Whether they’re looking to cut fuel costs or go green, businesses nationwide are showing increased interest in alternative fuels and the market is responding. Manufacturers are investing in the future and building more and more engines that run on cleaner burning fuels, including liquefied and compressed natural gas and dimethyl ether, and fuel producers are working to create more gallons of so-called drop-in fuels from natural sources, such as chicken fat and algae, that can be used in existing engine technology.
“If there is an opportunity to save money, the manufacturers and shippers will look at it. When there is an opportunity, the marketplace will work,” said John Felmy, chief economist at the .
There are a number of fuels that show promise, industry analysts said, and the use of a handful of fuels is already on the rise.
Drop-In Fuels
ichael McAdams, president of the , said renewable diesel holds the most promise for an alternative fuel for transportation. Renewable diesel is identical in composition to diesel fuel and has a D975 spec, he explained.
“These are diesels that can be used without being mixed in to other fuel,” he said.
Dynamic Fuels, LLC, a joint venture of Tyson Foods, Inc., and Syntroleum Corp., produces next-generation renewable, synthetic fuels from animal fats, greases and vegetable oils at its plant in Geismar, La., near Baton Rouge. The plant is designed to produce approximately 75 million gallons per year of finished products.
On its website Dynamic Fuels said, “We call our fuel synthetic since it is made from sources other than petroleum, but after our process, those sources yield the same molecule produced from traditional petroleum diesel processing. The difference is that synthetic fuel does not contain the impurities that give petroleum diesel its characteristic odor and color.”
Another facility, Diamond Green Diesel, is getting underway in Norco, La., near New Orleans. The project is a 50/50 joint venture with Valero Energy Corp., and animal rendering and food waste recycler Darling International, Inc. Following two years of strategic planning, the joint venture began production in June and is designed to produce 137 million gallons of renewable diesel per year. The refinery will convert approximately 11 percent of the country’s animal fat and used cooking oil into a fuel that has the same properties as petroleum diesel, Diamond Green Diesel said in a statement.
The fuel has the same properties as petroleum diesel, allowing the finished product to integrate seamlessly with Valero’s existing fuel infrastructure and be delivered by pipeline.
The Pasadena, Texas-based company KiOR built a commercial facility in Columbus, Miss., to produce drop-in fuel from forestry-based feedstocks, including Southern Yellow Pine whole tree chips. KiOR’s technology converts biomass to a renewable crude oil that is then refined into gasoline and diesel blend stocks using conventional hydrotreating equipment.
KiOR began shipments of cellulosic fuels from the Columbus facility in early 2013, and it is planning to build a larger facility in the future, the company said.
McAdams said the number of renewable diesel facilities will continue to increase both domestically and internationally. “These plants are just now getting up and running so we should see significant opportunity for trucks throughout the country to use this fuel,” he said.
Natural Gas
atural gas vehicles are one of the fastest-growing segments of alternative fuel vehicles, but they still make up a small percentage of the total Class 8 trucks on the road. Hugh Donnell, North American OEM and truck market leader at CWI-Cummins Westport, projects that Class 8 natural gas penetration forecasts show anywhere from 4 to 20 percent adoption rates by 2017.
Natural gas vehicles promise significant fuel savings. With the current price spread between diesel and natural gas, carriers can save $1 or more per gallon at the pump. Natural gas vehicles typically have a significant price differential over their diesel counterparts, sometimes reaching $60,000.
Zach England, chief operating officer of C.R. England, a refrigerated carrier based in Salt Lake City, said natural gas vehicles cost roughly 60 percent more than their diesel equivalents and, so far, the company has a negative return on investment on the small number of natural gas tractors within the fleet due to the high upfront cost of equipment.
“It is going to be difficult for carriers to make these things pencil out,” England said. However, he added that the experience has been invaluable and C.R. England remains committed to the cleaner burning fuel.
Another concern for carriers interested in natural gas is the added weight that comes with the fuel tanks and natural gas components. Ohio and Indiana have waivers for the additional 2,000 pounds for the equipment and other states may follow suit, Donnell said, which will allow more carriers to opt for natural gas equipment.
To be used in vehicles, natural gas must be compressed at 3600 PSI, resulting in compressed natural gas, or cooled to -260 degrees Fahrenheit, resulting in liquefied natural gas. Engine and equipment manufacturers make vehicles that can run on both fuels, and most fleets choose which to use based on the application.
Carriers can also choose between dual-fuel, compression-ignited engines that use a small amount of diesel fuel to ignite the natural gas, and spark-ignited engines. EPA said that in heavy-duty vehicles, dual-fuel, compression-ignited engines are slightly more fuel-efficient than spark-ignited dedicated natural gas engines. However, a dual-fuel engine increases the complexity of the fuel-storage system by requiring storage of both types of fuel.
Fueling facilities for CNG require a connection to a gas main, while LNG is generated in liquefaction plants then transported via truck to fueling facilities.
Carriers, shippers and fuel distributors said they are working together to increase the number of natural gas Class 8 vehicles on the road and the number of CNG and LNG fueling locations nationwide. The government may also provide additional support. U.S. Secretary of Energy Ernest Moniz said the department plans to help speed the development of fueling infrastructure so more natural gas can be used as a transportation fuel.
Moniz has said natural gas is a promising alternative to oil, despite the fact that the U.S. has increased domestic oil production. “Crude oil imports and exports essentially are becoming equal for the first time in a long time. However, this does not change the fact that we need to decrease our oil dependence, particularly as a transportation fuel,” Moniz said while speaking at the Department of Energy’s Energy Information Administration’s annual conference.
C.R. England recently hosted a natural gas symposium in Park City, Utah, where carriers, shippers and fuel distributors joined together to discuss natural gas.
Presenters included Jim Harger, chief marketing officer of ; Amanda Copperthite, LNG business development, Shell; Frank Love, president and chief operating officer of ; and Andy Bowman, logistics manager, The Hershey Company, among others.
Love said Love’s Travel Stops is investing in the fuel and adding fast-fill CNG fueling technology at some of its locations in Texas and Oklahoma. Love’s opted for CNG over LNG because there is already a natural gas network in place that touches 80 to 85 percent of it’s locations. “The pipeline is an economically more favorable approach assuming you’re already connected,” Love said.
Clean Energy has built 76 LNG stations and 15 are open. Harger said the stations are up and ready to go, but there hasn’t been the demand for the fuel. “ I just need 10,000 gallons of fuel consumption every month to pull the trigger,” he said.
Erik Neandross, chief executive officer of Gladstein, Neandross and Associates, a national consulting firm specializing in the natural gas transportation sector, said the national infrastructure data shows there are 566 CNG stations. “Very few of these stations—maybe 10 percent—are tractor trailer accessible and a fewer number than that have the compression to fuel a truck,” he said.
The recently approved several requests from U.S. companies looking to export natural gas, and given the vast increases in natural gas production in the U.S., many analysts expect exports to increase. However, the price of natural gas in the U.S. should remain consistent.
“Most analysts say there will be a price impact, but it will be small. That is because it is an enormously expensive proposition to start exporting natural gas,” Felmy said. “The other question is how big is the world natural gas market?”’
Harger said natural gas production should increase internationally as well. “I think what you’re going to see is gas will become very flat worldwide,” he said.
Felmy said China has almost twice the natural gas the U.S. has, and Australia also has natural gas coming online. “There are a lot of supplies that could come out and limit export potential,” he explained.
Dimethyl Ether
Earlier this year Volvo Trucks North America announced that it will commercialize dimethyl ether (DME)-powered heavy-duty commercial vehicles in North America and expects to enter production with the engines in 2015. DME can provide a 95 percent reduction in CO2 compared to diesel, said Göran Nyberg, president of Volvo Trucks North American Sales and Marketing.
Volvo has been testing Bio-DME in Sweden since 2009. To date, it has not been used as a transportation fuel in North America, in part because of the cost of developing large-scale production facilities.
Volvo is pursuing its U.S. project in partnership with Oberon Fuels, which has developed a process to produce DME on a small scale. DME can be made from natural gas, shale gas and biogas from animal, food and agricultural waste.
“Huge reserves of natural gas make efficient conversion to DME a natural next step toward promoting greater energy independence for the United States while reducing environmental impacts of the transportation sector,” Oberon said in a statement.
Oberon developed the first North American production units for DME, which came online in June. The company said it will produce 4,500 gallons of DME per day with its first production facility and subsequent units will have the ability to produce up to 10,000 gallons per day.
The physical properties of DME are quite similar to propane, so the distribution and dispensing infrastructure will be similar as well. The fuel can be stored on-site for long periods of time and does not need any extra care in cold temperatures. DME is injected as a liquid, but requires much lower pressure injection than both compressed or liquefied natural gas.
Oberon said its small-scale production units enable the development of regional fuel markets that service local customers engaged in regional haul, bypassing the need for a national infrastructure.
Oberon also said its small-scale production allows it to take advantage of smaller volume feedstocks that typically go unused, such as remote stranded-gas locations that are otherwise costly to access, and also to industrial operations where waste CO2 streams can be captured to increase output. In addition, feedstocks—such as shale gas and biogas from animal, food and agricultural waste—can be converted to DME using the Oberon process, the company said.
“Because DME can be produced from a variety of methane-containing feedstocks, it has the potential to be a renewable resource,” the company said. “Since production is not dependent on the price of crude oil and the Oberon process uses multiple feedstock sources, the price of DME is expected to be more stable than that of diesel.”
As part of the project, Volvo and Oberon are also working with Safeway, Inc., the largest food and drug retailers in North America. The company will use the trucks for operations in the San Joaquin valley. Oberon said DME offers diesel-quality performance with a high cetane number and low auto-ignition temperature, but burns cleanly without producing any soot, so it doesn’t require a diesel particulate filter.
Carriers looking to an alternative fuel might be able to save weight by opting for DME over compressed or liquefied natural gas as on-board storage is lighter only requires a single-wall steel tank versus the double-wall stainless steel tank that is needed for LNG or a carbon graphite tank that is needed for CNG.
An Overview Of Alternative Fuels
Biodiesel
Biodiesel is a fuel derived from renewable feedstocks, including animal waste fat, soybeans and vegetable oil. Biodiesel can be used in diesel and is blended at certain percentages. To work in today’s engines, biodiesel must be blended with diesel and should only be used in blends of less than 20 percent.
Biogas
Biogas, also called renewable natural gas, is gas produced from the breakdown of organic matter, including solid waste in landfills and animal waste. The gas can be treated and converted into compressed natural gas or liquefied natural gas and used in vehicles. A growing number of refuse fleets are capturing biogas from their landfills.
Ethanol
Ethanol is an alcohol made by fermenting the sugar and starch components of certain crops, including wheat, corn, sugar cane and other feedstocks. Most gasoline in the U.S. contains some ethanol in order to meet the renewable standard requirements under the Clean Air Act.
Renewable Crude Oil
Some companies are turning to advanced technology to produce crude from woody biomass or algae. These crudes can be processed using standard refining technology to convert the crude into renewable gasoline, jet or diesel.
Renewable Diesel
Today’s technology is allowing companies to make renewable diesel that has the same properties as diesel fuel derived from crude oil. Instead of crude, manufacturers use animal fats, and the final product can be used in existing diesel engines.
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