Motor fuels supplier Gulf Oil has added 34 liquefied natural gas trucks to its fleet and will begin distributing LNG to customers in the transportation sector.
Gulf Oil says its move into the LNG marketplace is part of an ongoing strategy to diversify its energy offerings and provide fuel alternatives that are cheaper, cleaner and domestic. Gulf will assist its fleet customers with LNG conversions, including vehicle selection, acquisition, hedging, operations and regulatory requirements.
Gulf’s new vehicles are Peterbilt 386 liquefied natural gas trucks equipped with Westport Heavy Duty 15-liter high-pressure direct injection systems.
For its own fleet, Gulf Oil was able to lock in a five-year discount against diesel costs, said Laura Scott, senior vice president of new business ventures. Fleets with more than 10 vehicles that use at least 20,000 gallons per year in a return-to-base operation can expect to lock in an after-tax internal rate of return in the 20 to 35 percent range by converting, Scott said.
The most effective way to increase market penetration for natural gas in the transportation sector is for large centrally-fueled fleets that self-supply to lock in the current spread between natural gas and diesel to ensure a return on their investment, even if the price of crude oil declines below $75 a barrel, said Gulf Oil President Ron Sabia.
In June, Royal Dutch Shell said it would supply LNG to about 100 TravelCenters of America sites and Petro Shopping Centers in the US, beginning in 2013. Shell will build more than 200 LNG fuel lanes for heavy-duty trucks throughout the US interstate highway system.
Other companies, such as EQT Corporation, also are making the switch to LNG. In July, EQT launched a pilot program to convert shale gas drilling rigs from diesel to LNG. EQT, which owns or maintains drilling rights to 3.5 million acres of land in the Appalachian Basin, has its initial LNG rig conversion operating in northern West Virginia.
