated CNG – 340 bhp

Dedicated CNG tractors are coming….first 5 in UK by end 2014 in a project led by CNG Services Ltd

Dual Fuel V Dedicated

• Dual fuel has advantage can complete journey on diesel so no range issue

• Dedicated trucks would give 28% CO2 saving is as efficient as diesel, but likely to give around 18 – 20% saving

• Dedicated CNG trucks are very quiet – could be important benefit for moving fracking waste water

• Dedicated CNG have very low NOX and PM10

• Dedicated trucks use 2 x the gas of dual fuel and so make it easier to finance CNG filling stations

• Dedicated trucks very simple, one fuel, simple methane catalyst, duel fuel trucks complicated to meet Euro 6

Dedicated trucks are the medium/long term solution, dual fuel are great to start the market

Renewable Gas

• Compressed biomethane (CBM) used directly in a truck• Not in the UK

• 2 small plants in Germany, widespread in Sweden (no gas grid)

• CNG with biomethane injected into the grid and a Green Gas Certificate model used• 450 CNG stations in Germany, widespread in EU

• Crewe in UK

• UK will have 27 Biomethane plants in operation by 1 April 2015 (compared to 3 at 1 April 2014)

• 1.8 TWh of gas in full year = 120,000 tonnes of CNG = 160 million litres of diesel = fuel 5,000 large HGVs (5% of market)

• Or can heat 60,000 homes?

Renewable methane very attractive for houses and trucks

UK HIGH PRESSURE GRID – THE £15 BILLION ASSET FOR TRANSPORT

UK Gas SystemLocal Transmission System

LTS is a vital national asset - ideal for CNG – it would cost >£15 billion to build NTS/LTS – these assets can help reduce diesel demand and reduce

CO2 from trucks

Benefits of Using LTS

• Lower pressure lift• Reducing electricity used in compression

• Reduces number of stages of compression from 5 to 2

• Higher flow rates• Compressors run for less time, lower maintenance

• Very high capacity per CNG station

• No leakage of gas in LTS• Higher pressure grids have no methane leakage

• Dry Gas• No gas drier needed

The 6,000 km of 20 – 35 bar LTS means that 95% of major UK distribution centres are within 2 km of the ideal energy source is a vital national asset

Energy Used in Compression

As the grid (inlet) pressure increases the electricity used in compression decreases and higher flow rates of above 2,000m3/hr are possible which

reduces the running hours of compressor and provides very high capacity

Estimated CO2 savings from LTS CNG

• Well-to-Tank savings from LTS compared to Low Pressure grid are significant• No leakage of methane to get gas to the supply point = 11.5%

• 80% less electricity for compression = 6%

• No drier = 1%

• Compared to diesel, the “Well to Tank” for LTS CNG is around 10% lower

• “Tank-to-Wheel” CO2 savings are 20% CO2

• This is based on 100% CNG

• Assumes 8% efficiency reduction compared to diesel

• Total CO2 reduction from Dual Fuel trucks supplied via LTS is around 25% compared to diesel

Then there is biomethane on top

SAVING IN OIL IMPORT COSTS

How Much Saving in Oil Imports?

• For 1 CNG Station, 1,500 trucks, annual CNG = 30 million KG• 15 million therms

• Cost of LNG around £9 Million at 60p/therm for gas

• Equivalent to around 40 million litres of diesel• Cost around £24 million at 60 p/litre (duty free)

• This money goes to Russia – main diesel supplier to UK

• 1 CNG station will save around £15 M per annum from gas replacing oil

• But if the gas is from Lancashire then of the £9M, around £6M comes back to UK as tax• We can use this money to insulate homes and build renewable

generation

25% CO2 saving is great but money also good – UK plc has to switch trucks to gas (like we have heating and 50% of electricity)

25 CNG stations can save 1 billion litres of oil imports

LOCATION OF SHALE GAS COMPASED TO LTS-NTS?

Shale Gas Locations and the UK Gas Grid

The NTS/LTS appears to be wherever there is shale gas which is a stroke of luck (and saves UK around £15 billion)

CONCLUSIONS - THE COMPELLING CASE

DfT Transport Energy Task Force

There are 5 working groups:

• WG 1. Establishing the evidence base

• WG 2. Sustainability & Objectives

• WG 3. Policy & Investment certainty

• WG 4. Customer acceptability

• WG 5. Role of alternative fuels – GAS FOR TRUCKS

Gas Industry can input into all these groups to support CNG/LNG, fossil and renewable gas for trucks/buses

Conclusions (1)

• Very high growth driven by the oil – gas price differential• Gas grid = gas for heating (UK 1970-90)

• Gas = gas for electricity (UK 1992 - 2012, 50% switch)

• OEMs now making trucks that run on natural gas• This is the key development - Scania

• Supported by UK dual fuel engineering (Hardstaff, Prins, Clean Air Power, G-Volution)

• CNG is ideal fuel for UK• Small country

• Extensive Local Transmission System

• Back to base operations

The development of dedicated CNG trucks is transformational

Conclusions (2)

• LTS CNG and dual fuel trucks can save 1 billion litres of diesel per annum by getting 40% of trucks off 100% diesel

• Needs 25 CNG stations, around £40 Million capex

• Premium per vehicle in short term of £15- £25K but can be expected to fall towards cost of tanks (£5k)

• Reduce CO2 from large trucks by 20 – 30%

• Shale gas offers CO2 reduction compared to fossil natural gas/imported LNG• Jobs and more wealth that can remain in UK

• Taxes to fund insulation and renewables

Shale gas and LTS CNG can provide huge benefit to UK