That’s one of the top ten things Joel Feucht, Caterpillar’s director of gas engine strategy for energy and power systems, says he’s learned in his first nine months on the job.
As the luncheon keynote speaker at the High Horsepower Summit 2012, September 27 in Houston, Texas, Feucht made a strong case for natural gas as a game-changing fuel for the coming decades.
“The abundant, cheap, clean supply of natural gas is transforming the way we think about energy, and, I would argue, transforming the way we think about the future of our country and the world,” Feucht said.
Feucht cited a book published in 2006 by James Howard Kunstler, The Long Emergency: Surviving the End of Oil, Climate Change, and Other Converging Catastrophes of the Twenty-First Century, as the kind of thinking that has been overturned by the ability to extract cheap and plentiful natural gas in the United States.
“Kunstler’s take was that we’re going to have to evolve to a very local economy,” Feucht said. “People were going to have to grow their own food and make their own shoes. And in 2006, that might have been a compelling story.”
But the use of fracking and horizontal drilling technology to open up vast new quantities of natural gas in the U.S. and elsewhere has changed all that in just the last couple of years. Feucht acknowledged that Kunstler was right about the scarcity of oil. And getting the oil out of the ground is going to be more difficult and expensive in the future, he said. But the natural gas cost curve is different. “The cost of oil is going to gradually rise, but the cost of gas is going to stay pretty flat,” he said.
Currently natural gas is running around $1.50 per diesel gallon equivalent.* In the past oil and natural gas prices tended to rise and fall in tandem. But thanks to fracking, shale gas has suddenly become plentiful and the price has plummeted.
“North America is clearly leading the way in transforming natural gas opportunities,” Feucht said. “It won’t be long before the rest of the world begins to experience some of that opportunity and transformation. It might be five years and it might be a decade, but it’s coming and it’s coming fast. We [Caterpillar] are going to invest because we see it as a global market long term.”
Caterpillar has produced spark ignited natural gas engines since the 1940s for power generation. But as a result of the increasing supply and lower cost of natural gas, the company has turned it’s initial focus to large engines using HPDI (high pressure direct injection) technology.
(HPDI engines inject natural gas with a small amount of diesel for ignition in the combustion chamber. Like a diesel engine, HDPI engines don’t require spark plugs, so the basic design of the engine and functionality of the diesel cycle is maintained, but the engine accrues all the clean burning, cost efficient benefits of natural gas.)
Feucht says Caterpillar’s focus going forward will be on the engines for mining trucks, rail and marine applications. Why? “Because large engines burn the most fuel,” he says, and that’s where Cat can save customers the most money.
A large mining truck will burn 500,000 to 600,000 gallons of diesel a year, Feucht says. So if that mine only has to pay $2 a diesel gallon equivalent for natural gas instead of $4.20 a gallon for diesel, the savings are going to be too good to ignore. “It becomes almost economically suicidal not to do this,” he says.
Operations that consume large quantities of fuel will also be able to amortize the expense of fueling stations and storage more easily, he said. As natural gas supplies and refueling stations increase, the opportunity to use it in highway transportation and construction equipment will grow. But the big engines are the focus for now.
Feucht closed by reminding the audience that the growth and success of the natural gas industry requires commitments and cooperation from everyone in what he termed the “value chain.” This includes the end users, the engine and OEM manufacturers, the gas companies and the companies that make the storage tanks, and refueling equipment.
* A diesel gallon equivalent (DGE) is the unit used to compare natural gas with liquid diesel fuel. Since natural gas is compressed and/or chilled, it would not be useful to compare it to diesel using volume, and a gallon is a volume measurement. So the industry uses diesel gallon equivalents which
measure of the amount of energy, or BTUs in a given amount of diesel of natural gas. So one DGE of natural gas can do the same amount of work as one gallon of regular diesel.