City rolls out CNG station

With regular and diesel gas prices inching toward $4 per gallon, the city of Springfield’s first compressed natural gas filling station just might solve an investor-consumer standoff in the alternative fuels world.

Assistant Public Works Director Jonathan Gano is betting on it. Gano believes once the city-owned CNG station opens in May – the first within 90 miles of Springfield – the private marketplace will respond, either by converting commercial fleets to run on natural gas or investing in the new technologies.

“It solves the chicken and egg problem. A private operator is not going to build a fueling station if there is no one to serve, and no one is going to buy a CNG vehicle if there is nowhere to fill up,” Gano said.

Gano manages the $1.4 million project that will serve roughly 20 vehicles for the Public Works Department, City Utilities and Greene County. The station, located at the Public Works filling station on West Chestnut Expressway, will be open to the public until the private sector opts to develop a CNG filling station, Gano said.

He said the city has no interest competing in themarketplace; it just wants to provide those businesses and individuals looking to convert to CNG systems a place to gas up. Already, the city has heard from interested businesses, including Rapid Robert’s, which will closely monitor demand, said Marketing Director Todd Wilson.

Worth the risk
Gano said the project is funded by a U.S. Department of Energy matching grant, with $700,000 coming from the city, the Greene County Highway Department and City Utilities. The work gained traction three years ago when Sen. Roy Blunt, then working for the U.S. House of Representatives, contacted city officials to see if they had an interest in building and operating a CNG station.

Public Works Director Phil Broyles said he thought it was a great idea and pushed for the city to move forward. Public Works already had a couple of hybrid vehicles, and Broyles saw this as another opportunity to reduce dependability on foreign oil while also utilizing a fuel that burns cleaner and reportedly extends engine life. “I thought we’d be seen as either idiots or geniuses,” he said.

Broyles said he saw a CNG station as a way to save taxpayer money should the price of regular and diesel remain significantly higher than natural gas. Though, as a commodity, the price of either can vary.

Gano said Public Works vehicles typically have a working life of at least seven years. He estimated that with compressed natural gas, sold in per-gallon equivalents at about $1.75 per gallon, it should take city-owned vehicles about four years to recoup the $10,000 expense of conversion. He noted that the Energy Department grant also is covering the $200,000 cost to convert the public fleets by Kansas City-based Fuel Conversion Solutions LLC. “We recognize that it is not inexpensive,” Gano said.

Cost concerns
The cost appears to be keeping some in the private sector at bay.

Randy Madsen, general manager of Don Wessel Honda, said he couldn’t sell CU its Honda Civic Natural Gas and sent officials to a dealership in Bartlesville, Okla., where a public CNG station already operates.

Madsen said at nearly $8,000 more compared to vehicles of the same model, he doesn’t see the demand or infrastructure in place to begin selling the vehicles at his dealership. Only 13 CNG stations operate within 150 miles of Springfield, and the closest is 90 miles to the west in Miami, Okla.

“That infrastructure has just not been there to even consider bringing on (those vehicles) right now,” Madsen said. “But we are watching the demand closely.”

Madsen said he knows of only a few customers who have asked in the last six months about CNG vehicles.

AT&T (NYSE: T), which runs a U.S. fleet of 71,000 service vehicles, committed in 2008 to spending $565 million to convert 15,000 vehicles to alternative-fuel systems by 2019. To date, the company has roughly 5,000 hybrid, electric and CNG vehicles.

AT&T Missouri President John Sondag said the company in February ordered 1,200 Chevrolet Express CNG cargo vans – all of which are being manufactured at the General Motors plant in Wentzville.

Sondag said 219 of AT&T’s roughly 2,500 service vehicles in Missouri are alternative-fuel vehicles, and 125 of those run on compressed natural gas. He said AT&T is moving to alternative fuel because it makes sense for the environment and the company’s bottom line. “As a company, we are committed to sustainability efforts,” he said. “Having 71,000 vehicles, you can imagine what we spend on fuel. So not only is this going to reduce carbon emissions, but it is also going to save us significantly on fuel costs.”

During the 10-year conversion period, Sondag said the company is projecting it will buy 49 million fewer gallons of gasoline.

The city of Springfield was able to find some cost savings in constructing the CNG station, even after receiving little contractor interest in the project. Gano said after a first request for proposal only yielded interest from a Michigan company that quoted a price above budget, the city purchased some specialty equipment separately. That move led to Ozark-based Larry Snyder & Co. coming on board as project general contractor, and it saved $400,000 on the total cost of the project. Those savings allowed for an upgrade of the station so vehicles could be filled in around five minutes compared to roughly eight hours.

Gano said he’s already heard from a family in Oklahoma about the station because it facilitates their travel plans. Currently on Interstate 44, there are no CNG stations between Miami, Okla., and St. Louis. “We welcome them to come in and fuel up,” he said.