Early results indicate a lack of local interest in compressed natural gas, but city officials say that doesn’t mean the alternative-fuel efforts are fruitless.
The city of Springfield opened its $1.4 million CNG station to the public in June 2012, and while sales are on pace to nearly double this year, city officials have noted more than half of all revenue is coming from outside the local market.
“We have seen a steady rise in natural gas sales this year, but the local use overall has been very modest,” said Jonathan Gano, the city’s interim Public Works director.
Gano anticipated two-thirds of gas sold would be to local customers, but its only current, regular commercial client is Mercy Springfield Communities.
In 2013, its first full year of operation, the station generated $30,000 from sales of the equivalent of 12,000 gallons of diesel fuel. This year, with the help of a local commercial fleet – which now has its own station to depend on – Gano expects the city’s CNG station revenue to approach $55,000.
“We’ve joked that in order to make money, we’d need to sell some cigarettes and lottery tickets,” Gano said, noting profit margins are slim, consistent with the model for private stations, traditionally around 2 percent to 3 percent of gas revenue.
For the city, the point wasn’t to create a moneymaking venture, he said, but to fuel its local fleet of public CNG vehicles and provide businesses and individuals an option for cheaper, cleaner-burning fuel.
Its development might be attracting competition.
St. Louis-based CNG fueling station startup Spire Natural Gas Fueling Solutions is considering building a site off Interstate 44, said Becky Martin, who oversees business development for the company launched last year.
“Springfield is a community we’ve looked at in the past,” Martin said. “There are semitrucks that go from St. Louis to Oklahoma, and we’ve heard they’d like to see a station with a larger lot that has access to 44.”
On Oct. 14, Spire, a division of gas producer The Laclede Group Inc. (NYSE: LG), will host a free informational workshop at the Ramada Plaza Hotel & Oasis Convention Center. Martin said the workshop is designed to promote and inform local businesses and individuals about the benefits of CNG vehicles.
Gano said a couple of clients, such as Seaboard Transportation Co., roll through nearly every week out of natural-gas friendly Oklahoma.
Gano said Springfield’s station, in the Public Works’ complex at 1111 W. Chestnut Expressway, is the only option for CNG vehicles traveling between Miami, Okla., and St. Louis.
According to
AltFuelPrices.com, Missouri is home to nine stations, with Columbia’s three stations the most of any city. By comparison, Oklahoma City claims 13 CNG stations and Tulsa, Okla., has six.
Among those catching the CNG fever is national trash haulers Republic Services Inc. Phoenix-based Republic Services (NYSE: RSG), which operates in Springfield at 2115 W. Bennett St., is responsible for boosting the city’s 2014 sales.
The company converted a fleet of 20 local trash trucks to CNG fuel this year as part of its three-year, $30 million nationwide investment in CNG vehicles. It also recently opened its own internal-use CNG station in town, so Gano said he couldn’t count on its sales next year.
Republic Services spokesman Russ Knocke said the waste haulers operate 22,000 CNG vehicles and 38 natural gas fueling stations companywide.
“Approximately 50 percent of all Republic vehicles purchased in 2014 are powered by the domestic fuel source,” Knocke said in an email.
The CNG initiative is designed to both save the business money in fueling cost and aid the environment. He cited U.S. Environmental Protection Agency data that CNG vehicles produce 80 percent fewer ozone emissions than their diesel counterparts as a key reason for switching.
That’s in line with why Gano said the city felt it was important to be a leader in the CNG movement.
“The environmental benefits are tremendous,” he said. “There also are a lot of geopolitical reasons for having domestically produced fuel.”
Then there is the cost.
The city’s station sells for an equivalent of $1.88 per gallon of diesel.
In 2012, prior to the public opening of the city’s station, he said there was a “chicken and egg” problem. While there seemed to be interest in the possibility of lower-cost fuel and cleaner-burning emissions, the infrastructure wasn’t here. Adding to Republic Services’ new station, and the possibility of one for Spire, Mercy Springfield Communities is looking ahead and considering its own station.
Erik Lawson, corporate transportation regional manager for Mercy, said the hospital system has a fleet of roughly 90 diesel vehicles, and one CNG box truck came on line last year.
As the city’s station was opening two years ago, Lawson said Mercy applied for and received a $34,000 grant to help cover the cost for a new 30-foot CNG box truck. With new diesel trucks costing around $90,000 and new CNG trucks listed at around $140,000, he said the grant made the move to buy a natural-gas vehicle economically viable. With the new truck that transports medical equipment around the region holding the equivalent of 70 gallons of diesel, Lawson estimated each fill-up saves the hospital around $140.
Now, the hospital system is looking at long-term changes to its fleet.
“We’ve already applied for another grant, and if we get a natural gas pump, we could definitely make a move,” Lawson said.
If converting its existing Ford Transit vehicles to hybrids, the cost would be around $8,000 to $10,000 per vehicle, Lawson said. Based on those figures, he said it would only take Mercy two years to make its return on investment.
