CNG Fueling Infrastructure Implementation
State policy and infrastructure investments for CNG vehicles
Matthew Most |
Vice President of Environmental Policy, Encana Natural Gas, Inc.
Wisconsin Public Utility Institute Seminar | Madison, WI | July 14, 2011
Future Oriented Information
In the interests of providing Encana shareholders and potential investors with information regarding Encana, including management’s assessment of Encana’s and its subsidiaries’ future
plans and operations, certain statements contained in this presentation are forward-looking statements or information within the meaning of applicable securities legislation, collectively
referred to herein as “forward-looking statements.” Forward-looking statements in this presentation include, but are not limited to: projected increase in demand opportunities for natural
gas in power generation and transportation; estimated years of supply of natural gas in North America; estimated average costs for plants by 2016; supply potential for natural gas from
2010 to 2010; projected natural gas highways; and future natural gas consumers.
Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will
occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility
that the predictions, forecasts, projections and other forward-looking statements will not occur, which may cause the company’s actual performance and financial results in future periods
to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These assumptions, risks and
uncertainties include, among other things: the risk that the company may not conclude potential joint venture arrangements with others; volatility of and assumptions regarding
commodity prices; assumptions based upon the company’s current guidance; fluctuations in currency and interest rates; product supply and demand; market competition; risks inherent
in the company’s and its subsidiaries’ marketing operations, including credit risks; imprecision of reserves and resources estimates and estimates of recoverable quantities of natural gas
and liquids from resource plays and other sources not currently classified as proved, probable or possible reserves or economic contingent resources; marketing margins; potential
disruption or unexpected technical difficulties in developing new facilities; unexpected cost increases or technical difficulties in constructing or modifying processing facilities; risks
associated with technology; the company’s ability to replace and expand gas reserves; its ability to generate sufficient cash flow from operations to meet its current and future obligations;
its ability to access external sources of debt and equity capital; the timing and the costs of well and pipeline construction; the company’s ability to secure adequate product transportation;
changes in royalty, tax, environmental, greenhouse gas, carbon, accounting and other laws or regulations or the interpretations of such laws or regulations; political and economic
conditions in the countries in which the company operates; terrorist threats; risks associated with existing and potential future lawsuits and regulatory actions made against the company;
and other risks and uncertainties described from time to time in the reports and filings made with securities regulatory authorities by Encana. Although Encana believes that the
expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned that the
foregoing list of important factors is not exhaustive. Forward-looking statements with respect to anticipated production, reserves and production growth, including over the next five years,
are based upon numerous facts and assumptions which are discussed in further detail in this presentation, including a projected capital program averaging approximately $6 billion per
year from 2011 to 2014, achieving an average rate of approximately 2,500 net wells per year from 2011 to 2014, Encana’s current net drilling location inventory, natural gas price
expectations over the next few years, production expectations made in light of advancements in horizontal drilling, multi-stage fracture stimulation and multi-well pad drilling, the current
and expected productive characteristics of various existing and emerging resource plays, Encana’s estimates of proved, probable and possible reserves and economic contingent
resources, expectations for rates of return which may be available at various prices for natural gas and current and expected cost trends. In addition, assumptions relating to such
forward-looking statements generally include Encana’s current expectations and projections made in light of, and generally consistent with, its historical experience and its perception of
historical trends, including the conversion of resources into reserves and production as well as expectations regarding rates of advancement and innovation, generally consistent with
and informed by its past experience, all of which are subject to the risk factors identified elsewhere in this presentation.
Furthermore, the forward-looking statements contained in this presentation are made as of the date of this presentation, and, except as required by law, Encana does not undertake any
obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking
statements contained in this presentation are expressly qualified by this cautionary statement.
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Who is Encana?

A leading North American energy
company with offices in
– Calgary, Alberta
– Denver, Colorado
– Dallas, Texas

100% production and reserves located in
North America

One of the largest producers of North
American natural gas
– 23,000 net drilling locations
– $24.9B market capitalization (May 2011)

Leading by example for NGVs
– Converting fleet to bi-fuel & dedicated NGVs (160
converted to date)
– 6 CNG stations operating; 6 LNG mobile fueling
stations; 1 LNG station under construction
– 16 rigs running on natural gas
3
Leading North American Natural Gas Company
Q1 2011 North American Natural Gas Production
Encana 2010 annual growth per share: 12%
MMcf/d
4,500
4,000
3,500
US P ro ductio n
Cdn P ro ductio n
DVN
BP
3,000
2,500
2,000
1,500
1,000
500
0
XOM
ECA
CHK
COP
APC
RDS
APA
Chevron
Source: Company Data, Energy eTrack Estimates
4
“Changing the Game…”
30 Natural Gas Producers
23 LDCs/Utilities
Partnering together to grow the market for
natural gas as a transportation fuel
CNG Fueling Station Count
1,600
1,400
1,200
1,000
Out of Service
800
Planned
600
Existing
400
200
2010
YTD 2011
2009
2008
2007
2006
2004
2005
2003
2002
2001
2000
1998
1999
1996
1997
1995
1994
1993
1992
-
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Canada & U.S.- Fuel Displacement Potential
 Light Duty CNG – 57 Bcf/D
 Medium to Heavy Duty CNG – 4 Bcf/D
 Heavy Duty On Road LNG – 13 Bcf/D
 Heavy Duty Off Road LNG – 16 Bcf/D
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Natural Gas for Transportation
CNG
Market Segmentation
GREEN CITIES
•
•
•
Municipal government fleets, light duty and medium duty vehicles
Commercial fleets and personal light and medium duty vehicles
Airport and port authorities
GREEN CORRIDORS
LNG
•
•
•
Heavy duty vehicle freight and goods transportation
Home base and mid-point fueling patterns
Transient and varied fueling patterns
GREEN GAS OPERATIONS
•
•
•
Drilling rigs and frac equipment
Service company light duty vehicle fleets
Field storage and fuel deployment solutions required
GREEN COMMERCIAL
•
•
•
Extra heavy duty “off-road” vehicles
Rail, mining, marine, military, and construction services
Heavy duty engine solutions required
7
U.S. Interstate Highway System
Green Corridors
Link up regional corridors as part of expansion phase
ICTC
RMC
I-75




TT
I-75 – Interstate 75 Corridor
TT – Texas Triangle
RMC – Rocky Mountain Corridor
ICTC – Interstate Clean Transportation Corridor
8
CO – Example of potential NG Station Buildout
18 CNG Growth Stations
in Metro Area
Anchor
Growth
Satellite
Total
CNG
0
24
20
44
LCNG
6
6
0
12
Total
6
30
20
56
9
NGV Incentive Comparisons – Leading States
Federal
Texas
West Virginia
Oklahoma
Oregon
Colorado
Louisiana
Natural Gas
Vehicle Count
117,074
11,454
2,319
2,719
1,645
972
378
Natural Gas
Stations (E/P)
948 / 107
39 / 15
0
62 / 6
12 / 0
29 / 5
9 / 10
75% of
infrastructure
25% of the
incremental cost
or $750 for
residents / 35%
for businesses
Infrastructure/
Home fuel
50% of the
construction costs
up to $250,000
($312,500 if allows
public access)
30% up to
$30,000 cap/
$1,000
Expires:
12/31/11
35% of the purchase
price or 50% of the
conversion cost up
to $7,500 for <
26,000 GVWR and
up to $25,000 for >
26,000 GVWR
50% of the
incremental
cost
Expires:
01/01/14
25% of the
incremental cost
or $750 for
residents / 35%
for businesses
Expires: 01/01/21
Fuel Credits
$0.50 GGE
Excise tax
Credit
No expiration
Expires: 01/01/21
$2,000 rebate
for the
purchase of a
NGV / $3,000
for the
conversion
Vehicle Incentives
Expires:
01/01/14
50% of the cost of
constructing an
alternative fueling
station
75% of
incremental
cost in 2011
Decreases:
55% : 2012
35% : 2013
25% : 2014
and 2015
Preferential NG
Fuel rates
50% of the incremental
cost, or 10% of the
cost of the motor
vehicle or up to $3,000
No expiration
Deregulation of CNG
as a Motor Fuel
Expires:
12/31/11
Mandates
Funding
Acquisition
Requirements
Acquisition
Requirements
Acquisition
Requirements
Acquisition
Requirements
Acquisition
Requirements
Grants / Loans
Grants / Loans
Grants / Loans
Infrastructure
Loans
Loans
Acquisition
Requirements
CNG highway /stations
every 100 miles
Grants
Loans
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USA Natural Gas Fueling Infrastructure
What are the catalysts for change?
•
– 905 CNG stations (386 public access)
– 44 LNG stations (14 public access)
– 107 Planned stations (103 CNG)
•
Air Quality & Fleet Acquisition
Regulation as Catalysts
(Air Quality as Motivation)
– California
– New York
•
California: 256 New York: 100
Utah: 77 Oklahoma; 62 Texas: 39
Planned
4
1,200
Planned
103
1,000
40
35
800
Private
519
600
Private
30
30
25
20
400
15
Public
386
200
NGV Incentives as Catalyst
(Air quality, revenues to state, lowered
fuel costs as motivation)
– Oklahoma
– Texas
– Louisiana, Colorado, Oregon
– New Legislation – West Virginia
50
45
Economic Factors as Catalyst
(Lowered fuel cost and air quality as
motivation)
– Utah (State and LDC joint effort)
•
Top States with NG Infrastructure
As of June 15, 2011 – 1056 Total
10
Public
14
5
0
0
CNG
LNG
Economic Factors for LDCs





Natural gas usage in homes is decreasing
1 home uses 75 decatherms per year
3 Honda Civic NGVs = 1 home
1 Bi-fuel Pickup NGV = 1.5 homes
1 Ton NGV = 5 homes
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Natural Gas For Transportation
We need the Chicken and the Egg!
(Vehicles and Stations)

Engage natural gas value chain to assist infrastructure buildout

Target metropolitan areas and along corridors for connectivity
and fill in the gap approach

Increase natural gas vehicle options for North America in all
market segments

Encourage bi-fuel and dual fuel vehicle development and
adoption

Pursue policy that incents NGV adoption through legislation,
regulation and rate tariffs for CNG, LNG and electricity used in
CNG and LNG stations

Create a level playing field for all alternative fuels
Develop a National Vision to Achieve What Others Believe to Be Impossible
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Natural Gas as a Transportation Fuel
– Abundant
– Affordable
– Clean
– Reliable
– Domestic Solution
13
Additional Information
Proposed NAT GAS Act for 2011

Sponsors
– House Reps. John Sullivan (R-OK), Dan Boren (D-OK), John
Larsen (D-CT)
– Senate Majority Leader Harry Reid (D-NV), Sens. Robert
Menendez (D-NJ) and Orrin Hatch (R-UT)

180+ Co-signers of the Bill

Components
– Restoring and expanding the natural gas fueled vehicle credit

Make all dedicated natural gas-fueled vehicles eligible for a credit equal
to 80% of the vehicle’s incremental cost (up to a cap based on the
vehicle’s weight class, ranging from $7,500 to $64,000)
 Make all bi-fuel and dual-fuel natural gas-fueled vehicles
eligible for a credit equal to 50% of the above cap
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Proposed NAT GAS Act for 2011, cont.

Components, cont.
– Extending the alternative fuel credit for purchase of natural
gas which is set to expire December 31, 2011
– Extending the natural gas vehicle refueling property credit
which is set to expire December 31, 2011

Increase to the fueling infrastructure credit from 30% or $30,000 to 50%
or $100,000 per CNG or LNG station and from $1,000 to $2,000 for a
home refueling unit
– All tax credits would be extended for 5 years
– Exempting the NGV and fueling infrastructure tax credits from
the AMT restrictions and making the credits transferrable
(thus facilitating the use of these credits by the public sector)
– Providing incentives for OEMs to produce NGVs in the United
States (Includes facility modernization/expansion, vehicle
production incentives, and local bond issuing authority)
– Indian tribes eligible for the incentives
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Natural Gas Fast Facts
Did you know?

CNG is stored in a gas state at 3,600 psi

LNG is stored in a liquid state at -260°F

Vehicle performance using natural gas is the same as gasoline
and diesel
Conversions
CNG
LNG

1 Gallon of Gasoline = 116,000 Btu/gallon (LHV)

1 Gallon of Diesel = 74,720 Btu/gallon (LHV)

1cf of Natural Gas = ~960 Btu

1cf of Natural Gas = ~1,000 Btu

1 Gallon Gasoline = ~120 cf Natural Gas

1 Diesel Gasoline = ~129 cf Natural Gas

1 mcf = ~8 Gallon Gasoline Equivalents (gge)

1 mcf = 7.785 Diesel Gasoline Equivalents (dge)

1 gge = 5.660 lb of CNG

1 DGE = 6.04 lb

Ratio of storage volume of gasoline to CNG is ~4:1

Ratio of storage volume of gasoline to LNG is ~7:1
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Resources

American Natural Gas Alliance (ANGA)
– http://www.anga.us/

Alternative Fuel Stations and Prices
–
–
–
–

http://www.afdc.energy.gov/afdc/stations/advanced.php/
http://www.altfuelprices.com/
http://www.cngprices.com/
http://www.fueleconomy.gov/
Clean Vehicle Foundation
http://www.cleanvehicle.org/index.shtml/

Natural Gas Vehicle Institute
– http://www.ngvi.com/

Natural Gas Vehicles for America
– http://www.ngvc.org/index.html/

US DOE Alternative Fuels & Advanced Vehicles Data Center
– http://www.afdc.energy.gov/afdc/

Weld County Smart Energy
– http://www.weldsmartenergy.org/
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