CNG Station Business Models

Posted by on Jan 31, 2015 in Tips

CNG Station Business Models

CNG Station Business Models Compressed natural gas (CNG) station business models traditionally fall into three distinct paradigms of ownership and business strategy. The business models discussed in this section are Fleet or End-User Ownership, Local Distribution Company (LDC) Ownership, and Third-Party Ownership. These business models arise out a number of key variables: KEY VARIABLES Who owns the station Fuel delivery service: time-fill, fast-fill, or combination Who maintains and operates the station Station accessibility: public, private, or limited How the station is funded, and how it will charge for fuel Fleet or End-User Ownership Several variants exist for a Fleet or End-User Ownership model. These models typically apply to entities that have vehicles that require fueling and desire to own the station that provides that fuel. In some cases, the ownership could be shared among multiple entities using the same station or with a utility in a hybrid arrangement. Variations include the following: 1) Ownership Differences: a) The ownership entity uses its own personnel for operation and maintenance of the facility b) The ownership entity contracts with a third-party for operation and maintenance of the facility 2) Fueling Sources: a) The ownership entity contracts with a utility for the regulated transportation and sale of natural gas to the station b) The ownership entity contracts with a third party for the natural gas commodity and the utility entity provides regulated transportation service to the delivery point Local Distribution Company (LDC) Ownership Local Distribution Company (LDC) Ownership occurs when the natural gas utility or LDC owns the CNG station and operates it for the benefit of others. LDC models follow a rate-based or non-rate based model. The “rate base” refers to how much money utilities have invested in facilities and equipment to ensure service to the utility’s customers. Most LDC ownership relies on a rate-based model in which the capital investment is made by the LDC and is reimbursed through a regulated rate (typically set by a public utility commission) charged to the customer. It is possible in some cases for the LDC to capture a rate of return where a profit is realized. These models are seldom used. Unregulated affiliates of LDCs also pursue natural gas vehicle infrastructure where the rate of return is based on the project risk and potential profits are not limited. LDC ownership in a facility can be full or partial and this will often affect the type of access available: public access, private access, or limited access. A full versus partial ownership model is a hybrid where a regulated natural gas utility owns a portion of the CNG facilities (generally the compressor, storage, and auxiliaries) under a rate-based model and a third party commercial retailer owns the dispensing means (along with the land, card-reader, and retail transaction functions) using an unregulated model. The LDC recovers its investment in facilities and associated operations and maintenance costs through...

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CNG Station Financing

Posted by on Jun 25, 2013 in Tips

CNG Station Financing

Finding CNG station financing is challenging due to: 1) Relatively new Natural Gas Fueling Station industry development stage 2) Difficulties in finding enough CNG commitments (load) on monthly basis to cover debt service 3) Determining the true cash flow of the business 4) Most lenders are looking for borrowers with prior experience operating CNG gas stations. It is important to seek assistance from a lender who is experienced in funding CNG gas stations, understands the specifics of this business and has a strong track record. It is also advantageous to work with someone who has prior experience operating CNG fueling stations and knows the industry. CNG Station financing and CNG equipment leasing are attractive options for customers who want to realize fast returns on their investment in CNG sales and/or CNG vehicles operation. By focusing on building a fueling commitments or vehicle deployment and finding a partner to finance or invest in a station to serve your fleet you minimize your financial exposure and spread the risk. You can start saving on fuel costs right away, to create the beneficial financial returns that come with using CNG fuel. CNGCenter have a network of lenders that are seasoned in financing CNG fueling stations and can develop the right loan package for your needs. Whether you are looking to acquire a CNG station, refinance, or construct a new site, we can assist you with finding financing that meets your needs. Based on your project needs, geographical location, capital requirements and etc, CNG Center can refer you to one of our financial partners ranging from small local privately owned bank to large worldwide recognized financial institution.     Please contact us with more information about your CNG Station Financing needs and we will be glad to introduce you to lenders that will help to finance CNG equipment and CNG station development. To see how much money switching to CNG can save to your fleet visit Diesel vs CNG Price Sensitivity Analysis...

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CNG Fueling Station Maintenance

Posted by on Jun 21, 2013 in Tips

CNG Fueling Station Maintenance

CNG Fueling Station Maintenance Overview & Commonly Overlooked Items Effective CNG fueling station maintenance can determine the success or failure of both a CNG station and the overall NGV program. Yet main tenance is perhaps the most critical but often overlooked issue affecting most CNG fueling stations. In many areas, there is a severe lack of experienced and qualified maintenance and repair technicians. In this technical paper, NGVi outlines the why, what, who, when and how of having a proactive CNG fueling stations maintenance plan and some of the often overlooked maintenance issues. Why? First, there are several reasons for having a CNG fueling station maintenance plan: • Ensure Safety for the station users, owner personnel and the general public • Ensure that the high-pressure fuel system equipment is safe to operate and use to fuel vehicles • Improved reliability and customer service • Ensure that the fueling equipment is operational when needed to fuel vehicles • Compliance with environmental and regulatory agency requirements • Ensure that the station meets all federal, state, and local codes and ordinances • Cost control • Ensure that the cost to operate and maintain the fueling equipment is minimized • Protect the Capital investment for the long-term • Ensure that the expensive equipment installed in the station is taken care of and not wasted What? The primary goals of the maintenance plan include: • Manage maintenance activities • Monitor system operation • Provide emergency fueling support • Enhance equipment reliability • Deliver clean fuel to vehicles Who? A routine scheduled cng fueling station maintenance program can be handled by the CNG fueling stations owner staff, an outside maintenance contractor, or a combination of both. In our experience, the most successful NGV programs are where the fueling station owner takes control of fueling station maintenance and uses an outside maintenance contractor to perform critical equipment rebuilds, i.e., dryer, compressor, dispenser, and PLC controller. When? There are three levels of maintenance needed for CNG station equipment. Proactive  Scheduled Reactive (Emergency) Most CNG fueling stations maintenance programs involve some measure of each but the most successful program will require that the majority of maintenance be planned and orderly rather than waiting for a breakdown to occur. If maintenance is primarily reactive, customer satisfaction will dramatically decrease and maintenance costs will significantly increase in the long run. How? The most critical aspect of CNG Fueling Stations Maintenance, at least for proactive and scheduled maintenance, is that each task clearly defines what is to be done, who will do it, and when is it to be performed. For example: What: Recording and trending compressor suction, inter-stage, and discharge temperatures and pressures Who: The fueling station owner technician When: Daily at 2:00 p.m. and after no less than 30 minutes of continuous compressor operation All maintenance activities that are performed on a CNG fueling stations must be documented on...

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Total Cost Converting to CNG with CNG Station

Posted by on May 29, 2013 in Blog/News, Tips

Total Cost Converting to CNG with CNG Station

Many fleets and municipalities are not making a commitment to use natural gas as a transportation fuel because the fleet managers do not have enough information to accurately estimate the total cost converting to CNG including CNG vehicle conversion, CNG fueling station development and all other tasks and costs associated with the process. An article below does a great job painting a big picture and we are glad to share it with you, our customers and subscribers. Please do not hesitate to contact us for a feasibility study applicable for your particular fleet. Total cost converting to CNG April 2013, Government Fleet – Cover Story By Shelley Mika At a GlanceIn addition to vehicle conversions and fueling facility construction, the costs of switching to compressed natural gas (CNG) include: Maintenance facility upgrades Technician training Backup fueling Fueling facility maintenance and repair CNG tank inspection and replacement. Converting vehicles to run on compressed natural gas (CNG) has some clear and immediate benefits. From the beginning, fleets that rely on CNG can expect lower fuel costs, cleaner running engines, lower maintenance costs, and fewer emissions. For these benefits, however, fleets pay a price. At first, the costs of CNG conversion seem just as clear as the benefits: purchasing new vehicles, converting old ones, and building fueling stations. But as fleets dig into the planning and implementation of a CNG program, other costs emerge. Five industry professionals share their experiences and shed light on the total costs of converting to CNG — and how to avoid budgetary surprises. Unexpected Capital Costs The true costs of CNG can be broken down into two categories: capital expenses and operating expenses. Beyond the purchase or conversion of fleet units and the building of fueling stations, capital expenses include modifications to maintenance facilities, backup fueling stations, and station upgrades. ■ Modifications to Maintenance Facilities: Fleets that service their own vehicles need to make modifications to maintenance facilities — and before CNG vehicles come on board. Specific code requirements exist for facilities that service natural gas vehicles. If your maintenance facility is old or outdated this effort can add few bucks to the total cost of converting to CNG. “The National Fire Protection Association (NFPA) outlines some requirements for maintenance upgrades, but local building codes might be even more restrictive in regards to maintenance facilities,” said Steve Riley, automotive director, City of Coral Gables, Fla. “A lot of the building upgrades would be required right away, before you start working on CNG vehicles — or any vehicle that runs on lighter-than-air fuel.” In order to safely accommodate lighter-­than-air fuel, maintenance facility upgrades include pressure gauges, leak-detection equipment, and proper ventilation. Without modifications, the CNG fuel system can’t be maintained or repaired inside the maintenance facility. “Costs for the facility upgrades will vary dramatically, depending on the size of the facility, its age, and its current configuration,” said...

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Dehydration of Natural Gas, water in CNG

Posted by on May 16, 2013 in Tips

Dehydration of Natural Gas, water in CNG

Natural Gas usually contains significant quantities of water vapor. Changes in temperature and pressure condense this vapor altering the physical state from gas to liquid to solid. This water must be removed in order to protect the system from corrosion and hydrate formation. In 1810, an English scientist by the name of John Dalton stated that the total pressure of a gaseous mixture is equal to the sum of the partial pressures of the components. This statement, now known as Dalton’s Law of Partial Pressures, allows us to compute the maximum volume of water vapor that natural gas can hold for a given temperature and pressure. The wet inlet gas temperature and supply pressures are the most important factors in the accurate design of a gas dehydration system. Without this basic information the sizing of an adequate dehydrator is impossible. As an example, one MMSCF (million standard cubic feet) of natural gas saturated @ 80 degree F. and 600 PSIG (pound per square inch gauge) will hold 49 pounds of water. At the same pressure (600 PSIG) one MMSCF @ 120 degree F will hold 155 pounds of water. Common allowable water content of transmission gas ranges from 4 to 7 pounds per MMSCF. Based upon the above examples, we would have two very different dehydration problems as a result of temperature alone. There are many other important pieces of design information required to accurately size a dehydration system. These include pressures, flow rates and volumes. All gasses have the capacity to hold water in a vapor state. This water vapor must be removed from the gas stream in order to prevent the formation of solid ice-like crystals called hydrates. Hydrates can block pipelines, valves and other process equipment. The dehydration of natural gas must begin at the source of the gas in order to protect the transmission system. The source of the gas moved through the transmission lines may be producing wells or developed storage pools. Pipeline drips installed near well heads and at strategic locations along gathering and trunk lines will eliminate most of the free water lifted from the wells in the gas stream. Multi stage separators can also be deployed to insure the reduction of free water that may be present. Water vapor moved through the system must be reduced to acceptable industry levels. Typically, the allowable water content in gas transmission lines ranges from 4 lb. to 7 lb. per MMSCF. There are basically three methods employed to reduce this water content. These are: 1.  Joule-Thomson Expansion 2.  Solid Desiccant Dehydration 3.  Liquid Desiccant Dehydration Joule-Thomson Expansion utilizes temperature drop to remove condensed water to yield dehydrated natural gas. The principal is the same as the removal of humidity from outside air as a result of air conditioning in your house. In some cases glycol may be injected into the gas stream ahead of...

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First step to build reliable CNG station

Posted by on May 16, 2013 in Tips

First step to build reliable CNG station

When our customers ask us about the most important tip to build a solid and reliable CNG station we tell them that it all starts with properly securing your compressor and other equipment to the base. We encourage them to bolt any of the CNG fueling equipment purchased to any substantial, relatively level foundation or base ! The foundation bolts must be of sufficient length to project at least 1/2″ through the nuts to allow for proper leveling. We also suggest that our customers use MJ #1295, a vibration isolation material between the compressor skid and the foundation. This material is available in 30″ X 30′ rolls. Also, make sure that the unit is positioned so the beltwheel is facing a fresh air source and allow for at least 36 inches between the compressor and any walls or obstruction. This not only helps air circulation but also makes it easier to access the unit for maintenance. The compressor package needs to be properly leveled and securely bolted to the foundation to avoid any vibration. Go ahead and use shims to level if...

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