Will Pittsburgh be the center of a CNG revolution?

The EQT compressed natural gas (CNG) fueling station in the Strip District of Pittsburgh may one day be remembered as the place where the CNG revolution began.

Located just north of downtown, The Strip is a gritty combination of commercial warehouses and aging factories being converted by gentrifying young professionals into housing. Somehow, that’s turned out to be the perfect combination for pioneering a market for CNG vehicles.

In 2011, EQT, a $14 billion gas company operating in the Marcellus Shale formation, opened up the first public-access CNG station in the Pittsburgh area. To date, more than half of the nation’s CNG stations have been private affairs designed to service fleet vehicles. UPS, FedEx, and Ryder Trucks have been in the lead.

But EQT saw a wider opportunity. Right away the company suggested that the many small companies in The Strip start converting to natural gas. Then it started targeting the growing number of local nonprofits. EQT also counted on the fact that some young professionals would be adventurous enough to experiment with a new fuel source. Finally, it set an example by converting 15% of its own fleet to CNG.

It worked. Two years later, EQT has been forced to add four new nozzles and is now planning a further expansion. The company is also working with various Pittsburgh organizations, public and private, to expand the reach of CNG throughout the region.

EQT is not the only competitor in the field. Chesapeake Energy Corporation, the nation’s second largest gas producer, plans to commit $1 billion by 2021 to encourage CNG adoption in western Pennsylvania. Southwestern Energy, the nation’s fourth largest gas producer, is also planning a similar initiative.

If all this is happening in Pittsburgh, it’s no accident. The city has a long tradition of developing fossil fuels, stretching back to the coalmines of the 19th century and Col. Drake’s oil well in nearby Titusville. But in this latest development, the mighty Marcellus is playing the leading role.

Last month, the output in the Marcellus surpassed 15 billion cubic feet per day, an increase of 400% over the last four years, according to figures released by the Energy Information Administration.

Moreover, production does not show any signs of slowing down. As the EIA reported last week:

The rig count in the Marcellus Region has remained steady at around 100 rigs over the past 10 months. Given the continued improvement in drilling productivity, which EIA measures as new-well production per rig, EIA expects natural gas production in the Marcellus Region to continue to grow. With 100 rigs in operation and with each rig supporting more than 6 million cubic feet per day in new-well production each month, new Marcellus Region wells coming online in August are expected to deliver over 600 million cubic feet per day (MMcf/d) of additional production. This production from new wells is more than enough to offset the anticipated drop in production that results from existing well decline rates, increasing the production rate by 247 MMcf/d.

In addition, the EIA recently projected that consumption of natural gas in the transport sector will rise by a factor of 20 over the next 25 years.

Natural Gas Consumption

Yet even the EIA’s optimistic predictions do not envision a very big role for natural gas in automobiles. Rail freight plays a bigger part than that envisioned for automobiles, which are grouped under the category of “light-duty vehicles.”

All this shows that natural gas is never going to make any real headway in substituting for foreign oil unless we start converting it to liquid fuel – methanol, ethanol, or butanol – that can be easily slotted into our current gasoline infrastructure.

But the potential is there. Last month Yuhuang Chemical, a subsidiary of the $5 billion Shandong Yuhuang Chemical Co., Ltd., of Shandong Province, China, announced plans to invest $1.85 billion in a methanol plant in St. James Parish, Louisiana that will produce 2 million tons of methanol annually by 2018. Right now, 80% of that methanol is targeted for export to a world market that currently consumes 65 million tons per year.

But if we keep working on methanol and ethanol conversion, more than a small portion of that might end up making it to that gas station in Pittsburgh. Or maybe someone will be inspired to build a methanol conversion plant right in the heart of the Marcellus itself.

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