Why CNG?

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The demand for natural gas in the U.S. continues to grow. Its clean burning characteristics, coupled with the fact that nearly all the natural gas used in North America is produced in North America , makes natural gas an increasingly popular fuel as the nation wrestles with major energy and environmental problems — including dependence on imported oil, poor urban air quality and global warming. As a result, it is forecasted that natural gas use will continue to grow in every U.S. energy sector – residential, commercial, industrial and, especially, power generation.

Using natural gas to power vehicles is yet another market that has grown significantly over the past decade. Moreover, groundbreaking legislation currently under consideration by the U.S. Congress, if passed, would provide valuable tax incentives for the purchase and use of natural gas vehicles (NGV’s) and natural gas fueling infrastructure. This would stimulate further growth in that market.

Longer term, extracting hydrogen from natural gas at the fueling station is expected to be the preferred source of hydrogen for fuel cell vehicles. It is the consensus of automotive experts that fuel cells will be the vehicle power plant of the future.

These growth forecasts have raised some concerns that natural gas supplies may not be able to keep pace with increasing demand. Indeed, based on these concerns, some have questioned policies encouraging the expansion of the NGV market.

The short answer is that the U.S. has ample traditional natural gas resources available for the near- and mid-term. And for the long-term, the potential of methane (the primary component of natural gas) from non-traditional and renewable domestic sources is virtually unlimited. The following explains why the U.S. will continue to meet natural gas demand well into the future:

Natural Gas Imports

From a public policy perspective, one of the most valuable attributes of natural gas is that it is primary a domestically produced product. In 2001, 84 percent of all the natural gas used in the U.S. was produced here, and the EIA forecasts that, at least until 2020, it will remain at about 85 percent. This means, however, that 15 percent will continue to be imported. Opponents of increased natural gas use believe this is a major concern, and argue that the natural gas situation is the same as with petroleum. They are wrong.

Canada and Mexico . First, nearly all the natural gas imported to the U.S. today is produced in Canada and delivered via pipeline, and all forecasts foresee these imports continuing. Canada has a huge natural gas resource base and can produce far more natural gas than it can use. It is more economic for customers in northern cities to purchase Canadian gas than to purchase gas transported from the Gulf coast. As new pipelines are constructed from Canada to the U.S. , the total amount of natural gas imported from Canada is expected to continue growing.

From an energy security perspective, placing Canada in the same category as OPEC countries is sophistry. According to Energy Secretary Spencer Abraham,” [t] he administration does not see this increased reliance on Canadian natural gas imports as a cause for concern. Canada has proved to be a reliable trading partner, and development of a North American energy policy, founded on increased energy trade among the three North American countries – the United States , Canada and Mexico – is an administration priority.”

Mexico , too, has a large natural gas resource base that, some time in the future, may be a valuable supplemental gas supply to serve U.S. customers in the west and southwest. Today, however, the U.S. actually is a net exporter of gas to Mexico to serve industries growing along the Mexico side of the U.S.-Mexico border.

NGVs and Natural Gas Demand

The 22.5 Tcf of gas used in 2000 represented over 23 percent of all primary energy used in the U.S. Of that amount, the 110,000 NGVs operating on U.S roads consumed between 8.3 and 12.1 billion cubic feet (bcf) annually, which equates to about 0.036-0.053 percent of total U.S. natural gas consumption in 2000.

Even if the number of NGVs were to increase 100-fold in the next ten years to 11,000,000 or roughly 5% of the entire vehicle market (a formidable goal), the impact on natural gas supplies and the natural gas delivery infrastructure would be small — equating to about 4 percent of total U.S. natural gas consumption.

Conclusion

The U.S. has abundant natural gas resources from traditional domestic sources that are more than sufficient to continue satisfying most of the country’s growing demand for natural gas for at least the next 50 years. In the near- and mid-term, that domestic supply will be supplemented by some imports, most of which will come from Canada . In the longer-term, America has the potential to satisfy all its natural gas needs from non-traditional and renewable domestic methane sources.

Return on Investment (ROI) – CNG vs. Gas