Thursday, April 25, 2013

LNG trucks tested for Interior delivery

Elwood Brehmer
Alaska Journal of Commerce

Fairbanks Natural Gas is working on a plan to truck liquified natural gas, or LNG, from the North Slope to Fairbanks. The LNG would likely be carried in LNG-powered semi trucks, something the utility tried this winter, rather than the conventional pick-ups it uses for other operations.

If semi trucks hauling liquefied natural gas from the North Slope are going to save the Interior from $4 a gallon diesel for space heat, why not save the trucks from it, too? That’s the question the parties interested in managing the gas, or LNG, trucking operation are asking.

Fairbanks Natural Gas LLC recently purchased two LNG-powered trucks to explore the option of using an expanded fleet of LNG trucks in the future, its President and CEO Dan Britton said. The alternative fuel trucks have been hauling LNG to Fairbanks since they were put into service in mid-February with promising results, Britton said. They are the only two such trucks in operation in Alaska.

The utility currently supplies about 1,100 customers in Fairbanks with Cook Inlet gas trucked north from its Point MacKenzie supply station.

Fairbanks Natural Gas is one of the groups interested in managing the LNG trucking operation from the North Slope, which Britton said will require about 75 dedicated truck and trailer rigs.

“We’re looking to make sure all of the trucks (for North Slope trucking) are LNG powered,” he said.

Fairbanks Natural Gas also operates a small fleet of local service pickup trucks that run on compressed natural gas.

One hurdle that must be jumped is the cost of an LNG-powered truck. The long-range outfitted models Fairbanks Natural Gas ordered cost about $240,000 each, Britton said, or about $80,000 more than a comparable diesel truck. He added that tanker trailers equipped to handle Dalton Highway conditions are another $330,000, making for a very expensive rig.

A full fleet of LNG rigs would cost more than $42 million.

Britton said a financing plan for an LNG fleet was included in the proposal his company submitted to the Alaska Industrial Development and Export Authority at the beginning of the year.

The Legislature recently passed Senate Bill 23, which approved AIDEA to finance up to $355 million toward a gas liquefaction plant on the North Slope and the subsequent trucking of gas south.

Between 20 and 25 trucks per day are expected to run the Dalton Highway each way at the start of the LNG operation. If gas output reaches the state’s 9 billion cubic feet per year goal, that number could increase to 40 trucks per day in both directions.

Britton said he has been in contact with some large transport companies in the state who have told him they also have the ability to finance the purchase of new LNG trucks. He described a scenario in which a trucking company owns the trucks and hauls tankers owned by Fairbanks Natural Gas.

Fairbanks-based Golden Valley Electric Association also submitted an alternative to AIDEA to execute a North Slope-to-Fairbanks LNG trucking operation. Golden Valley President and CEO Cory Borgeson echoed Britton’s idea of equipment ownership if Golden Valley’s proposal is chosen.

“Golden Valley’s fairly certain that we would finance our trailers,” Borgeson said.

Golden Valley is using Fairbanks Natural Gas’s trucks as a basis for its investigation into LNG-powered trucks. Borgeson said the benefits of the trucks appear to be worthy.

He added Golden Valley would work in cooperation with whatever entity controls or needs gas with the best interest of Interior residents in mind, regardless of which proposal AIDEA decides to finance.

AIDEA officials have said a financing decision can be expected sometime in May.

LNG trucks offer two distinct advantages over their diesel counterparts. They reduce emissions by roughly 25 percent — a fact that could be of particular benefit to Fairbanks when adding an entirely new fleet of trucks to an area where stagnant, heavy winter air often leads to air quality issues.

The trucks also use a fuel that is cheaper than diesel. Britton said Fairbanks Natural gas is still gathering data on its LNG trucks, but forecasted that a fleet of the trucks could provide a “significant cost benefit to the transportation cost of LNG” in the long run.

In areas of the Lower 48 where the natural gas infrastructure is already developed and LNG trucks are more common, vehicle available LNG is about 30 percent cheaper than diesel. Those cost savings may initially differ in Alaska because the fueling stations need to be constructed, but at the same time the gas will not be sold on a traditional retail market to begin with.

The LNG trucks’ fuel economy is comparable to that of a diesel truck, and drivers have reported more torque for pulling uphill, Britton said.

While Fairbanks Natural Gas owns the trucks, he said his company hired Carlile Transportation Systems, Inc. to drive them.

Carlile CEO Harry McDonald said his company has an interest in being a part of an LNG trucking operation, but he sees multiple companies being involved.

“There will be plenty of trucking to go around,” he said.

Britton said he hopes a network of LNG filling stations is developed across Alaska so the trucks can be used throughout the state.

In the event a gas pipeline from the North Slope is constructed and the LNG trucking operation is no longer necessary, Britton still sees value in the trucks and tanker trailers. He said growing interest in LNG for powering mining work as well as using the trucks to haul gas to communities outside of a pipeline corridor should keep the trucks busy.

“The last fail-safe that’s building more and more is a substantial market for these trailers in other areas of the world, so being able to monetize those assets, if that’s what it comes down to, is a high probability,” Britton said.

Haul road challenges

The LNG trucks Fairbanks Natural Gas owns were special ordered from Kenworth trucks. Ken Leaf of Kenworth Alaska said the trucks had to be outfitted with a second 120-gallon fuel tank so they could make the 350-mile trip between the Southcentral and Fairbanks LNG fueling stations.

LNG is less dense than diesel meaning more fuel storage is required on an LNG truck to gain the same travel range as a diesel truck.

McDonald said the LNG trucks’ limited range poses a challenge; the two currently running would need a third fuel tank to make the one-way 500-mile run from Fairbanks to Deadhorse. His company’s diesel trucks typically carry enough fuel to make the round-trip without refueling, McDonald said.

Britton said Fairbanks Natural Gas plans on building LNG fueling stations in Coldfoot — roughly halfway between Fairbanks and the North Slope — and at the end of the road in Deadhorse. The stations would be similar to the $1.25 million stations it built in Fairbanks and at Point MacKenzie to test the feasibility of LNG trucks in Alaska.

The trucks still run on about 5 percent diesel to start combustion. Leaf said engine manufacturers are working on all-LNG designs that should be available within two years — about the same time the LNG trucking operation from the North Slope is slated to begin.

Leaf was part of a panel discussion on alternative fuel commercial vehicles at the Alaska Trucking Association’s April 25 annual meeting. Britton presented Fairbanks Natural Gas’s ideas and findings about LNG-powered trucks at the meeting as well.

Britton said the fact that the trucks still burn some diesel means they still present the same cold weather challenges as a traditional truck, but nothing out of the ordinary so far in their two months of operation.

“It’d be nice to have another winter under our belt before we went out and bought 50 (LNG trucks), but by all appearances they’re going to work fine,” McDonald added.

Britton noted that concerns with overtaxing the Dalton Highway have been alleviated by the state Department of Transportation and Public Facilities.

“What we’ve been told is LNG trucking won’t be a major impact to the roadway,” Britton said.

DOT officials have said more than 250 vehicles use the road daily during the peak summer season already.

Both Fairbanks Natural Gas and Golden Valley incorporated large LNG storage facilities in the Fairbanks area in their plans to AIDEA. Britton said a road closure, even for an extended period of time, may disrupt truck traffic but it wouldn’t affect LNG supply.

Fairbanks Natural Gas is in the early stages of site preparation for a 5.25 million gallon LNG storage facility on the edge of the city that it announced plans for in May 2012.

Elwood Brehmer can be reached at

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