return on investment liquified natural gas pivotal lng · 2018. 10. 26. · engineering costs...
TRANSCRIPT
RETURN ON INVESTMENTLIQUIFIED NATURAL GAS
PIVOTAL LNGTRUCK MARKET LNG TO DIESEL COMPARISON
RETAIL BREAK EVEN AND IRR EXAMPLE FOR A TYPICAL TRUCK FLEET
Cells in yellow are for your input, other values are calculated
Acquisition Cost - Diesel Tractor 120,000$
Current Diesel Cost ($ per gallon) 3.00$
Estimated Annual Diesel Cost Increase % 3%
Average Fuel Mileage (MPG) Diesel 6.5
Current Diesel Exhaust Fluid Cost ($ per gallon) 2.00$
Estimated Diesel Exhaust Fluid Consumption % 2%
Estimated Annual Diesel Exhaust Fluid Cost Increase % 2%
Acquisition Cost - LNG Tractor 170,000$
LNG Tractor Premium (calculated or insert a value) 50,000$
Current LNG Cost ($ per DGE) 2.00$
Estimated Annual LNG Cost Increase % 0%
Average Fuel Mileage (MPG) LNG 5.9
Annual Average Tractor Mileage 100,000
Number of Tractors 25
Weeks of operation per year 50
Days of operation per week 5
Year Year Year Year Year Year Year Year Year Year Year
Annual Costs and Savings Per Truck 0 1 2 3 4 5 6 7 8 9 10
Annual Diesel Cost 46,154$ 47,538$ 48,965$ 50,434$ 51,947$ 53,505$ 55,110$ 56,763$ 58,466$ 60,220$
Annual Diesel Exhaust Fluid Cost 615$ 628$ 640$ 653$ 666$ 679$ 693$ 707$ 721$ 735$
Total Cost for Diesel plus Diesel Exhaust Fluid 46,769$ 48,166$ 49,605$ 51,087$ 52,613$ 54,184$ 55,803$ 57,470$ 59,187$ 60,956$
Annual LNG Cost 33,898$ 33,898$ 33,898$ 33,898$ 33,898$ 33,898$ 33,898$ 33,898$ 33,898$ 33,898$
Annual Fuel Savings 12,871$ 14,268$ 15,707$ 17,188$ 18,714$ 20,286$ 21,905$ 23,572$ 25,289$ 27,057$
Accumulated Fuel Savings 12,871$ 27,139$ 42,845$ 60,034$ 78,748$ 99,034$ 120,939$ 144,511$ 169,800$ 196,857$
Net Accumulated Fuel Savings (- Tractor Premium) (50,000)$ (37,129)$ (22,861)$ (7,155)$ 10,034$ 28,748$ 49,034$ 70,939$ 94,511$ 119,800$ 146,857$
Break Even - Years 3.4
IRR (5 year ) 16%
IRR (10 year ) 31%
Consumption Calculations Per Truck For Fleet Per Truck For Fleet Per Truck For Fleet Per Truck For Fleet
Diesel Consumption in Gallons 15,385 384,615 1,282 32,051 308 7,692 62 1,538
Diesel Exhaust Fluid Consumption in Gallons 308 7,692 26 641 6 154 1 31
LNG Consumption in DGE 16,949 423,729 1,412 35,311 339 8,475 68 1,695
LNG Consumption in LNG Gallons 29,153 728,814 2,429 60,734 583 14,576 117 2,915
Daily
Input Variables
Annual Monthly Weekly
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
Yea
r 1
Yea
r 2
Yea
r 3
Yea
r 4
Yea
r 5
Yea
r 6
Yea
r 7
Yea
r 8
Yea
r 9
Yea
r 1
0
Annual Diesel Cost
Annual LNG Cost
DIESEL TO LNG FUEL PRICE SPREAD AND COMPONENTS
CLEAN CITIES RETAIL LNG PRICE SURVEYINFORMATION PRIOR TO 2014 REFLECTS PRIVATE FLEET, NOT RETAIL
CLEAN CITIES SURVEY - RETAIL ON-HIGHWAY CNG PRICES
RETAIL DIESEL PRICE COMPONENTS – ENERGY INFORMATION ADMINISTRATION (EIA)
Diesel Retail Price/Gallon $3.00 LNG Retail per DGE $2.00
Crude Oil 50% $1.50 Gas to the plant 23% 0.45$
Refining 17% $0.51 Liquefaction 34% 0.67$
Distribution and Marketing 16% $0.48 Distribution and Station Cost 19% 0.37$
Taxes 17% $0.51 Taxes 26% 0.51$
Total $3.00 Total 2.00$
EIA Diesel Price Breakdown per gallon Typical LNG Price Breakdown per DGE
Example Comparison of Retail Diesel and LNG
Diesel Retail
Crude Oil Refining Distribution and Marketing Taxes
LNG Retail
Gas to the plant
Liquefaction
Distribution and Station Cost
Taxes
BASIC LNG STATION COST PER DGE EXAMPLE
Assumes one fueling station for 25 trucks located on an existing customer site
Assumes constant monthly throughput over the term
Very basic station with minimal construction and site improvements
Ignores land cost, Opex, taxes, insurance and residual value of equipment
DGE = Diesel Gallon Equivalent (1.7 LNG gallons)
Station Capex Assumptions Annual miles traveled per truck 90,000
Station Mechanical Equipment (tank, dispensers, etc.) 700,000$ Average fuel mileage (MPG) 6.00
Station mechanical equipment useful life (years) 10 Annual DGE fuel consumption per Truck 15,000
Station mechanical equipment residual value $ -$ Number of Trucks 25
Land Acquisition Cost -$ Annual DGE fuel consumption for the fleet 375,000
Land Value after year 10 -$ LNG fuel cost contribution per DGE 0.25$
Site Improvement and construction cost 100,000$ Annual contribution to station cost for the fleet 93,750$
Total Capex Assumption 800,000$ Monthly contribution to station cost for the fleet 7,813$
Station Opex Assumptions Total station flow in DGE over 10 years 3,750,000
Station Opex (utilities, maintenance and repairs) -$ Sum of contribution to station cost over 10 years 937,500$
Taxes -$
Insurance -$ Fuel station DGE per month 31,250
Total Opex Assumption -$ Fuel station LNG gallons per month 53,125
Fuel station LNG gallons per year 637,500
Fuel cost contribution per DGE assumption 0.25$
Annual Rate 3%
Number of payments 120
Payment Amount 7,812.50$
10 year Fuel Cost Contributions Present Value (PV) $809,076.20
Basic LNG station cost per DGE example
Present Value (PV) calculation based on monthly contribution to station cost
Station Flow Assumptions & Calculations
Fuel Cost Contribution Assumption
Station Cost Assumptions
LNG STATION CONSIDERATIONS
Factors that can decrease fuel cost contribution per DGE
Lower Capex
Potential infrastructure grants and tax incentives
Higher throughput through growth of primary fleet
Higher throughput through shared access with other fleets
Possible scalability savings if station is expanded
Treatment of residual value of equipment (actual useful life is far greater than 10 years)
Acquisition cost of land (if any)
Value of land after 10 years
Truck fueling patterns (i.e. all 25 in the morning or dispersed over the 24 hour period)
Engineering costs
Construction costs
Operating expenses
Project cost allocation (to fleet or facility)
Depreciation
Station equipment residual value
Steady flow from day 1 or ramp up over X time period
Potential for additional trucks/increased station flow
Station scalability/ same site and tank for additional trucks/just add dispenser
Other income streams (shared or public access)
Taxes
Some critical cost variables to be considered for any LNG station
TAXES
TAX PENALTIES ON LNG
• NEW TRUCKS PAY A 12% FEDERAL EXCISE TAX
• DIESEL TRACTOR - $100,000 X 12% = $12,000
• LNG TRACTOR - $150,000 X 12% = $18,000
• THAT’S A $6,000 PER TRACTOR FEDERAL TAX PENALTY FOR DOING THE RIGHT THING!
• X100 TRUCKS IN A TYPICAL DEPLOYMENT $600,000
• “BROWN WATER” LNG IS STILL TAXED ON AN LNG GALLON BASIS – NOT DGE!
FEDERAL FUEL EXCISE TAX (FET) IRS FORM 720
State Fuel Tax
From IFTA tables
July 2018
Does not include
state surcharges
State / Province Gasoline Special Diesel Gasohol Propane LNG CNG Ethanol Methanol E-85 M-85 A55 Biodiesel Electricity Hydrogen
1 ALABAMA (AL) U.S. 0.18 0.19 0.18 0.19 0.18 0.18 0.18 0.18 0.18 0.19
2 ARIZONA (AZ) #8 U.S. 0.18 0.26 0.18 0.18 0.18 0.26
3 ARKANSAS (AR) U.S. 0.215 0.225 0.215 0.165 0.05 0.05 0.215 0.215 0.215 0.215 0.225
4 CALIFORNIA (CA) #1 U.S. 0.57 0.06 0.1017 0.0887 0.09 0.09 0.09 0.09 0.57 0.57
5 COLORADO (CO) U.S. 0.22 0.205 0.22 0.11 0.1 0.15 0.22 0.22 0.22 0.22 0.22 0.205
6 CONNECTICUT (CT) #16 U.S. 0.25 0.417 0.25 0.26 0.26 0.26 0.25 0.25 0.25 0.25 0.25 0.417
7 DELAWARE (DE) U.S. 0.23 0.22 0.23 0.22 0.22 0.22 0.23 0.23 0.22 0.22 0.22 0.22
8 FLORIDA (FL) #19 U.S. 0.345 0.3437 0.345 0.3437
9 GEORGIA (GA) U.S. 0.268 0.3 0.268 0.268 0.268 0.268 0.268 0.268 0.268 0.268 0.268 0.3
10 IDAHO (ID) #7 U.S. 0.32 0.232 0.349 0.32 0.32 0.32
11 ILLINOIS (IL) #27 U.S. 0.324 0.349 0.324 0.358 0.35 0.294 0.324 0.324 0.324 0.324 0.324 0.349
12 INDIANA (IN) U.S. 0.26 0.47 0.26 0.47 0.47 0.26 0.26 0.26 0.26 0.26 0.47
13 IOWA (IA) #26 U.S. 0.305 0.325 0.29 0.3 0.325 0.31 0.29 0.305 0.29 0.305 0.305 0.295
14 KANSAS (KS) U.S. 0.24 0.26 0.24 0.23 0.26 0.24 0.24 0.26 0.17 0.24 0.26 0.26
15 KENTUCKY (KY) U.S. 0.246 0.216 0.246 0.246 0.216 0.216 0.246 0.246 0.246 0.246 0.216 0.216
16 LOUISIANA (LA) #22 U.S. 0.2 0.2 0.2 0.146 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
17 MAINE (ME) #6 U.S. 0.312 0.219 0.178 0.3073 0.198 0.147 0.312
18 MARYLAND (MD) #24 U.S. 0.338 0.3455 0.338 0.338 0.338 0.338 0.338 0.338 0.338 0.338 0.3455 0.3455
19 MASSACHUSETTS (MA) U.S. 0.24 0.24 0.24 0.186 0.186 0.186 0.24 0.24 0.24 0.24 0.24 0.24
20 MICHIGAN (MI) U.S. 0.404 0.423 0.404 0.423 0.423 0.404 0.404 0.404 0.404 0.404 0.423 0.423 0.423
21 MINNESOTA (MN) #17 U.S. 0.285 0.285 0.285 0.2135 0.171 0.285 0.285 0.285 0.2025 0.285 0.285
22 MISSISSIPPI (MS) #2 U.S. 0.18 0.18 0.18 0.17 0.18 0.228 0.18 0.18 0.18 0.18 0.18 0.18
23 MISSOURI (MO) #3 U.S. 0.17 0.17 0.17 0.17 0.05 0.05 0.17 0.17 0.17 0.17
24 MONTANA (MT) #10 U.S. 0.2925 0.0518 0.07
25 NEBRASKA (NE) U.S. 0.284 0.284 0.284 0.284 0.284 0.284 0.284 0.284 0.284 0.284 0.284 0.284
26 NEVADA (NV) U.S. 0.23 0.27 0.23 0.22 0.27 0.21 0.23 0.23 0.23 0.19 0.27
27 NEW HAMPSHIRE (NH) U.S. 0.222 0.222 0.222 0.222 0.222
28 NEW JERSEY (NJ) U.S. 0.371 0.442 0.371 0.3225 0.371 0.371 0.371 0.371 0.371 0.442
29 NEW MEXICO (NM) U.S. 0.21
30 NEW YORK (NY) #12 U.S. 0.399 0.3915 0.399 0.23 0.399 0.399 0.399 0.399
31 NORTH CAROLINA (NC) #25 U.S. 0.351 0.351 0.351 0.351 0.351 0.351 0.351 0.351 0.351 0.351 0.351 0.351
32 NORTH DAKOTA (ND) U.S. 0.23 0.23 0.23 0.23 0.23 0.23
33 OHIO (OH) U.S. 0.28 0.28 0.28 0.28 0.28 0.28 0.28 0.28 0.28 0.28 0.28
34 OKLAHOMA (OK) U.S. 0.16 0.13 0.16 0.16 0.05 0.05 0.16 0.16 0.16 0.16 0.16 0.13
35 OREGON (OR) U.S.
36 PENNSYLVANIA (PA) #4 U.S. 0.576 0.741 0.576 0.425 0.648 0.576 0.384 0.289 0.413 0.332 0.741 0.741 0.0172 0.576
37 RHODE ISLAND (RI) U.S. 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33
38 SOUTH CAROLINA (SC) #23 U.S. 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18
39 SOUTH DAKOTA (SD) U.S. 0.28 0.28
40 TENNESSEE (TN) #9 U.S. 0.24 0.21 0.24 0.17 0.16 0.16 0.24 0.24 0.24 0.24 0.24 0.21
41 TEXAS (TX) #13 U.S. 0.2 0.2 0.2 0.15 0.15 0.2 0.2 0.2 0.2 0.2 0.2
42 UTAH (UT) #21 U.S. 0.294 0.294 0.294 0.145 0.145 0.294 0.294 0.294 0.294 0.294 0.294 0.145
43 VERMONT (VT) U.S. 0.31
44 VIRGINIA (VA) #20 U.S. 0.162 0.202 0.162 0.162 0.183 0.162 0.162 0.162 0.162 0.162 0.162 0.202
45 WASHINGTON (WA) #11 U.S. 0.494 0.494 0.494 0.494 0.494 0.494 0.494 0.494 0.494
46 WEST VIRGINIA (WV) U.S. 0.357 0.357 0.357 0.2 0.152 0.237 0.357 0.357 0.357 0.357 0.357 0.357
47 WISCONSIN (WI) U.S. 0.329 0.329 0.329 0.226 0.197 0.247 0.329 0.329 0.329 0.329 0.329 0.329
48 WYOMING (WY) U.S. 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24
Average 0.29$ 0.18$ 0.175
STATE FUEL TAX SOUTHEASTERN STATES
State / Province Gasoline Special Diesel Gasohol Propane LNG CNG Ethanol Methanol E-85 M-85 A55 Biodiesel Electricity Hydrogen
1 ALABAMA (AL) U.S. 0.18 0.19 0.18 0.19 0.18 0.18 0.18 0.18 0.18 0.19
2 FLORIDA (FL) #19 U.S. 0.345 0.3437 0.345 0.3437
3 GEORGIA (GA) U.S. 0.268 0.3 0.268 0.268 0.268 0.268 0.268 0.268 0.268 0.268 0.268 0.3
4 LOUISIANA (LA) #22 U.S. 0.2 0.2 0.2 0.146 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
5 MISSISSIPPI (MS) #2 U.S. 0.18 0.18 0.18 0.17 0.18 0.228 0.18 0.18 0.18 0.18 0.18 0.18
6 NORTH CAROLINA (NC) #25 U.S. 0.351 0.351 0.351 0.351 0.351 0.351 0.351 0.351 0.351 0.351 0.351 0.351
7 SOUTH CAROLINA (SC) #23 U.S. 0.18 0.18 0.18 0.18 0.18 0.18 0.18 0.18
8 TENNESSEE (TN) #9 U.S. 0.24 0.21 0.24 0.17 0.16 0.16 0.24 0.24 0.24 0.24 0.24 0.21
Average 0.24$ 0.17$ 0.1734
SUMMARY
RETAIL BREAK EVEN AND IRR EXAMPLE FOR A TYPICAL TRUCK FLEET
Cells in yellow are for your input, other values are calculated
Acquisition Cost - Diesel Tractor 120,000$
Current Diesel Cost ($ per gallon) 3.00$
Estimated Annual Diesel Cost Increase % 3%
Average Fuel Mileage (MPG) Diesel 6.5
Current Diesel Exhaust Fluid Cost ($ per gallon) 2.00$
Estimated Diesel Exhaust Fluid Consumption % 2%
Estimated Annual Diesel Exhaust Fluid Cost Increase % 2%
Acquisition Cost - LNG Tractor 170,000$
LNG Tractor Premium (calculated or insert a value) 50,000$
Current LNG Cost ($ per DGE) 2.00$
Estimated Annual LNG Cost Increase % 0%
Average Fuel Mileage (MPG) LNG 5.9
Annual Average Tractor Mileage 100,000
Number of Tractors 25
Weeks of operation per year 50
Days of operation per week 5
Year Year Year Year Year Year Year Year Year Year Year
Annual Costs and Savings Per Truck 0 1 2 3 4 5 6 7 8 9 10
Annual Diesel Cost 46,154$ 47,538$ 48,965$ 50,434$ 51,947$ 53,505$ 55,110$ 56,763$ 58,466$ 60,220$
Annual Diesel Exhaust Fluid Cost 615$ 628$ 640$ 653$ 666$ 679$ 693$ 707$ 721$ 735$
Total Cost for Diesel plus Diesel Exhaust Fluid 46,769$ 48,166$ 49,605$ 51,087$ 52,613$ 54,184$ 55,803$ 57,470$ 59,187$ 60,956$
Annual LNG Cost 33,898$ 33,898$ 33,898$ 33,898$ 33,898$ 33,898$ 33,898$ 33,898$ 33,898$ 33,898$
Annual Fuel Savings 12,871$ 14,268$ 15,707$ 17,188$ 18,714$ 20,286$ 21,905$ 23,572$ 25,289$ 27,057$
Accumulated Fuel Savings 12,871$ 27,139$ 42,845$ 60,034$ 78,748$ 99,034$ 120,939$ 144,511$ 169,800$ 196,857$
Net Accumulated Fuel Savings (- Tractor Premium) (50,000)$ (37,129)$ (22,861)$ (7,155)$ 10,034$ 28,748$ 49,034$ 70,939$ 94,511$ 119,800$ 146,857$
Break Even - Years 3.4
IRR (5 year ) 16%
IRR (10 year ) 31%
Consumption Calculations Per Truck For Fleet Per Truck For Fleet Per Truck For Fleet Per Truck For Fleet
Diesel Consumption in Gallons 15,385 384,615 1,282 32,051 308 7,692 62 1,538
Diesel Exhaust Fluid Consumption in Gallons 308 7,692 26 641 6 154 1 31
LNG Consumption in DGE 16,949 423,729 1,412 35,311 339 8,475 68 1,695
LNG Consumption in LNG Gallons 29,153 728,814 2,429 60,734 583 14,576 117 2,915
Daily
Input Variables
Annual Monthly Weekly
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
Yea
r 1
Yea
r 2
Yea
r 3
Yea
r 4
Yea
r 5
Yea
r 6
Yea
r 7
Yea
r 8
Yea
r 9
Yea
r 1
0
Annual Diesel Cost
Annual LNG Cost
KEY QUESTIONS FOR THE FUTURE
• WHAT WILL THE PRICE SPREAD BETWEEN DIESEL AND LNG BE OVER THE NEXT TEN YEARS?
➢ WILL MARINE USE OF ULTRA LOW SULPHUR DIESEL CHANGE THE SUPPLY AND DEMAND
BALANCE?
• WILL THE PRICE SPREAD BETWEEN DIESEL AND LNG TRUCKS AND FUELING STATIONS
CONTINUE TO DECLINE?
• WILL TAX PENALTIES ON LNG TRUCKS AND EQUIPMENT BE REMOVED?
• WILL SOME FORM OF THE NAT GAS ACT BE REINSTATED TO INCENTIVIZE THE USE OF LNG?
