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Global Partners' (NYSE: GLP) CNG Loading Station Approved

Brian Hicks

Written By Brian Hicks

Posted April 16, 2013

Bangor, Maine will soon see a new compressed natural gas loading station, thanks to Waltham-based Global Partners LP (NYSE: GLP).

The company’s specialty is transporting energy across the country, and its subsidiary, Global CNG, just recently received approval to develop and operate the aforementioned station. We should probably expect a Stephen King horror story set around this station soon.

CNG FuelingGlobal CNG will provide natural gas supply all through the year to a variety of commercial industrial and municipal customers via the Bangor Gas Company. The station is expected to use compression technology developed by OsComp Systems Inc., which curbs the amount of energy required to achieve optimal compression for subsequent transport of the gas. Construction of the station is expected to be complete by August of this year.

Back in March, Global Partners had paired up with OsComp to deliver CNG throughout New England via trucks that make use of OsComp’s turnkey system. That system relies on specialized trailers and unloaders, effectively simulating a virtual pipeline.

From Global’s press release:

“First and foremost, our new CNG station is a win for businesses in Maine,” said Eric Slifka, the Partnership’s President and Chief Executive Officer. “The station will provide our customers with safe, convenient and cost-effective CNG to meet their year-round energy needs. This project leverages our technology relationship with OsComp Systems and our alliance with Bangor Gas to deliver CNG to manufacturers, hospitals, water treatment facilities, power plants and other large customers or institutions that are not connected to a pipeline. We bring the pipeline to the customer, creating a potential energy savings of up to 30 to 40% or $1 or more per equivalent gallon of delivered fuel oil.”

The virtual pipeline model is built around OsComp’s Rapid Fill™ compression system, which allows CNG trailers to fill up more than four times as fast as traditional filling systems — that means, of course, lower costs, quicker turnaround, and ultimately, savings passed on to the customer.

CNG in the U.S.

Meanwhile, we should focus on compressed natural gas itself. The ongoing North American shale boom has provided plenty of dividends all around. Oil operators are having a grand time, while many U.S. companies await approval from the Federal Energy Regulatory Commission in order to go ahead with development of liquefied natural gas export terminals.

LNG sent out through those terminals will service the hungry markets in developing Asia. Canada has already begun approving such terminals. And natural gas in general is being viewed favorably as a replacement for coal as a fuel for power plants across the nation.

Amidst all this, compressed natural gas is vying with electricity for control of the automobiles market. CNG is, as the name implies, compressed (pressurized at levels higher than 200-248 bar) and gaseous—stored in high-pressure cylinders. Primarily, it can be used instead of gasoline or diesel.

It burns cleaner than both, and CO emissions can be as much as 70 percent lower in comparison. CO2 emissions fall by 20 percent, too. And, of course, using CNG means moving away from oil.

Although CNG usage in vehicles has gone up dramatically over Europe, Latin America, and (more recently) the Asia-Pacific region, North America is not seeing much progress in this area.

That may appear strange, considering how much of a production glut we’re seeing here due to excess production. The major problem is simple: do we build the infrastructure first, or do we build the cars and vehicles first? This question applies equally to the electric vehicles market, for that matter. There, we already have the cars—but we don’t have the infrastructure, and that’s posing a real problem as far as widespread shifts toward EVs is concerned.

Perhaps we should take a lesson from that when we begin to seriously push toward CNG usage. So as of now, automakers don’t want to make CNG vehicles since there won’t be mass demand; the masses don’t want to go for CNG vehicles because there isn’t an adequate supporting infrastructure; and fueling stations won’t invest in the infrastructure because A) nobody’s making it and B) nobody’s buying it. It’s a nice puzzle.

Who Blinks First?

States have pushed for incorporating CNG in their fleets (Colorado is a leader here). That could lead to a decrease in the gulf between conventional vehicles and CNG vehicles.

But several companies have joined the effort, too. Clean Energy Fuels Corp. (NASDAQ: CLNE) is working on installing 150 LNG fueling stations along major domestic trucking highways by the end of 2013. It’s also doing the same for CNG stations. The company’s shares were up 6 percent over January.

Honda (NYSE: HMC) had its Civic Natural Gas model (starting at $26,305; 27MPG city) arrive last year. It’s the only passenger vehicle powered by CNG right now.

And Questar (NYSE: STR) has its subsidiaries focusing on natural gas retailing, natural gas fueling infrastructures, and related services. Questar Fueling already has 28 public fueling stations around. The company provides its own natural gas, and it has the pipelines in place. No wonder January saw the company’s shares go up 20 percent. 


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