Monday, July 21, 2014

Clean Cities Question Of The Month For July

Question of the Month: During the winter of 2013-2014, propane shortages and price spikes were widely publicized by news media, and some fleets reported difficulty getting propane for their vehicles. What really happened and what steps can propane fleets take to protect themselves from similar issues in the future?

Answer: Several factors contributed to the recent winter supply constraints and increased propane prices, including record low temperatures around the country (the 2013-2014 winter was almost 30% colder than the previous winter), increased rain fall requiring additional propane supply for crop drying, pipeline outages (the Midwest Cochin pipeline shut down for three weeks in December 2013), Canadian supply constraints, and increased exports leading to reduced propane reserves. It is important to note, however, that while the demand for propane used to heat homes in colder months fluctuates, fleet demand for propane remains stable throughout the year. As a result, propane suppliers are generally willing to offer longer term fuel contracts to fleets at prices that do not vary during the winter. But fleet customers need to plan ahead and negotiate these agreements in advance. Don't wait until the coldest day of the year to start asking questions.

Fleets should develop and maintain a long-term fuel contract based on projected consumption with their local propane marketer or fueling station operator. These contracts can provide a reasonably steady price for propane year-round, regardless of temperature fluctuations and other issues. However, fleets that fuel their vehicles at retail locations where there is no contractual relationship can expect to pay the current market price, which may be equal to or higher than gasoline during peak use periods. As such, the propane price spikes reported in the winter of 2013-2014 primarily affected fleets and drivers without fuel contracts.

While some fleets with fuel contracts also faced supply limitations and price increases this winter, these incidences may have occurred as a result of other circumstances. For instance, some pricing contracts are set up to fluctuate based on a floating commodity price, or they might be indexed to automatically track gasoline or diesel prices. In addition, state fleets may be subject to certain fueling restrictions if the governor addresses energy supply issues through executive action. The prolonged severe weather this past winter resulted in several regions declaring official states of emergency. Similarly, fleets with bi-fuel vehicles, which provide the option to fuel with gasoline, may be subject to caveats during emergency periods that would not affect fleets with dedicated propane vehicles. To avoid unwanted disruptions in propane supply and price spikes, fleet administrators should closely review current and future fuel contracts and discuss various scenarios with their propane marketer to ensure that the contract terms match up with the fleet's needs and expectations.

Working with Propane Marketers
Local propane marketers are present in most communities across the United States and can provide expertise and assistance in building fueling stations and deploying vehicles. Additionally, many marketers offer attractive lease options for fuel storage tanks, pumps, and dispensing equipment in return for a multi-year fuel supply contract. The cost of this equipment can be paid back over time through a shared savings or performance contracting agreement, virtually eliminating up-front costs to the fleet operator.

The cost to purchase and install propane fueling infrastructure can be significant depending on the fleet's choice of refueling options; however, fuel contracts can greatly reduce the financial burden. In most cases, the fleet is only responsible for the cost of infrastructure that cannot be removed from the site when the fuel contract is over, such as the electricity line or the concrete pad for the storage tank.

Current and Future Propane Supply
While the issues last winter raised concerns, it is important to note that the supply of propane in the United States is on the rise. Propane is a by-product of natural gas processing and crude oil refining. In recent years, as natural gas production levels in the United States have increased, so has the propane supply from these operations. Between 2007 and 2013, the percentage of the U.S. propane supply produced from North American resources increased from 76% to 92%. As such, propane is not subject to the same types of energy security risks as petroleum based fuels that depend on foreign oil supplies face.


For more information on propane production and distribution, pricing, supply, and infrastructure, you can visit the following websites:

Saturday, July 19, 2014

Letter From Tim Carmichael About The DGE Vote

From: Tim Carmichael [mailto:tim@cngvc.org]
Sent: Thursday, July 17, 2014 10:57 AM
Subject: National Conference of Weights and Measures Annual Meeting REPORT

Dear Board Members

As many of you know I spent the last 4 days participating in the National Conference of Weights and Measures Annual meeting in Detroit.

The disappointing news is that there were not enough votes to adopt a diesel gallon equivalent standard for LNG and CNG method of sale for natural gas in transportation.

The good news is there weren't enough votes to adopt a kilogram (or mass) standard as the method of sale either. [as feared this was presented as an alternative proposal at this meeting]

What Happened
  • Our industry was well represented at the meeting by NGV America, ANGA, Clean energy, Pivotal LNG, CHART, BLU LNG and CNGVC.
  • Collectively we covered the various committee meetings, answered questions, gave testimony, and urged the adoption of a diesel gallon equivalent (DGE) for LNG and CNG.
  • When it came to the final vote yesterday afternoon we had enough state representatives vote for the DGE proposal (29 including California and we needed 27) but we also needed 27 delegates and only 14 supported. The delegates are other weights and measures regulators mostly from the county level of government. There is no limit to how many delegates can participate from a single state. About 40 delegates were in the room for the final vote; most of them seemed to be from California and Michigan.
  • It is important to know that the proposal which was voted on called for natural gas to be measured and verified in a mass unit (pounds) but indicated in (what the consumer would see on the pump) in gallon equivalents.

Why I think the vote didn't go our way
  • The bottom line is that most of the weights and measures regulators strongly believe natural gas should be measured AND sold in a mass units. Several of the state representatives that voted for the DGE proposal commented during the week that they were only voting for the gallon equivalent proposal because their Governor or agency director told them they had to.

Other concerns raised included – appropriate pump labeling language, the number of decimal places needed for the mass measurement, a "slippery slope argument" that this will lead to everything being sold in equivalent units [to support this last concern some cited that the LPG industry recently inquired about changing their unit of measure to gallon equivalents]; complaints about the process being too political; complaints about industry applying too much pressure.

What happens now
  • For NCWM this issue goes back to the committee level; both to the Natural Gas Steering Committee and to regional meetings in the Fall
  • I believe it is important for our industry to continue to engage with NCWM's but based on our experience this week I am skeptical that more discussion will lead to a significant change of perspective among this body over the next year.
  • Several states are already working on and more indicated that they will now begin the process of developing regulations and/or legislation to create standards for DGE.
  • In California passage of AB 1907 becomes even more important now. I will connect with board members who have been engaging on this legislation and review the Administration's proposed amendments in the new light of no action at the national level.

I want to note that the state representatives from Colorado, Florida, and Arkansas were particularly supportive and helpful all week.


Tim Carmichael, President

Friday, July 11, 2014

Diesel Gallon Equivalent

From NGV Today
Read this and send an email to avoid chaos in the NGV marketplace:

In the week of July 13-17, 2014, the National Conference on Weights and Measures will vote on whether to establish a Diesel Gallon Equivalent (DGE) standard or a Kilogram standard for selling CNG and LNG in the U.S. If a kilogram standard is voted for, it will cause widespread disruption and chaos in the NGV marketplace.

This is your last chance to weigh in. Take five minutes to click here to obtain the email address for your state's weights and measures official, copy the below into an email and send it help make sure that a DGE standard is adopted and not a kilogram standard.

Matt Slavin
Editor, NGV Today


Copy and Paste the below:
Dear Weights and Measures Director,

In the week of July 13-17, 2014, the National Conference on Weights and Measures will consider a proposal to establish a standard for how compressed natural gas (CNG) and liquefied natural gas (LNG) are sold as transportation fuels in the U.S. I think is it imperative that NCWM adopt a standard for CNG and LNG to be sold in Diesel Gallon Equivalents (DGE) and not kilograms.

Adopting a national DGE standard will ensure that the market for using natural gas as a transportation fuel continues to grow and advances using alternative fuels to lower fuel costs for businesses and consumers, reduce emissions, and reduce the nation’s dependence on imported oil.

Again, I think it is imperative that a DGE standard be adopted.

I don't know anyone who has fueled their vehicle in a U.S. state in kilograms. Everyone fuels in gallons. This is simply common sense.

Sincerely,

Your name, title, phone number and email address

Wednesday, July 9, 2014

The Five Pickens Principles of Energy

As we celebrate the 6th anniversary of the Pickens Plan, I’ve come up with a great way to summarize what we should focus on to ensure we continue to make progress in achieving the goal of greater energy security for our nation.

Remember, a key objective is eliminating once and for all the national security and economic threats posed by our dependence on OPEC oil.

I think it’s important to share these basic principles with you, so you can make your voice heard in the upcoming election. I call them “The Five Pickens Principles of Energy.”

The principles are:
  1. Clear responsibility and accountability for energy decisions.
  2. Inject real fuel competition into the transportation mix.
  3. Meet our own energy needs before we worry about other countries.
  4. Pursue a North American Energy Alliance.
  5. Remember: Energy is not a free market.

Educating our political leaders at all levels is important, and I’m hoping you will be a part of that. To help with that, I need you to watch this video as I briefly explain each of the principles to CBS News.

If you’re with me on securing North America’s energy future, these Five Pickens Principles of Energy can help your family, friends, colleagues, and neighbors understand what we’ve been working so hard to accomplish. Please share this video with them.

NGV Industry To Rally in Detroit to Support the Adoption of the DGE Standard

WASHINGTON, D.C.  – NGVAmerica, the NGV industry and its advocates rally in support of the adoption of the diesel gallon equivalent (DGE) standard that will be voted on at the National Conference of Weights and Measures (NCWM) meeting to be held July 13–17 in Detroit, Michigan. The adoption of the DGE standard is a critical issue that will have lasting effects on the future of the industry.

To bring the DGE standard issue to Detroit, NGVAmerica was joined by natural gas industry leaders, including the American Gas Association, the American Public Gas Association and America's Natural Gas Alliance. Trade allies representing motor fuel retailers and users—the American Trucking Association, National Association for Convenience Stores, Society of Independent Gasoline Marketers of America and Truck Renting and Leasing Association—have expressed their support for the DGE approach as a sensible and necessary way to dispense, market and sell natural gas.

In addition, public policy makers from across the country support the DGE proposal. The Governors of Colorado and Oklahoma issued a joint letter expressing support. The Governors of Pennsylvania and Utah likewise issued individual letters supporting the continued use of the GGE standard and adoption of a DGE standard for liquefied natural gas (LNG). Finally, fifty-four members of the U.S. House of Representatives have joined together to sign onto a letter expressing their support. "When people make business decisions, they want an easy way to make comparisons," said Amy Farrell, a vice president of America's Natural Gas Alliance. "This is a good, common-sense direction that is consistent and understandable." In 1994, the natural gas industry worked with NCWM to develop a standard that paved the way for compressed natural gas (CNG) to be sold in gasoline gallon equivalents. That standard has benefited consumers and industry alike because it provides a common unit for comparing the cost of CNG and gasoline. Now the natural gas industry has asked NCWM to work with it to develop a DGE standard. This new standard is needed because current rules do not address LNG, and increasingly CNG and LNG are being used in heavy-duty applications where diesel fuel is the dominant fuel. The DGE standard is universally supported by industry and would allow for the ready comparison of CNG and LNG with diesel.

In addition to providing a common-sense unit of sale for fuel retailers and users, the DGE standard provides the benchmark for consistency with taxation methods and creates efficiencies associated with accounting and record keeping requirements. Fourteen states have already adopted taxation changes so that LNG is taxed based on the DGE standard and more states are moving in this direction. "NGVAmerica thanks our members, industry allies and public officials for their tireless efforts that have resulted in getting the DGE standard to the point where it is a voting issue at the NCWM Annual Meeting," said NGVAmerica President Richard Kolodziej. "The adoption of the DGE standard would provide greater uniformity and clarity for the continued use of natural gas as a transportation fuel." For more information on this issue and the upcoming NCWM meeting, visit the NGVAmerica Call to Action at ngvamerica.org/gov_policy/fed_regs/fed_DGE_equivalent.html.

Saturday, July 5, 2014

New, Improved Home Fueling Apparatus

New Gas Industries' new Home Refueling Apparatus "can deliver up to 80 gasoline gallon equivalent (GGE) per week in the home utilizing only a 1 HP compressor that requires just a standard household power supply of 110 volts," said Harry Bruns, NGI’s Manager of Operations. They plan to scale up the technology so it can be used with small fleets of 5 to 15 vehicles.