Australia’s ‘natural’ fuel
Natural gas reserves in Australia are estimated to be approximately 50,000 – 100,000 petajoules (PJ), and with an annual demand of 1,700 PJ, Australia has between 25 – 50 years natural gas supply. Currently, the country imports approximately 40 - 50 per cent of crude oil to meet its needs, while natural gas exports are in the order of 40 per cent of production. Australia, therefore, exports a ‘lower economic value indigenous fuel’ – natural gas – and imports a higher economic value fuel – crude oil.
This picture paints some obvious conclusions and presents the nation with a great challenge as well as an exciting opportunity. Australia is relatively ‘short’ on crude oil, and relatively ‘long’ on natural gas. Moreover, supply and operational realities suggest that natural gas can have a significant role in Australia’s medium to long term transport fuel balance. In terms of transmission, Australia is well equipped to pipe gas around the country and the infrastructure is expanding.
The Australian NGV industry, a historyArticle continues below…
The period between 1985 and 1999 saw optimism and investment in the natural gas vehicle (NGV) industry.
Gas monopolies characterised the period, with much collaboration between the state-based monopoly natural gas utilities. It has been estimated that approximately $20 million was invested by AGL (Sydney & Canberra), Gas & Fuel (Melbourne), Algas (Brisbane), SAGASCO (Adelaide), and SECWA (Perth). Local investment focused primarily on compressed natural gas (CNG) cars, buses, forklifts and rigid dual fuel trucks.
European standards were soon to be implemented, however, during these 14 years there was minimal focus and/or support available from engine or vehicle original equipment manufacturers (OEM) and minimal government initiative and support.
The period from 1999 to 2005 was characterised by confusion and development.
In the late 1990s, the Australian Federal Government introduced the Alternative Fuels Conversion Program (AFCP) and the Compressed Natural Gas Infrastructure Program (CNGIP) to facilitate the growth of the NGV industry.
The CNGIP was developed in order to expand the CNG public refuelling stations in Australia, with up to 50 per cent of the capital required to build such stations to be funded by the Federal Government. The Australian Greenhouse Office (AGO) developed a confidential and competitive bidding process, which was an absolute failure primarily due to the lack of support by the Australian gas industry.
The Federal Government’s AFCP had the aim of increasing the use of alternative fuels in medium to heavy duty road vehicles. The program was to fund up to 50 per cent of the additional cost of a CNG or liquefied natural gas (LNG) vehicle over the equivalent diesel vehicle, and it was well supported financially by the Federal Government and by fleet users of natural gas.
During this period, deregulation and privatisation of gas utilities resulted in a stalling of any investment decisions regarding the development of CNG or LNG infrastructure. Furthermore, second generation OEM products began appearing on the market during a period when there was no real interest or commitment from the gas supply side.
The need for government leadership
Even though no long-term support from federal or state governments currently exists, the NGV industry is in a position to expand over the next decade. And the industry’s growth will see beneficial results, including substantially reduced vehicular emissions, a material reduction in the often-ignored social costs of transport, partial freedom from our dependence upon imported oil, a more cost-effective way to transport goods and services to markets, and the reduced carbon footprint of the Australian economy.
These results can be realised within the near future if governments:
- Develop a clear National Fuels Policy that promotes clean, reliable and sustainable options for the transport sector with excise differentiation and clarity; - Provide partial funding to fleet users of the additional cost of NGVs in the short term; - Financially support the development of CNG and LNG refuelling infrastructure for the common good and for a finite time in order to de-risk and provide a signal to investors; and, - Continue to fund the development of engine and vehicle technology for the Australian market.
The NGV industry today
Since the mid-1980s, Australian bus fleet operators have been using NGVs – the Australian CNG bus market is currently a world leader. Some of the projects embarked on have been successful and some were deemed as failures by the bus fleet operators. Either way, these fleet operators and gas utilities pioneers laid the foundation for a CNG bus market that, with the exception of France, has the highest penetration of CNG buses in the world. Today, CNG fleets are growing in most capital cities, with Sydney, Perth and Brisbane leading the way. CNG bus stations are also springing up around the country.
The number and type of rigid and articulated (prime-mover) vehicles available in Australia is also growing. Clean Air Power has approximately 80 articulated dual fuel NGVs in service in Australia with orders for over 100 more within 12 months. Dedicated NGVs using the Cummins Westport CGasPlus engine are available in Iveco, Mack, Kenworth and Stirling trucks. Isuzu Australia is able to fully import dedicated CNG light to medium CNG trucks and AEC Limited has developed and produced technology to convert late model Isuzu rigid trucks to operate on CNG. CNG forklifts are another CNG vehicle available and in wide use in Australia.
LPG is widely used and will enable CNG to be readily accepted as a fuel in the future, including CNG powered cars. However, the 30 year history of the LPG refuelling and car conversion industry in Australia has resulted in minimal development of the ‘CNG car market’, with only approximately 2,000 LPG refuelling sites. Nevertheless, there is an emerging demand for high quality conversions which is being stimulated by the availability of home CNG refuelling units and depot-based stations. Importantly, any CNG systems developed for cars in Australia must not worsen the emissions or reduce the vehicle's ability to meet the Australian Vehicular Design Rules (ADRs).
CNG stations are currently being built, owned and/or operated by end fleet users, including Brisbane CC, La Farge and Boral; infrastructure investors and maintenance companies, including APA Group; energy companies, including TRUenergy, AGL and Origin Energy; and CNG compression station manufacturers and distributors, including CompAir, Greenfield (AtlasCopco) and Advanced Fuels Technology.
LNG infrastructure – the first mover
Kleenheat, a wholly owned subsidiary of Wesfarmers, has invested significant time and capital since 2001 in the establishment and development of a national on-road LNG network and industry. Kleenheat currently supplies LNG to approximately 100 heavy vehicles nationally, with this number expanding on a weekly basis. Kleenheat’s efforts are the primary reason that Australia now has a real and viable alternative to diesel fuel for medium and heavy goods vehicles.
Kleenheat currently owns and operates a demonstration 7 tonnes per day (t/d) plant in Western Australia and is developing a new plant that will produce 175 t/d by mid-2008. The company has said it is actively pursuing LNG supply and marketing opportunities to expand its existing east coast operations.
Since 2004, new infrastructure developers have been analysing the market and building business cases to enter it. One such company is Energy Developments Limited, with gas flowing into its 200 t/d LNG plant in Karratha, WA in late 2007.
Since 2006, other companies such as Liquegas Energy and BOC have also made announcements regarding their intention to build infrastructure. At this rate, within three years there will be enough gas to refuel over 2,000 articulated vehicles, with each consuming between 0.2-0.4 t/d of LPG.
Primed for growth
The Australian NGV industry has had its share of challenges but has survived and is ready to assume its role as the only viable, sustainable and economically sensible fuel option to decrease Australia’s dependence on crude oil.
In order for Australia to realise the full benefits from the NGV industry it will require:
- Leadership and supportive State and Federal Government long-term policy and programs to clarify the excise and emissions issues around alternative fuels, accelerate the infrastructure development and to support research and development; - Continued support by the OEM vehicle manufacturers who are marketing NGVs; - Entrepreneurial behaviour and a re-think by Australian energy retailers; - The establishment of an industry association to professionally represent the NGV industry, primarily on policy, standards and safety issues; and, - Continued support by innovative fleets who have been implementing NGVs within their fleets, such as Boral, Murray Goulburn, Sands Fridge Lines, Brisbane City Council, Regional Haulage, Pure Logistics, Scotts Transport, Mitchell Corp, Sargeants Transport, Torrens Transit, Public Transport Authority of WA, Sydney Buses, Action Buses, Cleanaway, Sita, Gosford CC, Waverly CC, SW Tafe, and Salisbury Council.
Australia is uniquely positioned to benefit from its large reserves of natural gas if appropriate policy and strategies are implemented which would facilitate the use of either CNG or LNG in transport applications. In our ‘carbon constrained future’ it appears that we have a solution that will enable the Australian transport sector to remain competitive and viable whilst minimising the external costs of road-based transport.