# Abstract

Benefits to national security, the trade deficit, and the environment of a nation that uses natural gas trucks are attractive to society, but it is the trucking industry who would make the capital investment and take on the risk of this transition . We ask the question: "What set of conditions would make the business case to convert to natural gas trucks?" As a case study, we developed a financial model that takes into account the economic and operational factors of converting a heavy truck fleet t o compressed (CNG) and liquefied (LNG) natural gas. Lynden Inc

, . a Pacific Northwest

- Alaska based trucking company

, participated in this process and provided financial modeling and operational insight from a trucking industry perspective. This paper pro vides a detailed overview of what it means to run heavy trucks on natural gas and a summary of the economic and operational factors that a trucking company must consider. We modeled for three of Lynden's operations: pick

- u p and delivery (CNG), farm pick up (CNG and LNG), and line haul (LNG spark and HDPI engines) to look for the minimum number of annual miles per truck needed for an investment in natural gas trucks to be economically attractive. At today's fuel prices, conditions are right for many high mil eage (>70,000 miles per truck per year) fleets to begin testing natural gas trucks where fuel is available. If those tests are successful, then fleets will begin to purchase new natural gas trucks as old diesel trucks are retired. Some significant barriers still remain to the mainstream adoption of natural gas trucks, but barriers related to fueling infrastructure and available engines are beginning to see major breakthroughs. Policy incentives that address remaining barriers can help accelerate this transi tion and make natural gas attractive to lower mileage fleets.

### iii 

# Summary

This is an exciting time for heavy

- duty natural gas trucks. Refueling infrastructure is finally beginning to be developed, the price differential between natural gas and diesel has reac hed a tipping point where running natural gas is now profitable for high mileage fleets, and a higher powered spark

ignited engine that will fit a much larger number of heavy truck operations will soon be available.

Policy makers, the trucking community, and environmental groups share a common interest in running heavy trucks on natural gas for three compelling reasons:

1. Natural gas will remain less expensive and less
volatile than diesel for the foreseeable future.

2. Natural gas is domestic and abundant. T his benefits national security and reduces the
trade deficit.

3. Natural gas is cleaner burning and emits fewer greenhouse gas emissions than diesel.

This is an attractive possibility for society, but it is the trucking industry that would make the capital investment and take on the risk of this transition. This paper asks the question, "What set of
conditions would make the business case to convert heavy trucks to natural gas?" We address the risks and rewards of converting a heavy truck fleet from diesel to natural gas from the point of view of a trucking company.

As a case study, Lynden Inc., a Pacific Northwest

Alaska based trucking company, has participated in this process to provide financial modeling and operational insight from a trucking industry perspective.

This paper provides a detailed overview, as well as the pro's and con's, of what it means to run heavy trucks on compressed (CNG) and liquefied (LNG) natural gas, including the physical properties of natural gas as a fuel, fuel tanks, availab le and future engines, refueling options, maintenance, and safety requirements.

There are a number of economic and operational factors that a trucking company must consider when deciding whether or not to convert a fleet of diesel trucks to natural gas . We address the current and future price of fuels, additional cost of natural gas trucks, reduced fuel economy of engines, reduced operating range, additional weight of natural gas trucks, LNG venting and tank issues, limited engine options, maintenance c osts, safety upgrades for maintenance shops, and limited refueling infrastructure.

We developed a financial model that takes into account fuel price, annual miles per truck, payload, fuel economy, operating range, maintenance costs,
and the additional we ight and cost of a natural gas trucks for three of Lynden's operations: in

- city pick

up and delivery (CNG), milk tanker farm pick

- up (CNG and LNG), and line

- haul (LNG spark

- ignited and HDPI engines). We did not include upgrades to maintenance shops because costs and options to outsource maintenance vary greatly.

Based on the model, we estimated the minimum number of miles required to generate a 20% Return On Investment for each scenario at varying diesel fuel prices ($3.50, $3.75, $4.00, and $5.00/ gallo n) while keeping natural gas prices consistent ($2.50/ Diesel Gallon Equivalent ).

Since 2010, the price of natural gas ($2 to $5 per mcf) has dropped to roughly one quarter the price of oil ($80 to $1 2 0 per barrel) on an energy equivalent basis. At these pr ices, where natural gas
is approximately $1.50/ DGE less expensive than
diesel at the pump , the line haul and farm pick

- up LNG operations required a minimum of around 70,000 miles per truck per year using a spark

ignited engine and 140,000 miles for the HDPI engine to reach a 20% ROI. Pick

- up and delivery operations that are not weight sensitive, required only 60,000 miles per year

.
Not surprisingly, at lower priced diesel, the minimum number of miles required for an attractive ROI, increases. Once th e price differential decreases to $0.75 per DGE , natural gas becomes impractical because the number of miles required to be profitable exceeds the number of miles that can be driven in a year.

### iv

At the other end of the spectrum, when diesel is $2.50/ DGE mor e expensive than natural gas, natural gas becomes an attractive option for fleets traveling 30,000

- 40,000 miles per year (70,000 miles for the HDPI engine). At these prices, the
model was much less sensitive to differences in the additional weight and pric e of natural gas trucks.

Based on this model, conditions are right for many high mileage fleets to begin testing natural gas trucks where fuel is available in the next few years, even without government subsidies. If those tests are successful (i.e. tru cks are profitable and reliable), then fleets will begin to purchase new natural gas trucks as old diesel trucks are retired. This is likely to be a gradual process as fleets learn to navigate the remaining barriers:

1. Limited fueling infrastructure means a loss of flexibility for "go anywhere" fleets to meet customer needs. Operating range is limited by the tanks that can fit on a truck at an economical price and reasonable weight. Until infrastructure is widely available, fleets will be limited to centra lly

fueled operations and routes where fuel is
available.

2. Limited engine options . Available engines are either too small (8.9L spark) or too expensive (15L HDPI) for most operations. However, larger spark

- ignited engines that can meet the needs of many lon g

- haul fleets will be available soon. 3. Natural gas trucks are more expensive, mainly because of the specialized high

pressure or super

- insulated fuel tanks. This is a significant barrier to fleets and owner

operators with limited access to capital.

4. The high cost of upgrading a maintenance shop can make an investment in natural gas trucks considerably less attractive. Full service leases and maintenance packages are available, but this is not always practical for fleets in rural areas and is generally less d esirable than performing maintenance "in

- house."

5. LNG use is limited to operations where trucks are refueled every 1

- 2 days so that venting of fuel is not an issue.

6. Additional weight of fuel tanks detracts from available payload and revenue. This is

a conce rn for fleet managers who are constantly looking for ways to reduce weight.

7. Fleets are apprehensive about new technology. It takes time to learn about and carefully test a new kind of truck and fuel.

Interest from fleets is likely to increase in the first quarter of 2013 as two primary barriers, lack of refueling infrastructure and limited engine options, see major breakthroughs. Policy incentives that address remaining barriers can help accelerate this transition and make natural gas attractive to lower

m ileage fleets.

### v 

# Table of Contents

List of Figures

................................ ................................ ................................ ................................ ................ vi


## Acknowledgements

................................ ................................ ................................ ................................ ... vii i



## 1. Introduction

................................ ................................ ................................ ................................ ................. 1



## 2. What Does it Mean to Run Heavy Trucks on Natural Gas?

2.1 Natural Gas Fuel Characteristics

................................ ................................ ................................ ........... 2

2.2 Fuel Tanks

................................ ................................ ................................ ................................ ............. 3

2.3 Fuel System

................................ ................................ ................................ ................................ .......... 4

2.4 Engines

................................ ................................ ................................ ................................ ................ 5

2.5 Transmissions and Braking

................................ ................................ ................................ ................... 8

2.6 Maintenance

................................ ................................ ................................ ................................ ........ 8

2.7 Heavy Trucks

................................ ................................ ................................ ................................ ........ 9

2.8 Refueling Process

................................ ................................ ................................ ................................ .. 9

2.9 Refueling Infrastructure

................................ ................................ ................................ .................... 10

2.10 Safety

................................ ................................ ................................ ................................ ................ 12



## 3

. Fuel Prices

3.1 Fuel Price s

................................ ................................ ................................ ................................ .......... 14



## 4. Economic and Operational Factors

4.1 Summary of Economic and Operational Factors

................................ ................................ ............... 16

4.2 Price of Natural Gas

................................ ................................ ................................ ........................... 17

4.3 Additional Cost of Natural Gas Heavy Trucks

................................ ................................ ..................... 17

4.4 Fuel Economy Penalty

................................ ................................ ................................ ....................... 17

4.5 Opera ting Range

................................ ................................ ................................ ............................... 17

4.6 Weight Penalty

................................ ................................ ................................ ................................ .. 17

4.7 LNG Venting, Weathering, and Tank Issues

................................ ................................ ....................... 18

4.8 Fuel Quality

................................ ................................ ................................ ................................ ....... 19

4.9 Loss of Flexibility

................................ ................................ ................................ ............................... 19

4.10 Limited Engine Options

................................ ................................ ................................ ...................... 19

4.11 Limited Space for Tanks and Other Equipment ........................................................................................ .19

### vi

4. 1 2 Maintenance Costs

................................ ................................ ................................ ........................... 19

4. 1 3 Shop Upgrades

................................ ................................ ................................ ................................ . 20

4. 1 4 Leasing

................................ ................................ ................................ ................................ ............ 20

4. 1 5 Refueling

................................ ................................ ................................ ................................ ......... 20

4. 1 6 Dedicated Fleet Refueling Stations

................................ ................................ ................................ .. 20

4. 1 7 Side Benefits

................................ ................................ ................................ ................................ .... 20



## 5

. Lyn den Inc. Case Study: What Set of Conditions Make the Business Case to Invest in Natural Gas Heavy Trucks?

5.1 About the Mode l

................................ ................................ ................................ ............................... 21

5.2 Lynden Scenario Operational Characteristics

................................ ................................ .................. 22

5.3 Model Summaries

................................ ................................ ................................ ........................... 23

5.4 Model Conclusions

................................ ................................ ................................ .......................... 29

5.5 Modeling for the Westport HDPI 15L

................................ ................................ .............................. 29

5.6 Importance of Fuel Price

................................ ................................ ................................ ................... 30

5.7 Model Limitations and Alternative Approaches

................................ ................................ ................ 31

5.8 Fe edback from Lynden's People

................................ ................................ ................................ ...... 31

5.9 Lesson s Learned f r om this Exercise

................................ ................................ ................................ . 32



## 6

. Who is Currently Using Natural Gas and What Have They Learned?

6 .1 Examples of Heavy

- Duty Truck Fleets Using Natural Gas

................................ ................................ . 33

6 .2 Initial Tests

................................ ................................ ................................ ................................ ....... 34

6 .3 California

- Based LNG

................................ ................................ ................................ ........................ 34

6 .4 LNG Outside of California

................................ ................................ ................................ ................. 34

6 .5 CNG in Closed Loop Applications

................................ ................................ ................................ ...... 35



## 7

. Policy Options to Support the Adoption of Natural Gas Heavy Trucks

7.1 Policy Options to Support the Adoption of Natural Gas Heavy Trucks

................................ ............ 37



## 8. Conclusions

8.1 C o nclusions

................................ ................................ ................................ ................................ ...... 41



## References

................................ ................................ ................................ ................................ .................... 43


## Appendix

................................ ................................ ................................ ................................ ......................... 47

### vii 

# List of Figures

Box 1. Power and Efficiency of Natural Gas Engines

................................ ................................ ................... 8

Box 2. Renewable Natural Gas: Bio

- methane and Biogas

................................ ................................ ......... 39

Box 3. Other Al ternative Fuel Technologies

................................ ................................ .............................. 40

Figure 1. N atural Gas and Diesel Physical Properties

................................ ................................ ..................... 2

Figure 2. Pro's and Con's of Natural Gas Properties

................................ ................................ ...................... 2

Figure 3. Typical CNG and LNG Fuel Systems

................................ ................................ ................................ . 3

Figure 4. Pro's and Con's of CNG an d LNG

................................ ................................ ................................ ..... 4

Figure 5. Pro's and Con's of Spark

- Ignited and Com pression

- Ignited Engines

................................ ................ 6

Figure 6. Specifications for Available Heavy

- Duty Natural Gas Engines and Comparable Diesel Engines

...... 7

Figure 7. Natural Gas Engines for Heavy Trucks Currently Under Development

................................ ........... 7

Figure 8. Maintenance Intervals of H eavy Duty Diesel vs. Natural Gas Engines

................................ ............ 9

Figure 9. Number of LNG Fueling Stations by State

................................ ................................ ..................... 10

Figure 10. Natural Gas Fueling Station Locations

................................ ................................ .......................... 10

Figure 11. Proposed 2012

- 2013 LNG Fueling Station Network

................................ ................................ ...... 11

Figure 12 . Pro's and Con's of Natu ral Gas from a Safety Perspective

................................ ............................ 13

Figure 13 . Conversion Factors for Comparing Natural Gas to Diesel

................................ ............................. 14

Figure 14. Crude Oil and Natural Gas Average Monthly Historical and Commodity Futures Prices

.............. 14

Figure 15

. CNG and Diesel Price Difference

................................ ................................ ................................ ... 15

Figure 16

. CNG and Diesel Retail "at the pump" sale prices

................................ ................................ .......... 15

Figure 17

. Summary of Economic and Operational Factors. Pro's and Con's

................................ ................ 16

Figure 18

. Estimated Range and Weight Differential for Common Natural Ga s Configurations

.................... 18

Figure 19. Ope rational Characteristics for 5 Lynden Scenarios

................................ ................................ .... 22

Figure 20. Comparative Model Summary Pick Up and Delivery CNG

................................ ........................... 23

Figure 21. Comparative Model Summary Farm Pick Up CNG

................................ ................................ ........ 24

Figure 22. Comparative Model Summary Farm Pick Up LNG

................................ ................................ ......... 25

Figure 23. C omparative Model Summary Line Haul LNG 11.9L Spark

................................ ........................... 26

Figure 24. Comparative Model Summary Line Haul LNG 15L HDPI

................................ ............................... 27

Figure 25. Summary if Model Results for 5 Lynden Scenarios

................................ ................................ ....... 28

Figure 26. Minimum Annual Miles per Truck for 12% ROI for 5 Lynden Sc enarios

................................ ........ 28

### viii

Figure 27. Operational Characteristics that are Profitable, Marginally Profitable,

and Not Profitable or P ractical

................................ ................................ ................................ ....... 29

Figure 28. Impact of Fuel Prices on the Minimum Annual Miles per Truck to Achieve a 20% ROI

.................. 30

Figure 29

. Examples of Heavy Duty Truck Fleets Using Natural Gas

................................ .............................. 33

Figure 30. Estimated Impact of Suggested Policies on the Minimum Number of Annual Miles per Truck

to Achieve 20% ROI

................................ ................................ ................................ ......................... 38

Figure 31. Proposed Weight Credit for Natural Gas Fuel Tanks (empty weight)

................................ ............. 39

Figure A

- 1 . Fire Codes Related to Natural Gas Repair Garages and Fuel Systems

................................ ......... 47

### ix 

# Acknowledgements

This paper would not have been possible without the many people who generously gave their time and expertise. Many thanks t o: Brian Trice and Robert Carrick, Freightliner; Bob Fry and Andy Douglas, Kenworth; James Harger, Mark Watkins, and Shaunt Hartounian, Clean Energy; Mike Tucker, Vocational Energy; Jeff Campbell, Cummins

- Westport; Stephen Ptucha, Westport; Jim Moore, ESI

Navistar; John Pettit, Clean Air Power ; Scott Lucero, Agility Fuel Systems ; Dave Meyers, Lincoln Composites ; Richard Moskowitz, American Trucking Association ; Jeff Shefckik, Paper Transport; Charles Musgrove, Dillon Transport; Daniel St

- Germain, Robert Tra nsport; Brian Paterski, Schneider ; Ben McLean, Ruan; Jon Burdick, Josh Drenckpoh l

, 

### Bob Griggs, Jason Jansen, Jim Jansen, Gail Knapp, Dick Korpela, Alex McKallor, Brad McKeown, Charlie Mottern, Dave Seaman, Frank Sharp, Bob Strong, and Brad Williamso n, Lynd en Incorporated; Tony Knowles , Mary Haddican, and Brad Carson , National Energy Policy Insti t ute.

### 1 

# What Set of Conditions Would Make the Business Cas e to Convert Heavy Trucks to Natural Gas ?

– a Case Study

1. Introduction

There is a great deal of interest i n running heavy trucks on natural gas from the trucking industry

, policy makers, and env ironmental groups. However, there are some significant barriers to its mainstream adoption.

Running heavy trucks on natural gas is appealing for three main reasons.

1.) Natural gas will remain less expensive and less volatile than diesel for the foreseeable
future. N atural gas is approximately $1.50 to $2.0 0 per gallon less expensive than diesel on an energy equivalent basis

. F utures

c ommodity markets for crude oil and n atural

gas predict that natural gas will remain substantially less expensive than diesel in the future. Natural gas represents a savings of 20 to 25 cents per mile in fuel costs over diesel

. Because it is produced domestically, natural gas is not impacted by foreign supply and prices are less volatile. T his price savings and stability has caught the attention of the trucking industry wh ere fuel is often the largest expense

.
2.) Natural gas is domestic and abundant

. This benefits national security and redu ces the trade deficit

. R ecent dis coveries of shale gas resources have fueled predictions that the
U.S. will be a net exporter of natura l gas by
2030. If all heavy trucks in the U.S. converted to natural gas, we would reduce oil use by approximately 2 mill ion ba rrels of oil per day, 12% of total U.S. oil consumption

. At $85 per barrel, this translates to reducing our trade deficit by over $150 million per day

.
The National Energy Policy Institute (NEPI)
has identified that the transition of heavy
trucks to run on natural gas is one of the most cost effectiv e potential energy policies
studied. This transition also reduces oil consumption more than any other policy
measured.

3.) Natural gas is cleaner burning and emits fewer greenhouse gas emission s than diesel

. Natural gas burns cleaner than diesel.
This allows some natural gas powered trucks to meet EPA 2010 standards for criteria air pollutants (PM and NO x emissions) witho ut heavy after

- treatment emissions systems (e.g. diesel particulate filters and SCR) fou nd on EPA 2010 compliant diesel engines.

From “well to wheels” natural gas vehicles reduce greenhouse gas emissions by 12

- 2 3 % (LNG) a nd 28% (CNG) compared to ultra

- low sulfur diesel. Vehicles that use n atural gas sourced from landfill gas, wastew ater

tr eatment, and farm waste "biomethane" generate 85

- 90% fewer GHG emissions

. The magnitude of this advantage depends on the fuel’s source and processing method.

N atural gas emits fewer greenhouse gases when used as a fuel, however its impact can become detri mental if leaked into t he atmosphere where it can be 25 times more potent than CO 2 as a greenhouse gas.

Benefits to both national security and the environment make this an attractive possibility for society, but it is the trucking ind ustry that would
mak e the investment and take on the risk of this
transition.

This paper addresses the risks and rewards of converting a heavy truck fleet from diese l to natural gas from the point of view of a trucking company. We ask the question: “ what set of
conditions would make the business case to convert heavy trucks to natural gas?”

As a case study, L ynden Inc., a Pacific Northwest

Alaska based trucking company, has participated in this process to provide financial modeling and operational insight from a trucking i ndustry perspective.

### 2



## 2. What Does it Mean to Run Heavy Trucks on Natural Gas ?

Converting a heavy truck (class 8, greater than 33,000 gross vehicle weight) fleet to run on natural gas means adjusting to a new fuel. This section expl ains the differences between diesel
and natural gas fuels and a gives an overview of natural gas heavy

- duty tractor trailer s, engines, fuel systems, maintenance, and safety requirements.



### N atural Gas Fuel Characteristics

Natural gas is composed primarily o f methane with smaller amounts of propane, ethane, helium, and
water. It is “lighter than air” at temperatures above 160° F. Natural gas is either compressed (CNG) or

super cooled (LNG) so that it can be stored in tanks
on a truck.

CNG is stored as a gas under high pressure ( 3

, 600 psi), which reduces its volume to less than 1/100 th of the space it would oth erwise occupy. Liquefied natural gas (LNG) is cryogenically coole d to approximately

- 260  ̊ F where it condenses to a liquid that occupies 1/600th the sp ace it would

occupy at standard temperature and pressure

. Natural gas contains less energy than diesel on a per gallon basis. When comparing L NG and CNG to diesel, it is ofte n described in terms of diesel gallon equivalent (D G E ’s) to account for the lo wer energy
content

. Figure 1 compares the physical properties of diesel to LNG and CNG. One gallon of diesel contains 1 2 8,700 Btu's, the

amount of energy in 135 cubic feet of natural gas.

A t atmospheric pressure natural gas would fill a
container nearly 1000 times larger than a gallon of
diesel t o get the same amount of energy. Compressed to 3,600 psi (CNG), the container would be 4 times larger

, and cooled to

- 260 degrees F (LNG) the container would be 1.7 times as large. In other words, to c arry the same a mount of energy as diesel

, CNG tanks take up 4 times and
LNG tanks tak e up 1.7 times as much space.

Natural gas has less energy per gallon th an diesel,
but it is lighter. The energy density (energy per pound) of natural gas is higher than diesel,
howe ver the heavy tanks required to store CNG and LNG offset this energy to weight advantage. Figure 2 summarizes the benefits and disadvantages of na tural gas fuels. Property Diesel LNG CNG Energy Content (Btu/ gal) 128,700 74,700 20,300

Diesel Gallo n Equivalent “DGE” (gal) 1 gal 1.72 gal 3.7 gal Diesel Gallon Equivalent “DGE” (gal) 1 g al 0.23 cu ft 0.49 cu

ft Density (lbs./ gal) 6.8 3 1 Energy Density (Btu/lb) 18,250 28,266 28,266



### Natural Gas Pro’s Natural Gas Con’s Less expensive than diesel on an energy equivale nt basis. National Average (October '11):

- Diesel: $3.81 / DGE

- CNG: $2.33 / DGE

- LNG: $2.17 / DGE New distribution and refueling infrastructure is required.

Prices are less volatile than oil because natural gas is produced domestically and is not impacted by foreign supply.
Prices are listed in DGE to account for the diffe rence in

energy content.

- 1 DGE = .23 cu ft LNG

- 1 DGE = 6.3 gallons CNG Contains less energy (Bt u’s) on a per gallon basis so it r equires more space on a truck to get the same range

.

Compression

- ignited natural gas engines are as efficient as diesel en gines. Spark ignited natural gas e ngines are less efficient (10%) than a diesel engine.
Cleaner burning fuel allows spark

- ignited natural gas to use less expensive, lighter weight after

- treatment devices to meet EPA standards. Natural gas engines are curr ently limited to few available options (7.6L, 8.9L, and 15L)

.

Lighter than diesel on a per gallon basis

.

- energy density (Btu/ pound) is 50% higher Tanks are heavier

.

Figure 2. Pro's and Con's of Natural Gas Fuel Properties. Figure 1. Natural Gas & Diesel Physical Properties

### 3

Fuel Tanks

Fuel storage for natural gas is considerably different from that of die sel and accounts for the
bulk of the additional weight and higher cost of natural gas trucks.

CNG is typically stored at 3,600 psi an d 70 degrees
F. These high pressures require very robust cylinders. The cylinders typically used in heavy trucks are made of a plastic gas

- tight container and a full composite wrap in order to optimize weight

, however, these tanks are very expensive.

An LNG fuel tank is esse ntially a giant thermos constructed as a 1⁄4“ thick stainless steel “tank within a tank” with a vacuum and super

- insulation
between the two walls. This vacuum thermos design is intended to prevent ambient heat from entering the tank and causing evaporation of fuel and achieves the highest known thermal efficiency (R value exceeds 5000). LNG is typically stored at near atmospheric pressure, but the tank design must compensate for heat gain and higher pressure when not in use. The inner tank is usually
made o f nine percent nickel steel and the outer
tank is usually made of carbon steel.

Tanks are generally described by their diesel gallon equivalent (DGE) volume. This accounts for the lower energy content of natural gas . "Usable fuel"
is less than actual volu me because of the need to maintain vapor space in the tank (LNG) and the fact that fuel does not flow below pressures of about 150 psi (CNG). In other words, you can not use every molecule of fuel in a tank

. Figure 3 compares key variables in CNG and LNG f uel systems. Figure 4 summarizes the advantages and disad vantages of CNG and LNG systems

.

1. Effective size is "usable" fuel in diesel gallon equivalent s. This accounts for the vapor space (LNG tanks) and the "heat of compression" and residual fuel at low pressure (CNG tanks) which reduces the amount of fuel that is "usable". Westp ort GX LNG storage tanks volume is reduced due to pump displacement for 5% diesel mixture. 2. Range assu mes 6 mpg for diesel and 10% fuel economy penalty for "spark" natural gas engines. Compression

- i gnited natural gas engines have approximately the same fuel economy as diesel and account for 5% diesel mixture

. 3. Diesel weight includes diesel tank, fuel and after

- treatment system (DPF + SCR + Urea Storage with solution = 546 lbs). 4. Does not include Federal Excise Tax (FET)

. 5. Westport HD weight assumes that 45 gallon diesel tank, hydraulic pump and diesel weigh 400 lbs. 6. Westport HD fuel system includes HDPI engine, hydraulic pump, and fuel tank. Fuel Tank Configuration and

Nominal Size Effective Size 1

"Usable Fuel" Range 2 Fuel System Weig ht (full fuel) Additional Cost of

Fuel System Installed 4 Diesel 75 gal lon 75 DGE 450 miles 1,200 lbs 3 --

CNG (5) 15 DGE tanks behind cab 68 DGE 367 miles 2,050 lbs $27,000

CNG (2) 41 DGE side mounted 74 DGE 400 miles 1,650 lbs $35,000

LNG (1) 119 gallon side mounted 60 DGE 324 miles 1,200 lbs $22 ,000

LNG (1) 150 gallo n side mounted 75 DGE 405 miles 1,400 lbs $26,000

LNG (2) 150 gallon side mounted 150 DGE 810 miles 2,800 lbs $45,000

LNG Westport
HD 15L (1) 119 gallon side mounted 58 DGE 365 miles 1,600 lbs 5 $70,000 6

Fig ure 3. Typical CNG and LNG Fuel Systems.

### 4

Another important factor to consider when comparing CNG to LNG is th e duty cycle. LNG works well in applic ations where trucks have very
little down

- time so that new cold LNG is continually added to the system . If a tank sits idl e, the gas inside will warm and expand; after about five days it will begin to vent into the atmosphere.

Tank valves are designed to release this pressu re, so it is not a safety issue. B ut this equates to lost
fuel and represents an added cost

. In addi tion, the environmental benefits of using natural gas are negated ( methane is 25 time s more potent as a greenhouse gas than carbon dioxide )

. CNG tanks
do not vent over time because the tanks are designed to contain gas under high pressure.

LNG tank life s hould exceed the life of the vehicle, however the vacuum will slowly decay over time as gasses diffuse into the tank materials causing the tank to lose some of its super

- insulation properti es. Once the vacuum within the tank decays to a point where the p ressure increases by
more than 40 psi over the course of a day

, then the
tank is no longer considered adequate and need s to be re

- evacuated by a competent maintenance facility. This is typically required after the first 4

- 5 years and every 2

- 3 years there after. The cost is approximately $1,000 per unit and would include other minor parts replacement or refurbishment

. Fuel tanks require visual inspections only. No other
maintenance is required over the life of the tank.



### Fuel System:

Natural gas is stored as CNG or LNG, but all engines burn natural gas as a vapor.

In a spark

- ignited natural gas engine, which can operate on CNG or LNG, the CNG flows from the storage tanks into a fuel line, then into a regulator to reduce the p ressure to engine specificati ons. Delivery of LNG to a spark

- ignited engine is provided by t he fuel pressure. T here are no pumps
in th e system . When the engine demands fuel the pressurized LNG flows out of the tank toward the engine. The cold pressurized fuel then passes

t hrough a heat exchanger, using engine coolant to warm and vaporize the liquid into a gas. From this point on, the process is the same for CNG and LNG.
Gas is mixed with air and the exhaust gas recirculation ( EGR ) system before it is introduced to the intake manifo ld system and delivers power via a four

- stroke internal combustion engine.

In contrast, Westport's compression ignited HPDI (High Pressure Direct Injection) engine uses an engine driven hydraulic pump , located in the fuel
tank to move fuel. The pump pres surizes the LNG to about 4,500 psi. The pressurized liquid travels through a heat exchanger, using engine coolant to Compressed Natural Gas (CNG) Pro’s

- Infrastructure is more readily available

.

- Trucks can sit idle for weeks without losing pressure or "venting

. " Compressed Natural Gas (CNG) Con ’s

- Space and heavy tanks required to store CNG make this impractical for long
distances

.

- Tanks are h eavier compared to LNG

.
Liquid Natural Gas (LNG) Pro's

- LNG is more dense than CNG, so is mo re practical for long dista nces.

- Tanks are l ighter compared to CNG

. Liquid Natural Gas (LNG) Con's

- Infrastructure is very limited outside of California, but is expanding.

- LNG should only be used in applications where the truck is working (and being refueled) daily to avoi d warmin g fuel and "venting

. "

Fig ure 4. Pro's and Con's of Compressed Natural Gas (CNG) and Liquefied Natural Gas (LNG).

### 5

vaporize the pressurized liquid into a pressurized gas which is then supplied to the engine.



### Engines:

The "spark" in a diesel engine comes from the compression of the diesel fuel. Natural gas engines can be either spark

- ignited or compression

- ignited with pilot injection of diesel fuel

. This can be a source of confusio n for those learning about natural gas trucks

. Figure 5 summarizes advant ages and disadvantages of spark

- ignited versus compression

- ignited engines.

Spark ignited engines use spark plugs similar to a gasoline engine and meet EPA 2010 emission standards using only a 3

- way passive catalyst that is lightweight and maintenance free . These engines use “stoichiometric” combustion where the chemically ideal ratio of fuel and air is burned by the engine without any excess of fuel or air left over. Like their diesel counterparts, they are able

to use cooled Exhaust Gas Recirculation (E GR) NO
x control where the EGR system takes a measured quantity of exhaust gas, passes it through a cooler before mixing it with the incoming air charge to the cylinder to lower the in

- cylinder temperature and reduce oxygen concentration in the combustion

c hamber by diluting the incoming ambient air with cool exhaust gases. The Cummins

- Westport spark ignited engines use EGR, but this is not necessarily true for all spark

- ignited engines. They are approximately 10% less fuel

- efficient than a comparable new d iesel engine due to the lower

compre ssion ratio

.
Compression ignited engines are virtually the
same as a diesel en gine, except that they are able to run on natural gas. Westport's HD system injects b oth diesel (~5%) and the natural gas (~95%) into the co mbustion chamber of the engine where the diesel ignites under pressure, which in turn ignites the natural gas. These engines operate with LNG only, due to the common rail pressure (constant 4500 psi) required by the engine. Even though these engines operat e with 95% cleaner burning natural gas

, EPA emissions requirements call for diesel particulate filters (DPF) and liquid urea Selective Catalytic Reduction (SCR) after

treatment to meet 2010 emission standards. This requirement and the additional diesel ta nk

, make this engine system heavier and more expensive than the spark

- ignited system. However

, these engines maintain the same fuel efficiency as their diesel counterparts

.

“Dual

- Fuel” is a term that is sometimes inaccurately applied to compression

- ign ited engines that require both diesel and natural gas.
The term was originally used to describe Clean Air Power’s “dual

- fuel” engine that can run on 70% natural gas and 30% diesel and has the ability to run on 100% diesel. It is currently in use in Europ e and is under development for the U.S.

There ar e currently only two natural gas engines on
the mark et for use in heavy

- duty trucks. 1.) the spark ignited Cummins

- Westport ISL

- G 8.9 L and 2.) the compression

- ignited Westport Inn ovations
HD 15L engine. Figure 6 shows engine specifications for these engines compared to their
diesel counterparts

. ESI

- Navistar has a 7.6L spark

ignited e ngine available today for lighter

- duty applications.

There are also a handful of new engines currently under development a nd being field tested that are expected to be “game changers” by filling the niche for higher

- powered, lighter weight spark

- ignited engi ne systems. Among these are spark ignited
Cummins

- Westport 11.9 L and ESI Navistar 13L engines. Also under development are an ESI Navistar 9.3 L spark

- ignited engine and the Clean Air Power (CAP) 13L compression

- ignited “dual

fuel” engine, which will be able to run on 100% diesel if natural gas is not available. Cummins has also announced that it will be developing a 15L spark

- ignited engine. ( Figure 7 )

Retrofit kits are also available that convert existing diesel engines to run on natural gas (CNG or LNG).
Eco

- Dual's conversion kit is approved for the 2004

- 2009 Cummins ISX 15L engine platform. Converted engines use 6 0

- 80 % natural gas with diesel pilot injec tion and can default to run on 100% diesel at any time if natural gas is not available.

### 6 8 Spark Ignited Engine Pro’s

No DPF or SCR after

- treatment necessary to meet 2010 emission standards

- Maintenance Free

- Lighter Weight

- No diesel tank required

- Less expensive

- Engine braking capability and manual
transmission available with the 11.9 L

- Available with CNG or LNG Spark Ignited Engine Con’s

Lower Compression Ratio means:

- L ess fuel efficient (7

- 10%)

- Limited options available i n the near term (7.6L, 8.9L, 11.9L, and 15L)

- E ngine braking is currently not available with
the 8.9L

.

- A utomatic transmission (8.9L) is expensive

.

- More frequent maintenance intervals

Compression Ignited Engine Pro’s

Maintains partial attr ibutes of a diesel engine:

- S ame compression ratio as diesel

- Same fuel efficiency as diesel

- 475 hp max

- Engine braking

- M anual transmission options

- S ame maintenance intervals

SCR after

- treatment provides 5% better fuel economy over engines without it.
Greenhouse gas emission s per mile are lower :

- Well

- to

- wheels reduction compared to ULSD is 25% (HD) vs. 16% (ISL

- G LNG)

. Compression Ignited Engine Con’s

Heavier system:

- Requires diesel after

- treatment systems and a diesel fuel tank

- After

- treatment system ~ 5 00 lbs

- D iesel ta nk and fuel weighs ~400 lbs

Sp ace is required for diesel and diesel exhaust fluid ( DEF ) tanks, so dual 58 DGE (11 6 DGE) is the maximum fuel capacity

. After

- treatment m aintenance is required

.
M ore expensive than s park

- ignited systems ($20,000

- $4 0,000 ) and $ 70,000 more than diesel

. LNG only. Currently not available with CNG.

Figure 5. Pro's and Con's of Existing Spark

- Ignited and Compression

- Ignited Natural Gas Engines.

### 7 6.7

- 7.6 L ISL

- G 8.9 L ISX 11.9 L HD 15 L

Diesel Natural Gas Diesel Natural Gas Diesel Natural Gas* Diesel Natural Gas

Manufacturer Navistar

DT466 ESI Navistar

Phoenix Cummins C ummins

Westport Cummins Cummins

Westport Cummins Westport
Innovations Displacement 6.7 L 7.6L 8.9 L 8.9 L 11.9 L 11.9 L 15 L 15 L Ignition Compression Spark Compression Spark Compression Spark Compression Compression
HPDI Cylinder Head 4 valve 4 valve 4 valve 2 valve 4 valve 4 valve 4 valve 4 valve Fuel System Common rail

system Throttle

Body
Intake Manifold Common rail

system Intake

manifold Common

rail system Intake

manifold Common rail

system Common rail

system

2010
Emissions Strategy Particulate

F ilter and
advanced
EG R after

treatment Passive

3

- Way Catalyst Particulate

Filter and SCR after

treatment Passive

3

- Way Catalyst Particulate

Filter and SCR after

treatment Passive

3

- Way Catalyst Particulate

Filter and SCR after

treatmen t Particulate

Filter and SCR after

treatment

Weight (dry) 1,425 lbs. 1,290 lbs 1,850 lbs 1,625 lbs 2,888 lbs ~2,700 lbs 3,286 lbs 3,243 lbs
Horsepower 210

- 300 hp 300 hp 330

- 380 hp 260

- 320 hp 310

- 425 hp 320

- 400 hp 400

- 600 hp 400

- 475 hp

Peak Torque 520

- 869 lb

ft 250

- 860 lb

ft 1,150

- 1,300

lb

- ft 660

- 1,000

lb

- ft 1,150

-

1,650 lb

- ft 1,450 lb

- ft 1,450

- 2,050 lb

- ft 1,450

- 1,750

lb

- ft
Peak Torque
RPM 1,300 RPM 1,300 RPM 1,400 RPM 1,300 RPM 1,200 RPM 1,200 RPM 1,200 RPM 1,200 RPM

Clutch Engagement Torque 400 lb

- ft 400 lb

- ft 550 lb

- ft 550 lb

- ft 800 lb

- ft 800 lb

- ft 1000

- lb

- ft 1000

- lb

- ft

Engine Braking Exhaust

brake

- yes No Yes No Yes Yes Yes Yes

Make Cummins

- Westport ISX ESI Navistar ESI Navistar Clean Air Power Displacement 11.9 9.3 13 13 Ignition Spark S park Spark Compression
Fuel CNG, LNG Biogas CNG, LNG, Biogas CNG, LNG, Biogas CNG, LNG, Biogas, or 100% diesel

HP 32 0

- 425 hp 350 hp TBA 430 hp Torque 1,450 lb ft 850

- 1,200 lb ft TBA 1,150 lb ft
EGR Yes No Yes Yes Test Engine Complete Underway 2011 201 2 Complete
Field Test Underway 2011 2012 TBA 2012 Available Q1 2012 TBA TBA TBA
OEM Partner Kenworth, Peterb ilt,

Freightliner , Volvo, Autocar International International International Figure 6. Specifications for available heavy

- duty natural gas engines and comparable diesel engines.

* The 11.9 L Cummins

- Westport will not be available until January 2013, however a limite d number are available for testing in 2011 and 2012.

Figure 7. Natural Gas Engines for Heavy Trucks Currently Under Development

.
* Cummins Inc. has also announced the development of a 15L spark

- ignited engine.

### 8

Transmissions and Braking:

T ruck OEM’s offer automatic transmission s with torque converter technology for use with spark

ignited natural gas engines. This transmission multiplies engine torque at start to deliver adequate power to the drive wheels and makes the most efficient use of fuel. Current (8.9L) s park

ignited nat ural gas engines are designed for use
with automatic tran s missions to enable performance over a wide range of applications

, including heavy duty applications

, that would not otherwise be possible.

Spark

- ignited engines must reduce the compression ratio in order for gas to burn and

prov ide a richer mixture. Currently , engine braking is not available in the 8.9L engine, but t his is partially compensated by the auxiliary braking provided by an automatic transmission

. Spark

ignited engines are capable of e ngin e braking and this will be av a i lable wi th the 11.9 liter engine

.

C ompression ignited natural gas engines maintain the attributes of a diesel engine such as a high compression ratio and engine braking

. Box 1 has additional discussion of power and efficien cy of natural gas engines. 

### Maintenance:

Maintenance requirements differ between s park ignited natural gas engines and their diesel counterparts, but the overall cost is roughly the same. Spark

- ignited engines require more frequent valve adjustments, spark plug replacement

, and specialized oil . This means up to approximately 3 cents per mile in additional
maintenance costs. However , spark

- ignited engines do not require diesel after

- treatment systems or maintenance (DP F and ur ea) which is
estimated to cost 4

- 5 cents per mile , so o verall
maintenance costs are expected to be similar to or slightly lower tha n diesel

.
Compression

- ignited engines follow the same
maintenance intervals as their diesel counterpart s, however the engine and fuel system require
addit ional fuel filters and inspections . This adds approximately 1.4 cents per m ile using outside
labor and 0.9 cents per mile using internal labor. They require the same after

- treatment system maintenance as a diesel truck, but use less DEF

. Figure 8 compare s the maintenance intervals of diesel and natural gas engines.

Some fl eets use an accelerated oil change interv al for the 8.9L engine because it is being used in a
more severe dut y

- cycle than it was designed for

. But this is a product of using a smaller en gine, not natural gas. The 11.9L engine will better suit these types of operations.

The maintenance costs for a natural gas truck are comparable to a new diesel truck

, but the upgrades required for shops servicing natural gas vehicles
can be substantia l.

LNG units will start to vent if the tanks are warm for more than a few days (CNG tanks do not vent)

. To deal with this potential fire hazard, natural gas compliant shops may be required to have sloped roofs, methane detection systems, automated
venti lation systems

, and explosion proof lighting. These improvements can be very expensive. P rice estimates range between $200 ,000 and $1 million dollars depending on local code requirements and size of the shop

. POWER AND EFFICIENCY:
Spark

- ignited n atural gas engines are not able to
achie ve the high compression ratio (and ass ociated efficiency) or horsepower of a diesel engine because of the need to prevent pre

- ignition and engine damage. Most spark

- ignited natural gas engines on the market today suffer a fuel penalty of about 10% , but thi s is impro ving. Horsepower is limited by the amount of gas that can be supplied to the cylinder without creating “engine knock”. This is referred to as a “knock limit” (38 hp/ L for natural gas). Westport's compression

- ignited engine can achieve the same compression ratio, fuel economy, and horsepower rating as a diesel engine because it uses direct injection of both diesel and natural gas . Current 8.9L natural gas spark

- ignited engines can achieve a max 320 hp
and 15L co mpression ignited engines achiev e a max 4 75 hp

. However, these ratings were chosen based on market demand and the technology is capable of developing engines with higher power.

Box 1. Power and Efficiency of Natural Gas Engines.

### 9

M any m aintenance procedures (tires, oil changes, etc.) can be done without modifications to the shop. Bringing trucks into the shop with low or empty LNG tanks minimizes the risk of venting and associated fire danger. Performing maintenance outdoors may be prac tical alternative in some

cases.

Many fleets choose to operate under full service lease agreements or outsource the maintenance of natural gas trucks in order to remove the uncertainty of maintenance costs and shop upgrades.



### Heavy Trucks:

Heavy

- duty natura l gas trucks are available in the U.S. from Daimler

- Freightliner ( M2 ), Paccar’s Kenworth ( T800 , T440 ), Peterb ilt (384, 386 , 388,
367 ), Navistar, and Vo lvo (VNM )

.
A natural gas (CNG or LNG) heavy truck with the
ISL

- G 8.9L spa rk ignited engine is $30,000

- $4 5 ,000

more exp ensive than a comparable diesel. LNG tanks are slightly less expensive than CNG tanks assuming equal range requirements. An LNG truck with the Westport HD 15L engine is about $70,000 more expensive than a comparable diesel

.

. This is primari ly due to the cost of the fuel system.

The best way to determine an accurate price and weight differential for a specific application is to obtain a quote. This will also en sure that the fuel tanks will work with specific chassis length, po sitioning of the 5th wheel, required turning
radius , and o ther necessary equipment

.

Conversion kits are also be ginning to become available. These kits retrofit existing diesel engines so that they are able to run on compressed or liquefied natural gas and include natur al gas fuel tanks and fuel system

. Kits cost between $25,000 and $40,000 depending on the size and type of the natural gas fuel tank.


### Refueling Process:

Filling up the “gas tank” may be the most obvious difference between a natural gas and diesel truck

.

A CNG filling station typically takes natural gas from the local pipeline at low pressure and compresses it to be stored in above ground storage tanks at high pressure . In rural communities, the pipeline may not have adequate capacity for a CNG filling sta tion.

CNG refueling equipment ca n either be “fast fill” or “time fill”. A “fast fill” system uses a large compressor and a high

- pressure storage tank to fill
the truck tank in about the same amount of time as a typical diesel truck , however filling beyond 75% requires a slower trickle. These systems require a significant amount of electricity to run the compressor. A “slow

- fill” system is typically used
where f leets are able to fill over a few hours . In both systems, natural gas nozzles lock onto the

rece ptacles and form a leak

- free seal, similar to the Diesel
Cummins
ISL 8.9L CNG/ LNG

Cummins
IS L

- G 8.9L Diesel

Cummins ISX
15L LNG

Westport
HD 15L
Oil & Filter 15,000 15,000 25,000 25,000

Fuel Filter 15,000 (primary) 30,000 (secondary) 30,000 25,000 High Pressure Diesel 125,000 Low Pressure Diesel 31,250 High Pressure LNG 125,000 Spark Plugs N/A 45,000 N/A N/A

Coolant Filter 15,000 15,000 50,000 50,000 Coolant Change 80,000 60,000 250,000 250,000 Valve Adjustment 150,000 60,000 500,000 500,000 DPF (PM Trap) 200,000 N/A 300,000 300,000
DEF Dosing Filter 200,000 N/A 200,000 200,000

Figure 8. Mainte nance Intervals of Heavy Duty Diesel vs. Natural Gas Engines

.

### 10

coupling on an air compressor nozzle. The receptacles are designed so that when the nozzle is removed the gas is prevented from escaping. Basic driver training is required, but personalized

pr otective equi pment is not necessary.

LNG is typically delivered to the station via tanker truck and stored in cryogenic storage tanks. An LNG filling station consists of a liquid nitrogen (refrigerant) storage tank and a large (~16,000 gal lon) LNG storage tank. LNG is pumped into the vehicle like any other liquid fuel, but with more sophisticated cryogenic fueling equipment. Employee training and protective equipment (gloves, mask, and apron) are necessary.

According to one LNG user, "r efueling the truck is different, but simple " . The tank looks like a regular diesel tank on the side of a truck. The nozzle looks like a "race car" nozzle. Drivers put on safety equipment (gloves, face shield, and apron) to protect their skin from the super

- cooled fuel. They swipe the ir cards, hook up the nozzle, and hit a button. The computer knows how much fuel the
truck needs and tell s the driver when the tank is full. It takes about five minutes to refuel.

Compression

- i gnited engines require die sel in
addition to LNG ; although the diesel only needs to
be refilled ab out 1 out of every 20 times it is refueled

. 

### Fueling Infrastructure:

Natural gas refueling infrastructure has been a classic “chicken and egg” scenario, w here fueling
stations will not risk the $1.5M investment without

a strong customer base and fleets are not wi l ling to purchase natural gas vehicles without refueling infrastructure in place.

The re are currently 47 LNG stations in the U.S. (Figure 9)

, however only about 1/3 rd of those are open to the public (i.e. you do not need prior access or approval) and until recently, there were essentially no LNG filling stations outside of California. CNG is more widely available (936 public and private stations nationwide) with the majority
in the Mid

- West (Figure 10), but is st ill limited compared to diesel

.

State # of LNG Fueling Stations
California 36
Texas 5
Utah 1
Nevada 1
Alabama 1
Louisiana 1
Arizona 1
Connecticut 1

Figure 9. Number of LNG Fueling Stations by State. Incl udes private and public stations. Alternative Fuels and Advanced Vehicles Database

Figure 10. Natural Gas Fueling Stati on Loc ations. Includes CNG and LNG s tations

. Alternative Fuels and Advanced Vehicles Database

### 11

Clean Energy (a n LNG producer who builds natural gas refueling stations) h as partnered with Pilot

Fl ying J truck stops to build 150 LNG fueling stations along major interstate corridors. They anticipate having an LNG fueling station every 200 to 300 miles by July 2013 and double that to 300 or 400 stations by 2015 to serve all r egional routes. Chesapeake Energy and Temasek Holdings have
each invested $150 million in this effort to construct a foundational grid of LNG stations for heavy

- duty trucks . Figure 11 show s the proposed
locations of LNG stations to be built in 2012 and
201 3.

Infrastructure will first expand from California into
a Southwest LNG truck re

- fueling corridor with
stations now present in Northern California, Arizona, Nev ada and Utah. E fforts are also underway to create a natural gas vehicle corridor in Texas, the “Texas Triangle”

, connecting Austin, Dallas/ Fort Worth, Houston, and San Antonio. Also planned for early opening include stations linking Houston with Chicago, Chicago to Atlanta, and highways in the mi d

- west with high truck traffic.

Local utilities can also be a source of both CNG and LNG. Many utilities produce LNG in order to store excess natural gas in the summer months for use in the winter and are willing to sell both CNG and LNG as transportation fuel. Some utilities are already seeking out discu ssions with the trucking community as they consider building fueling stations. Because natural gas rates from utilities

are regulated, they can provide some of the least expensive fuel available.

Until more natural gas refueling infr astructure is built, f leets may consider buildi ng th eir own refueling stations. A CNG or LNG fueling station can
cost between $400,000 and $1.5M.

Groups such as Clean Energy or Vocational Energy
wil l partner with fleets to design and build, and in some cases, operate and maint ain a station.

Fleets can pay for the capital cost of a station or Clean Energy will pay for a station and recoup the
cost over 10

- 15 years. To be economically feasible, fleets should be using 25,000 to 30,000 gallons of diesel per month , minimum, assumin g the station is in a desirable location with public access. T wice that amount of fuel would be needed for a
dedicated fleet location.

Mobile LNG fueling units are also available for fleets operating on temporary jobs. These units hold approximately 3,00 0 DGE. This is about half the volume of a delivered load of LNG fuel, so it is not economical in the long term. Like all LNG storage tanks, they will vent if not used or refilled every 4

- 5 days.

Figure 11. Proposed 2012

- 2013 LNG Fueling Station Network

. Clean Energy

### 12

Safety:

Natural gas is noncorrosiv e and nontoxic. Because it is lighter than air, it will rise under normal atmospheric conditions rather than pooling like a liquid fuel. This eliminates the potential for ground
or water contamination and reduces the probability of a fire in the event of a leak, but creates additional hazards for the area around the ceiling of confined spaces. LNG and CNG are about as flammable as diesel, but ignite only under

con centrations between 5

- 15%.

Truck cabs are equipped with methane detec tors to alert drivers i f gas has vented into the cab. These warnings need to be taken seriously in order
to avoid drowsiness and associated safety issues.

Natural gas vehicles are safe and have a proven track record. Based on a survey of over 8,000 natural gas fleet vehicles tr aveling nearly 180
million miles , t here were a total of seven fire incidents in the natural gas fleet, only one of which was directly attributable to a failure of the natural gas system

.
Natural gas vehicles, fuel systems, maintenance facilitie s, and refu eling facilities are heavily regulated from a safety standpoint.

CNG and LNG fuel tanks and fuel systems undergo rigorous safety testing and must comply with federal standards. They are made of high

- strength materials designed to withstand impact, punctur e and, in the case of fire, their pressure relief devices (PRDs) provide a controlled venting of the gas rather than letting the pressure build up in the
tank. CNG tanks are designed to “leak before breaking” so that if a tank stays in service beyond
the d esign life, and experiences excessive fill cycles, they will only fail by leakage

.
The fuel systems in a natural gas vehicle must conform to NFPA standards for safe design,
install ation, inspection, and testing. The CNG vehicle fuel containers must meet the Federal
Motor Vehi cle Safety Standard

.
LNG has its own safety considerations

- Flammable: While it is not flammable as a liquid, if exposed to air, LNG will rapidly expand to 600 times its original liquid volume, so small leaks can present a significa nt fire hazard near
the leak.

- Large Expansion Ratio : When warmed, LNG can build to extremely high pressures (over
3

, 000 psi ) if trapped in lines causing lines to fail. Care must be taken in the design of piping systems and during maintenance operations to assure that liquid cannot become trapped
between two valves.

- Cryogenic Temperatures : Liquid LNG is stored at very cold temperatures (

- 260  ̊ F ) so presents a risk of “cryogenic burning” if skin comes in contact with a pressurized liquid stream or by touching a fuel line. Eyes and skin should be covered when working on LNG systems.

There are also special fire safety requirements for repair gar ages servicing CNG or LNG vehicles. Fleets servicing their own vehicles will requi re upgrades to comply with these requirements.

- Natural gas presents an asphyxiation hazard at
concentrations hi gher than 21%. Because this

can present a haza rd in indoor env ironment s , shops require an air evacuation system

.

- LNG does not have an odor, so an approved gas detection system in the garage as well as
lubrication or chassis repair pits is required.

- No open flame heaters or heaters with

e xposed surfaces hotter than 750  ̊ F are allowed

.

- The area within 18” of the ceiling is designated a Class I, Division 2 hazardous location. This means modified lighting and electrical systems may be required unless ventilation with at least four air changes per hour i s provided.

Repa ir garages servicing CNG vehicles that are not performing major fuel system repairs may only require explosion proof lighting.

NFPA 30A and state fire, mechanical, and electrical codes provide guidance, but allow for site specific modifications. The local fire department is generally the Authority Having Jurisdiction (AHJ).

Fleets that have on site natural gas refueling equipment must comply with NFPA codes 52, 55,

### 13

and 57 for equipment requiremen ts, design, construction, site , ventilation, installation, testing, emergency equipment, and maintenance and with code 52 and 57 for LNG fire protection, personnel safety, security, LNG fueling facilities and training

. See Appendix for a list of Nati onal Fire Protection
Administration Codes related to CNG and LN G vehicles, facilities, and fueling equipment. Figure 12 summarizes the advantages and disadvantages of natural gas fuel from a safety perspective.

Natural Gas Safety Pro’s Natural Gas Safety Con’s

Non

- toxic and non

- corrosive Asphyxiation hazard in enclosed spaces (air evacuation
and methane detection systems are required) Does not pool on the ground:

- Reduced fire hazard at ground level

- No ground or water contamination

- Flammable only at concentrations between
5% and 15% Rises “lighter than air”:

- Increased fire hazard indoors at ceiling level (modified lighting and electrical systems may be required)

- Rigorous design and testing stand ards

- Safe and proven track record for vehi cles Heavily Regulated

- Rapid exp ansion creates significant fire (i.e. explosion) hazard near a leak

- Very high pressures can build if gas becomes trapped between two valves causing lines to fail (follow proper maintenance procedures)

- LNG: c ryogenic burn c an occur if skin is exposed to liquid gas or fuel line (cover eyes, skin)
Figure 12. Pro's and Con's of Natural Gas from a Safety Perspective.

### 14



## 3. Fuel Prices

The price differential of natural gas to diesel is the single most important factor to consider in modeling the business case for converting a fleet to natural g as. Retail prices at the pump are generally listed in diesel gallon equivalents (D G E ’s) to account for the lower energy content of natural gas compared to diesel. The commodity futures market trade s wellhead natural gas in MMbtu’s or Mcf units. Figure 13 shows conversion factors for comparing nat ural gas to diesel. Until 2005, crude oil prices and U.S. natural gas prices moved together, supporting the conclusion that the two commodities were
connected. H owever, current spot prices and
futures markets show a persistent disparity between oil and gas prices.

The commodity futures market predicts natural gas prices to be 65

- 70% less expensive than oil on an energy equivalent basis ov er the next five years. F igure 14 compares historical spot prices and commodity futures for West Texas
Intermediate (WTI) Crude Oil and Henry Hub wellhead natural gas.

The U .S . Energy Information Administration predicts that crude oil prices will increase to about 2.8 times the p rice of natural gas by 2035

on an energy eq uivalent basis. Recognizing the extreme volatility of oil prices and the difficulty in predicting future prices, they recognize that
the price of oil could increase to as high as 4.8 times the price of natural ga s. Fuel Type Units Conversion Factor

Wellhead
Gas 1000 ft 3

(Mcf) Mcf x 5.8 =

e quivalent energy in a barrel of oil
Wellhead
Gas MMbtu $ MMbtu x 1.028 Btu per ft 3 = $ Mcf

CNG Gallons Gallons CN G x 0.16 = diesel gallon equivalent (DGE)

LNG Gallons Gallons LNG x 0.58 = diesel gallon equivalent (DGE)

Figure 14. Crude Oil and Natural Gas Monthly Average Historical and Commodity Futures Prices. Figure 13. Conversion Factors for Comparing Natural Gas to Diesel

.

Sources: Historical: U.S. Energy Information Administration

Gas: Henry Hub NYMEX Gulf Coast Spot Price Oil: Crude Oil (West Texas Intermediate) Spot Price
Futures: NYMEX Near

- Month Contracts www.cmegroup.com Gas: Henry Hub Natural Gas Trade Date 09/12/11 Oil: Crude Oil (West Texas Intermediate) Trade Date 09/12/11 Crude Oil (WTI)
Natural Gas Wellhead

### 15

Conversely, if demand for natural gas increases
as it enters the transportation, liquid fuels, and overseas markets, then the price of natural gas
could increase to a point where oil is only 1.1 times the price of natural gas.

The price differential at the r etail end is slightly narrower than the commodity prices, accounting for the cost of refinement,
distribution , and refueling infrastructure. Recent retai l, at

- the

- pump sale prices (October 2011) at 320 CNG stations shows CNG an

avera ge $1.65 less expensive than diesel (42% less) and LNG $2.10 less expensive (53% less). These average prices are somewhat misleading as retail prices vary region ally

. At a given loca tion, LNG is generally 50 cents more expensive than CNG. Figures 15 and 16 show the price differential of CNG and diesel ( October
2011 ) for the continental U.S.

Natural Gas (CNG) Information Reported by Clean Cities ($/DGE) Diesel Information Reported by Clean Cities ($/gal) Average Price/
Standard Deviation Number of Data
Points Average Price/

Standard Deviation Number of Data
Points New England $2.74 / 1.00 14 $3.91 / 0.19 43
Central Atlantic $2.54 / 0.64 76 $3.80 / 0.23 50
Lower Atlantic $1.80 / 0.54 10 $3.71 / 0.17 50
Midwest $1.94 / 0.53 28 $3.72 / 0. 15 112 Gulf Coast $1.96 / 0.62 7 $3.65 / 0.13 23 Rocky Mountain $1.66 / 0.66 70 $3.85 / 0.15 29
West Coast $2.69 / 0.59 120 $4.06 / 0.28 56
NATIONAL AVERAGE $2.33 / 0.77 325 $3.81 / 0.23 363
Figure 16. CNG and Diesel Retail “at the pump” sale prices. September 30 th

- October 14 th , 2011 Includes federal and state motor fuel taxes A total of 12 LNG price points were collected with an average fuel price of $2.17 per DGE
Clean Cities Alternative Fuel Pr ice Report October 2011

CNG Price Difference Relative
to Diesel

Figure 15. CNG and Diesel price difference Clean Cities Al ternative Fuel Price Report Oct 201 1 $2.75

- $2.00 $1.50

- $1.00

$2.00

- $1.50 $1.00

- $0.25

### 16



## 4. Summary of Economic and Operational Factors:

Natural gas is likely to remain significantly less

exp ensive in future years, but a number of economic and operational challenges exist for the use of natural gas as a transportation fuel in heavy trucks.

Figure 17 p resents a summary of the factors
discussed in previous chapters. These assumptions are used in our financial
model to determine savings for converting a fleet to run on natural gas. Advantages of
natural gas over diesel are shown in green, disadvantages in blue

, and factors that are
neutral in grey

.

Fuel Diesel LNG CNG Natural gas contains less energy per gallon 128,700 Btu/ gal 74,700 Btu/ gal 20,300 Btu/ gal Fuel prices are listed in energy equivalent “Diesel Gallon Equivalents” D G E ’s 1DGE 1.72 gal 0.23 cu ft 3.7 gal

0.49 cu ft Natural gas is li kely to remain substantially less expensive than diesel in the foreseeable future $ 4 / D G E $0.68/ mile $2.50/ DGE

$0.42

- $0.47/ mile $2.50 / D G E

$0.42

- $0.47/ mile Natural gas is produced domestically and prices are not impacted by foreign supply Extremely volatile price Less price

volatility Less price

volatility Natural gas is lighter than diesel 6.8 lbs/ gal 3 lbs/ gal 1 lbs/ gal Natural gas has more energy per pound 18,250 Btu/ lb 28,266 Btu/ lb 28,266 Btu/ lb
Eliminate environmental risk of fuel s pill Pools on ground Evaporates Evaporates Natural gas has a risk of explosion (enclosed spaces) Non

- explosive Explosive Explosive LNG tanks vent after sitting 4

- 5 days Does not vent Vents

- lost fuel Does not vent
It is m ore difficult to steal natural g as

Truck Diesel LNG CNG Natural gas trucks are more expensive (primarily due to fuel system) -- Spark $30

- 40,000 HD $60

- 70,000 $30

- 40,000

Salvage value end of useful life 25% 25% 25% Depreciable life of tractor 48 months 48 months 48 months

Eng ine Diesel Spark 8.9L, 11.9L Compression Spark

- Ignited natural gas engi nes are less fuel efficient compared to a new diesel engine -- 10% less

--

Available n a tural gas engines have limited hp 600 hp max 400 hp max 475 hp max Maintenance costs are highe r for spark engines (spark plugs and specialized oil) -- Up to $0.03/ mi

--

Spark

- ignited engines do not require DPF or urea diesel after

- treatment systems $0.04

- $0.05/ mi 200 lbs. lighter maintenance free $0.04

- $0.05/ mi

Natural gas engines are quiete r than diesel 10 dB quieter 10 dB quieter

Operations Diesel LNG CNG Operating range is limited to available infrastructure , wheelbase, and tank configurations Max 200 +200 =
400 DGE ; Typical 5 0

- 100 DGE Max 75 +75 = 150

DGE usable ; Typical 50

- 75 DG E Max 75 +40+40 =

126 DGE usable ; Typical 75

- 80 DGE Cost of additional fueling stop

-- $25 per stop $25 per stop Available payload is usually diminished

-- 50 to 6 00 lbs
heavier 4 00 to 1,600 lbs

heavier Maintenance shops require safety upgrades (light ing, venting, gas detectors) -- Up to $200 ,000 per bay Up to $200 ,000

per bay New technology presents a risk Stable technology New technology New technology
Figure 17. Summary of Economic and Operational Factors. Pro's (green), Con's (blue) , and Neutral (gray)

### 17

Price of Natural Gas: Natural gas price is listed in DGE to account for the reduced energy co ntent of natural gas compared with diesel. It is currently $1.50

- $2.25 less expensive than diesel and is likely to remain less expensive in the foreseeable future.
Price s c urrently range between $1.85 and $2.20 per DGE. We assumed $2.50 per DGE in our
mod el as a conservative estimate.

Additional Cost of Natural Gas Heavy Trucks:

A natural gas heavy truck with the ISL

- G 8.9L spark

- ignited engine is $30,000

- $40,000 more expensive than a comparable diesel. LNG is slightly less expensive than CNG because th e robust tanks required for CNG are more material intensive than the thermos design for
LNG. A truck with the ISX

- G 15L engine is $70,000 more expensive than a comparable
diesel and is available with LNG onl y. Natural gas engines are approximately $10,000 more expensive than a comparable diesel engine. The higher cost of the truck is primarily due to the cost of the fuel system and in the case of compression

- ignited engines, the diesel after

treatment system

. Prices have come down substantially in the last few years due to
economies of scale.

Fuel Economy Penalty:

Spark ignited engines are 10% less fuel efficient than a comparable new diesel engine. The Westport HD 15L compression

- ignited engine has approximately the same fuel efficiency as a comparable new diesel engine.

A truck that averages 6 mpg will save 21 cents per mile in fuel costs with a spark

- ignited engine (10% loss in fuel economy) and 26 cents per mile with a compression ignited engine (no loss in fuel economy)

.

Operating Range:

T he operatin g range that can be achieved wi th a given natural gas tank must ac count for t hree factors: 1.) A ccount for the reduced energy content of natural gas compared to diesel by using the rated capacity listed in diesel gallon equivalents (D GE) . 2) D educt appro ximately
10% from a CNG tank to determine "usable fuel." CNG does not flow at low pressures so there is always some residual fuel in the tank
that cannot be used. LNG tanks require vapor space which reduces the effective storage

space , however, this is a lready accounted for in the listed DGE capacity, so do es not need to be
discounted. 3.) S park ignited natural ga s engines suffe r a 10% fuel economy penalty.
C ompression ignited engines (HD 15L) get the same fuel economy as diesel.

Standard tank configur ati ons provide a range of
250

- 35 0 miles with CNG and 300

- 375 with LNG

. Some flee ts are experimenting with using additional tanks for increased range , b ut this
adds another $2 0,000

- $30,000 to the price of
the truck . For CNG, the maximum tanks used to
date in clude three 25 gallon tanks behind the cab (75 DGE) and two side

- rail tanks (41 DGE) which gives a total usable fuel capacity of 143
DGE and (700

- 8 00 mile range), but this configuration is very heavy (nearly 3,000 pounds full of fuel) . For LNG, two 150 ga llon tanks (75 DGE each ) would give an 810 mile range (assuming 6 mpg with diesel reduced by
10% , 5.4 mpg for a spark ignited engine ).

Westport's 15L HDPI requires addit ion al space for the diesel tank, DEF tanks, and hydraulic

pump inside the LNG tank. Cu rrently, the largest LNG tank available with the integral LNG pump is a 120 LNG tank, so the 150 gallon tank is not an option. Maximum fuel capacity with
dual 120 gallon tanks is 116 DGE. However,

t here is no fuel economy penalty with this engine and 5% di esel provides additional energy (730 mile range with dual 120 gallon tanks)

.

Weight Penalty:

The total "tires to tailpipe" weight of a natural gas truck depends upon the type of engine (ISL

G 8.9L or HD 15L) , the type of fuel (CNG or LNG)
and size of fuel tanks (depending on needed fuel capacity)

.

### 18

The table below shows the estimated weight differential of the most common natural gas configurations based on variables: engine, after

treatment, fuel system, and fuel. Actual weight differential will vary by a few hundred pounds

, depending on which diesel truck is used as a base case. A good rule of thumb says that an LNG or CNG truck will be 300

- 600 pounds heavier. However, the weight can be very close to diesel weights if the natural gas truck is configu red with lightweight components.

Fuel Type CNG CNG LNG LNG LNG Engine 8.9L "spark" 8.9L "spark" 8.9L "spark" 11.9L "spark" HD 15L
Tank Configuration and Nominal Capacity (5) 15 DGE
Behind Cab
75 DGE (2) 41.2 DGE

Side

- Rail
82.4 DGE (1) 150 gal

Side

- Rail
75 DGE (1) 150 gal

Side

- Rail
75 DGE (1) 12 0 gal

Side

- Rail
58 DGE Usable Fuel (DGE) 68 DGE 74 DGE 75 DGE 75 DGE 5 8 DGE Fuel Economy Penalty 10% 10% 10% 10% N o

Range (6 mpg) 367 mi 400 mi 338 mi 338 mi 365 mi Engine Weight 1,625 lbs (vs.

1,800 lbs d iesel) 1,625 lbs (vs.

1,800 lbs diesel) 1,625 lbs (vs.

1,800 lbs diesel) 2,700 lbs (vs.

2,888 lbs diesel) 3,243 lbs (vs.

3,286 lbs diesel) Fuel System Weight (Full Fuel) 2,050 lbs (vs.

5 10 lbs diesel) 1,650 lbs (vs.

510 lbs diesel) 1,400 lbs (vs.

5 10 lbs diesel) 1,400 lbs (vs.

510 lbs diesel) 1,802 lbs (vs.

510 diesel)
After

- Treatment System Weight 100 lbs

(vs. 5 50 diesel) 100 lbs

(vs. 5 50 diesel) 100 lbs

(vs. 5 50 diesel) 100 lbs

(vs. 5 50 diesel) 5 50 lbs

(vs. 550 diesel) Weight Differential of
Variables (engine, fuel system, after

treatment) - 175

+1,540

- 4 5 0 - 175

+1,140

- 4 50 - 175

+890

- 4 50 - 188

+ 890

- 4 50 lbs - 43

+1,292

- 0

Total Weight Differential natural gas vs. diesel 915 lbs heavier 515 lbs heavier 26 5 lbs heavier 252 lbs heavier 1,2 49 lbs
heavier

Notes:

1. Range assumes 6 mpg for diesel and LNG HD 15L co mpression ignited engine and 5.4 mpg for 8.9L and 11.9L spark

- ignited engines

2. Fuel system for HD 15L LNG configuration assumes LNG fuel system we ighs 1,400 lbs full fuel, 45 gallon diesel
tank and accessories wei ghs 96 lbs and diesel weighs 6.8 l bs per gallon (1,802 lbs total)

. 3. Weight differential is compared to a 75 gallon di esel tank ( 81 lbs ) and diesel we ighs 6.8 lbs per gallon ( 510 lbs).

4. After

- treatment system for spark ignited engines is a simple 3

- way catalyst (100 lbs) and for compression (HD 15L) and diesel engines includes DPF, SCR, and urea storage with solution (550 lbs).

LNG Venting

, Weathering, and Tank Issues :
Venting or "off

- gassing" occurs when LNG warms and expands to the point that the tank releases excess pressure to the atmosphere through the pressure relief valve. This equates to lost fuel and reduced savings. It also negates the environmental benefit of using natural gas because methane is 25 times more potent as a greenhouse gas than carbon
dioxide.

If new cold LNG fuel is added to the system on a daily basis this is not a problem, so LNG should only be used in operations where the truck has very little down ti me. Gas will warm Figure 18. Es timated range and weight differential for common natural gas configurations. (C ompared to diesel truck with 75 gallon fuel tank

- weight differential will vary depending on base truck).

### 19

to the point that it will begin to vent only after about 4 to 5 days of not being refilled. The

t anks are designed to release this pressure, so it is not a safety issue

. The super

- insulation properties of an LNG tank gradually degrade over time

, decreasing the amount of time that a tank can sit idle without venting. When the amount of pressure that builds over the course of a day exceeds 40 psi,
the vacuum in the tank needs to be re

evacuated. This generally occurs after about 5

years an d every 1

- 2 years thereafter. Loss of vacuum can also occur if there is damage to the tank from a collision or other accident.

If venting occurs on a regular basis, "weathering" can become an issue. When LNG vents, the lighter methane molecules vent first

. Over time, the residual fuel will contain a higher proportion of heavier butane, pr opane, ethane, and helium, than would otherwise exist and will be of lower fuel quality.

There have been some repo rts of LNG fuel lines freezing and causing problems. How ever, this is thought to be related to LNG pump replacement where the LNG pump is removed and the empty LNG tank becomes exposed to the environment, not from everyday use.

Venting and icing is not an issue with CNG.

Fuel Quality:

As with diesel, fuel quali ty is important. Fuel should have a high methane content, or drivers may feel loss of power. Impure fuel can cause plugged filters.

Loss of flexibility :

Loss of flexibil i ty and loss of a "go anywhere" fleet is a concern for a fleet that converts to

natu ral gas. Fleets want to be able to respond to customer needs wherever those might be. Until widespread infrastructure is developed, natural gas fleets will be limited to operations within range of a limited number of natural gas fueling station s

. Limited engine options :
There are currently only two natural gas engines available for heavy trucks: the Cummins Westport 8.9L spark

- ignited engine and the Westport 15L compression

- ignited engine (LNG only , heavier, and more expensive ). Medium duty delivery truck s are currently limited to the ESI Navistar 7.6 L engine. A typical 80,000 GVW truck is pushing the limits of the 8.9L engine and is limited to flat terrain. However, the 11.9L spark

- ignited engine will be available 1st

q uarter of 2013 and will fit a much larger number of heavy truck applications. As demand for natural gas trucks increases, more options
will become available. Additional engines are also currently under development (Figure 7).

Limited Space for Tanks and Other Equipment :
LNG and especially C NG tanks take up more space than diesel tanks . This can limit the amount of space available on the truck for pumps or other equipment that might be required. On a 3

- axle tractor, s ide

- rail mounted CNG/ LNG tanks can fit on as short as a 177" wheelbase, but this is very tight and makes tank servicing more difficult. A 190" wheelbase is a more typical wheelbase for side

- rail mounted
tanks. Some drivers have complained that it is difficult to see when backing up with the "back

of

- cab" CNG tanks.

Maintenance Costs :

Maintenance costs are $0.0 25 to $0.0 3 more per mile for the spark

- ignited engines ( due to spark plugs, overhead valve adjustments , and specialized oil ). However, they require no diesel after

- treatment system maintenance ($0.04

- $0.05 per mile), so overall represent a cost savings of approximately $0.01

- $0.02 per
mile

. Maintenance for a compression

- ignite d engine is the same as for a diesel engine , but with approximately $0.01 per mile in additional fuel filters and inspections

. However, l ess DEF i s used compared to a diesel, so this additional

cost may be negated

.

### 20

Shop Upgrades:

Upgrades required for shops servicing natural gas vehicles can be substantial. Natural gas compliant shops may be required to have methane detection systems, automated

ve ntilation systems, and explosion proof lighting

. This can cost up to $200 ,000 per bay depending on local code r equirements

. Shops servicing only CNG vehicles that are not doing major fuel system repairs may require only explosion proof lighting, however t his will vary depending on local fire code requirements.

Many fleets choose to operate under full service lease agreements or outsource the maintenance of natural gas trucks in order to remove the uncertainty of maintenance costs and shop upgrades. Outdoo r, unenclosed shop bays may be another practical alternative.

Leasing:
Natural gas trucks are available under a full

service lease. This reduces the burden of the high incremental cost and the uncertainty around maintenance and shop upgrades and allows for immediate s avings for high mileage fleets. It also allows fleets to test natural gas in their operations now, while they wait for the 11.9L engine to become available. However,

t he monthly lease c harge for a natural gas truck
can be nearly double th at of a comparable diesel truck and operating charge is $0.03 per mile higher.

Refueling:

Refueling with LNG is as fast as refueling with diesel, but safety equipment (gloves, goggles, apron) is required to protect skin from cryogenic burns that would res ult from contact with the super

- cooled fuel.

CNG filling times depend upon the size of the compressor and high pressure storage tank. New stations with large compressors and storage tanks can pump at 8 gallons per minute, but filling time will increase if a number of CNG trucks refuel back

- to back. At older CNG stations or stations with smaller compresso rs, it can take 30 minutes or more to fill as the compressor fires up to trickle fill the tanks to full capacity.

Dedicated Fleet Refueling Stations:

A fl eet that is interested in refueling "on

- site" should be using approximately 250,000 DGE per year for CNG and 500,000 DGE per year for LNG in order to make the investment in a refueling station economically viable and in the case of LNG, to minimize venting issues. A delivery of
LNG to the refueling station should be made about every 3

- 4 days to minimize venting issues and lost fuel. If other fleets are involved, or if the station is in a desirable location for public

private use, t hen lower volumes may be viable (i.e. the station could be built at no cost to the fleet by the natural gas fuel supplier).

Side Benefits :
Ultimately, the decision to invest in natural gas is an economic and functional decision , but

t here are a handful of side benefits to its us e.

- Engines are quieter (about 10 decibels)
than a diesel.

- There is no nee d for #1 diesel in the
winter which is a more expensive and
less efficient fuel than # 2 diesel

.

- It is much more difficult to steal natural gas, as can sometimes be a problem
with dies el.

- It adds a new dimension to customer relations. Fleets can help customers
reduce costs and meet their sustainability goals

. Bio

- methane sourced from landfill gas, wastewater treatment, and farm waste presents an opportunity to be "carbon negative"
and in some cases partner with customers to use their waste as fuel.

- If future air quality regulations become more stringent, natural gas has more potential to improve air quality cost

effectively compared to diesel.

### 21



## 5. Lynden Inc. Case Study: What Set of Conditions Make the Business Case for an Investment in Natural Gas Heavy Trucks?

The large fuel price differential between natural gas and diesel is very attractive, but is it enough to overcome the economic and operational factors that come with natural gas heavy
trucks?

Lynden Inc. , a Pacific Northwest

- Alaska based transportation company partnered with the National Energy Policy Institute on this project to develop a financial model and gain insight into the economic and operational conditions
that woul d lead a heavy truck fleet to invest in natural gas trucks.

The Lynden family of companies capabilities
include: truckload and less

- than

- truckload transportation, scheduled and charter barges, rail barges, intermodal bulk chemical hauls,
scheduled and cha rtered air freighters, domestic and international air forwarding, international ocean forwarding, customs brokerage, trade show shipping, remote site construction, sanitary bulk commodities hauling, and multi

- modal logistics

.

About the Model:

We use a p rof it

- and

- loss model to find annual cost or savings per mile, per truck, and per fleet. The model accounts for the economic and operational factors summarized in figure 17

.
1. Fuel p rice

. We modeled for cost of diesel at $3, $4, and $5 per gallon while leaving the cost of natural gas constant
at a conservative ly estimated $2.50 per diesel gallon equivalent (D G E ).

2. Weight differential

. Weight differential comes from OEM quotes and compare s natural gas to a comparable new diesel
truck using design specifications f or trucks used in each operation

. T he additional weight of a natur al gas truck
translates to a percentage of reduced payload and additional miles needed to travel per year to make up for the loss in payload (cost per mile estimated at $3.10 per mile). We used full fuel weights and full urea ( diesel after

treatment system ) weights

.
3. Fuel Economy and Operating R ange. Ope rating range is based on "usable" fuel and accounts for a 10% fuel efficiency penalty for spark

- ignited engines. For the HDPI engine, there was no fuel economy penalty. Each additional fuel stop needed to compensate for reduced fuel range is estimated to cost $25 to account for
additional time and labor.

4. Price differential, depreciable life, and salvage value of the truck. Truck prices

came from actual OEM quotes and compare natural gas to a comparable
new diesel truck including Federal Excise Tax (FET)

. We assumed a depreciable life of 4 years for the truck (conservative estimate) and equal salvage values (25%) for diesel and natural gas tr ucks at the end of their useful life.

5. Maintenance costs. We assumed maintenance costs to be equal between natural gas and diesel trucks. This is based on a $0.03/ per mile increased cost for spark

- ignited engines (spark plugs and specialized oil) and a $0 .01

- $0.04 / mile savings by eliminating
maintenance costs associated with
diesel after

- treatment systems.

6. Shop upgrades. We did not include the cost of maintenance shop upgrades in this model. Costs vary greatly depending on the size and locati on of
the s hop and options for outsourcing
maintenance may be more practical.

### 22

Lynden Scenario Operational Characteristics (w e modele d 3 operations, a total of 5 scenarios ) :

1. In

- City Less

- Than

- Truckload (LTL) Pick

- Up and Delivery : CNG

2. Milk Tanker Farm Pick Up: CNG a nd LNG

3. Truckload and Less

- Than

- Truckload Line Haul : LNG 11.9L "Spark" engine and LNG 15L HDPI
Key variables are summarized in figure 19; results are presented in figures 20

- 26.

LTL Pick

- Up & Delivery (CNG):

This is a 15 tractor fleet
based in the Seattle area. The 69,000 GVW tractor with
semi

- van trailer operate s within a 50 mile radius to provide pick

- up and delivery service from a central
terminal and travel s an average 14,000 miles per year. There are currently four CNG fueling stations in
the Seattle area with enough space available for a truck to
refue l. CNG quote is for a n 8.9 L spark

- ignited engine

. This operation is not weight
sensitive because truck is rarely loaded to full capacity, so the weight penalty was removed from the model for
this scen ario

. Farm Pick Up (CNG & LNG) :

Tractors with tank trailers pick up milk fr om the dairy farm and deliver to the processing plant. The 8 truck fleet carries loads up to 105,500 GVW within a 30 mile radius of the terminal on flat terrain. The 8.9L engine i s beyond its upper limit for this application. Each truck averages 60,000 miles per year. R efueling infrastructure is currently not available, but annual fuel use

a nd terminal location make
this a potentially feasible public/private refueling site. We comp ared the diesel to
CNG and LNG trucks

. This is an extremely weight sensitive operation. Line Haul (LNG) :

L ine haul refrigerated trucks
with team drivers specialize in transporting seafood and
other refrigerated freight from the Pacifi c Northwest

to Centra l and Southern California , Portland, Boise, Salt Lake City, Denver, Minneapolis, Chicago, and Boston. GVW is 80,000 pounds and trucks a verage 150,000 miles per year. The 11.9L engine is at its upper limit for this application. For the model, we assume LNG refueling infrastructure is available for these corridors. We compared the diesel and LNG 11.9L engine and HDPI
15L. This operation is also weight sensitive.

LTL Pick Up & Delivery C NG Farm Pick Up
CNG Farm Pick

Up LNG Line Haul LNG

11.9 Line Haul LNG

HDPI Engine Size 8.9 L 8.9L 8.9L 11.9L HDPI Fleet Size 15 trucks 8 trucks 8 trucks 50 trucks 50 t rucks Annual miles per truck 14,000 miles 60,000 60,000 150,000 150,000 MPG Diesel MPG Natural Gas 5.91 mpg 5.32 mpg 4.7 mpg

4 .23 mpg 4.7 mpg

4 .23 mpg 5.89 mpg

5.28 mpg 5.89 mpg

5.89 mpg
Additional Cost of
Natural Gas Tractor $ 2 9,000 $40,000 $43,000 $34,000 $67,000

Additional Weight of
Natural Gas Tractor n/a 1,556 lbs 555 lbs 68 lbs 500 lbs

Payload Diesel Payload Natural Gas n/a 75,000 lbs 73,444 lbs 75, 000 lbs

74,450 lbs 45,000 lbs

44,93 2 lbs 45,000 lbs

44,500 lbs
Tank Size Diesel 50 gallons 75 gallons 75 gallons 90 gallons 90 gallons
Tanks Size NG Nominal Tank Size NG D G E Tank Size NG Usable (2) 25 DGE
50 DGE
45 DGE (5) 15 gallon BOC

75 DGE
68 DGE 150 gallon

75 DGE
75 DGE 150 gallon

75 DGE
75 DGE 120 gallon

58 DGE
58 DGE Range Diesel Range NG 296 miles
240 miles 353 miles

288 miles 353 miles

296 miles 531 miles

396 miles 531 miles

354 miles
Figure 19. Operational Characteristics for 5 Lynden Scenarios Di esel vs. Natural Gas

### 23

Model Summaries:

Figure 20. Comparative Model Summary: In

- City Pick Up & Delivery 8.9L Spark

- Ignited CNG vs. Diesel

### 24

Figure 21. Comparative Model Summary: Farm Pick Up 11.9L Spark

- Ignited CNG vs. 11.9L Diesel

### 25

Figure 22. Comparative Model Summary: Farm Pick Up 11.9 L Spark

- Ignited LNG vs. 11.9L Diesel

### 26

Figure 23. Comparative Model Summary: Line Haul 11.9L Spark

- Ignited LNG vs. 11.9L Diesel

### 27

Figure 24. Comparative Model Summary: Line Haul 15L HDPI LNG vs. 15L Diesel

### 28 In City Pick Up
and Delivery
CNG Farm Pick Up

CNG Farm Pick Up

LNG Line Haul LNG

11.9L Spark Line Haul LNG

HDPI

Annual ( Cost ) and Savings per mile Diesel $3 per gallon ( $0.37 ) ( $0.16 ) ( $0.12 ) ( $0.03 ) ( $0.06 ) Diesel $4 per gallon ( $0. 20 ) $0.05 $0.10 $0.14 $0.11 Diesel $ 5 per gallon ( $0. 03 ) $0.27 $0.31 $0.31 $0.2 8
Annual ( Cost ) and Savings per truck Diesel $3 per gallon ( $ 5,185 ) ( $9,574 ) ( $6,983 ) ( $3,695 ) ( $9, 184 ) Diesel $4 per gallon ( $ 2,182 ) $3,192 $5,783 $21,458 $16,239 Diesel $5 per gallon ( $439 ) $15,958 $18,548 $46,882 $41,663
Annual ( Cost ) and Savings per fleet Diesel $3 per gallon ( $ 77,778 ) ( $76,589 ) ( $55,865 ) ( $198,271 ) ( $4 59,214 ) Diesel $4 per gallon ( $ 42,185 ) $25,537 $46,261 $ 1,072,907 $811,964 Diesel $5 per gallon ( $ 6,591 ) $127,663 $148,387 $2,344,085 $2,083,142

Return on Investment (ROI) = annual savings/ additional cost of tractor Diesel $3 per gallon ( 18% ) ( 24% ) ( 16% ) ( 12% ) ( 14% ) Diesel $4 per gallon ( 8 % ) 8% 13% 63% 24 % Diesel $5 per gallon ( 2% ) 40% 43% 137% 62 %

Figure 25

. Summary of Model Re sults for 5 Lynden Scenarios

. ( Cost ) and Savings includes operating c osts and a nnualized c apita l c osts ROI = annual profit/ additional cost of the natural gas tractor

Figure 2 6 . Minimum Annual Miles per Truck fo r 2 0 % Return On Inv estment for 5 Lynden Scenarios. (Assume Natural Gas is $2.50/ DGE )

### 29

Model Conclusions:

No model is pe rfect, however this model is a useful tool for predicting which operations make business sense for natura l gas. Figure 26
shows the mini mum number of miles per truck
needed at various fuel price differentials to achieve a 20% Return on Investment (ROI) while taking into account the high incremental cost of
the natural gas truck , loss of fuel economy, loss of payload, maintenance costs, and reduced operating range.
Return objectives are set by each company based on their unique circumstances such as cost of capital, amount of leverage, shareholder return expectations, and perceived risk of the
investment. The R eturn O n N et A sset threshold fo r four publicly traded trucking companies over the last 5 years ranged from 5.7% to 25.6% (average 12.1%.) A 20% threshold is on the high end of what a business would use as an investment criteria for this type of model , but is in line with the high perce ived risk of investing in new technology like natural gas trucks. Assuming $4.00 per gallon diesel and $2.50 per DGE natural gas (today's approximate prices), LNG fleets traveling more than 70,000 miles
achieve a 20% R eturn on Investment. The
minimum num ber of miles for a fleet of CNG trucks to achieve a 20% ROI ranges between 60,000 and 90,000 miles per year, depending on
the actual cost of the tractors and the sensitivity of the operation to weight.

Modeling for the Westport HDPI 15L:

We also modeled the Westport HDPI 15L for the Line Haul scenario. For a truck with a single 120 gallon (58 DGE) tank, this added approximately 500 lbs and $67,000 to the weight and price of a comparable 15L diesel truck with 90 gallon tanks and required 140,000 miles per truck per year to reach 20% ROI. Adding an additional 35
DGE tank increased the incremental cost to $103,000 and added another 700 pounds.
Trucks with this additional tank required 260,000 miles per truck per year to achieve a 20% ROI. The best fit for o perations using the HDPI engine are those with short range, high miles, and high horsepower requirements. Figure 27. Operational Characteristics that are Profitable, Marginally Profitable, and Not Profitable or Practical.

Assumes a $1.50/ DGE fuel price differential b etween diesel and natural gas.

### 30

Importance of Fuel Price :
There seems to be a critical point in the price difference between diesel and natural gas
where diesel is between $1.25 and $1.50 more expensive than natural gas per diesel gallon equivalent (F igure 28). At these prices, small chang es in the price different ial have a large impact on profitability. In other words, when the price differential is between $1.25 and $1.50 / D G E , nat ural gas suddenly becomes profitable to a relatively large number of heavy
truck o p e rations when it was not profitable before

.
W hen the price differential increases to above $2.00 per DGE, natural g as becomes attractive

to a n even greater number of fleets ( those traveling 30,000 to 40,000 miles per year ) although the increase in the number of fleets is relatively less. At these higher diesel prices

, factors such as the capital cost of the tractor and additional weight of the tractor have less of an impac t o n the minimum miles traveled to reach a 20% ROI threshold.

Even with very high priced diesel ( price differential greater than $3.50 per DGE ), there remains a bottom limit for an investment in natural gas trucks. Very low mileage fleets (those traveling l ess than about 20 ,000 miles per year) simply do not travel enough miles to reach a 20% return on their investment , unless the price of natural gas trucks decreases. Hybrid and electric trucks might better suit these types of operations.

At the other end of the spectrum , w hen the price differential between natural gas and
diesel narrows to less than $0.75 per DGE natural gas beco mes impractical because t he
miles required to achieve 20 % ROI exceed the miles that can possibly be driven by a truck in

one year.

Figure 28. Impact of Fuel Prices on the Minimum Annual Miles per Truck to Achieve a 20% ROI.

### 31

Model Limitations and Alternative Approaches:

These conclusions (minimum number of miles per year per truck to be economically attractive)
should be viewed as a rough estimate only. The numbers will vary by company based on the
desired retur n on investment, truck mission and utilization, the sensitivity of the operations to truck weight, the size of the tanks required to

meet a given fuel range, and the capital investment of each alternative (price of each truck).

There are limitations and a lternative approaches to any model. For t his paper, we used a Profit

- and

- Loss or Return on Net Assets (RONA) approach where the annual, pre

- tax,

pre

- interest profit is divided into the depreciated, additional cost of a tractor over the life of that tracto r. One alternative approach often used by a business to evaluate
the attractiveness of an investment looks at after

- tax cash flows over the life of the
investment: Discounted Cash Flows Return On
Investment (DCF

- ROI).

In contrast to the RONA approach the DCF

- ROI approach considers the impact of taxes and the time value of money. Because the RONA approach is a pre

- tax measurement, the threshold of minimum return should be higher than the threshold for minimum return on the
DCF

- ROI approach. For instance, if one used a minimum return target of 20% for RONA, and one assumed a 40% tax rate (combined federal & state), the equivalent after tax return
threshold for the DCF

- ROI approach would be
12%.

While technically more correct from a finance perspective, w e opted to use the RONA model
in this anal ysis because the RONA approach is
easier to model and understand

.
There is value in simplicity, particularly at this stage where fleets are asking whether or not it is worthwhile to further investigate and possibly test a natural gas vehicle in their fleet rather than replace an entire fleet with natural gas trucks. Once a fleet gains some experience with natural gas trucks, then it might be more appropriate to use the mor e in

- depth DCF

- ROI approach to see if it ma kes sense to convert an entire fleet to natural gas.

In the end, the decision to replace a fleet with natural gas trucks is not based on a model. It is based on the reliability and operational performance of the trucks and on actual savings
seen in real t ests of real trucks.

Feedback from Lynden's People:

We expect t he combination of accelerating
demand in emerging markets for oil overseas and abundant domestic natural gas will keep oil prices high and natural gas p rices low over the long term. G et used to gas. Whether we like it or not, and I can th ink of a lot of reasons why

not , the future is going to be natural gas and
batteries.



### - Jim J.
, CEO , Lynden Inc.

There are a lot of "con's". T he only "pro" seems to be the price differential between natural g as and diesel

. Without the model it is very hard to know the impact of all of these factors. But

, there is value to looking at this. If we can get a competiti ve advantage, then it is worth it.

Weight is a huge concern because additional weight equates to loss of payload and additional miles (cost) to make up for lost

revenue . If we could get a credit for the additional weight of running natural gas, this would eliminate the weight concern.

If we move forward with a natural gas vehicle, it
will first inv olve a test in a lane where there is fuel. Lynden is still looking for the best place to test a natural gas vehicle : high miles, compatible with the 8.9L engine, and available fuel

. If tests are successful and fuel becomes more available, then we may begi n to purchase natural gas trucks as old trucks are retired

.

- Alex M.
, Chief Operating Officer , Lynden Inc.

We may make a capital investment decision based on various issues, primarily oriented towards meeting a customer’s needs. From a

### 32

financial standpoint, we may take one of two approaches. The RONA approach is a pre

- tax measurement of earnings generated from the
associated net assets. The DCF

- ROI approach
measures after tax cash flow returns on an
associated investment. Regardless of which

ap proach we take, the amount of risk we perceive in making the investment may influence our decision on what minimum return we will require. Companies who are successful over the long term will generally try to achieve a return on invested capital that exce eds their cost of capital, which varies by company.

- Brad M. CFO, Lynden Inc.

T his may mak e sense financially, but it also has to work from a practical standpoint. We don't know for sure if the 11.9L engine will work for us and fuel is not ye t available for our routes.

- Jason J., President, Brown Line

As the model points out, there could be huge potential. We need to look first at areas that have the highest miles and consume the most fuel per unit. The Farm Pick Up scenario is not

necess arily the best choice because we do not know if the 8.9L will be approved for these kinds of weights, so we are looking at other
scenarios

. There is a lot to learn and many factors to consider so we need time to make a good decision

. Lack of infrastructu re means that we are limited to local routes rather than being able to respond to extraordinary events with our go

- anywhere type fleet. We are always concerned with the first generation of any new engine (11.9 L Cummins

- Westport in this case).
As much as we like to lead our industry, the leading edge can be the "bleeding edge" if we
rush.

- B rad W.
, President, LTI Inc.

[ After test driving a CNG 8.9L for 30 miles] , the

power of the truck was good considering it was an 8.9L engine. This wouldn't work for o ur operations, but the new 11.9L should work. The truck was quieter, you could hardly hear it running. It burns clean, the exhaus t was just steam with no smell. The truck was heavy (16,000 lbs. compared to our 13,500 lbs. but

was not set up with lightwe ight components . I wouldn't have a problem with driving these trucks in the future. Frank S.

- Driver

From a maintenance perspective, there are a lot of unknowns (shop upgrades, maintenance technician training, shop tools, life of spark engines , tank iss ues , and safety concerns )

. Biogas is "neat", but without very expensive scrubbers, we can end up with a maintenance nightmare. Diesel is a stable technology and we
understand it. Dave S. Director of Maintenance, LTI, Inc.

I had always thought that natural ga s added a lot of weight , good to clear this up . We wet

hose (refuel on

- site) to reduce man hours at the pump. This makes it challenging to test a truck without committing to a large investment (on

site refueling station) or sacrificing man hours
to ref uel elsewhere. Charlie M., Dir ector of Maintenance, Lynden Transport

Lesson s Learned from this Exercise :

1. Look for lanes with high mileage, high fuel use per unit and available fuel for
vehicle tests.

2. Don't "over spec" the tanks. These are very expensive and heavy, so should be spec'ed with the small est tank practical to get required range.

3. Many dealerships are still learning about natural gas. California dealerships currently have more experience, especially with LNG trucks.

4. M ake sure the tractor weigh t includes full fuel and urea for accurate weight comparison with diesel.

5. 2012

- 2013 is a logical time to invest in natural gas vehicles with the availability of the 11.9L spark ignited engine and infrastructure becoming available on major interstate corrid ors.

### 33



## 6. Who is Currently Using Natural Gas and What Have They Learned?

CNG is being used successfully in short and medium range applications such as refuse
trucks

, straight trucks, and busses. Natural gas
in Class 8 tractors is only beginning to be adop ted as LNG refueling infrastructure and larger natural gas engines are now beginning to
become available. There are currently about 1,8 00 natural gas
Class 8 tractors in operation in the United States, mostly in California, Arizona, and Texas. They primar ily run "return

- to

- base" operations with a 150 mile radius because of limited infrastructure. Most (95%) operate on LNG and some (5%) on CNG. Figure 29 summarizes some of the current users of natural gas heavy trucks.

Business Year Location Natural Ga s Truck Description Commodity Gov't Funding Early Tests

- Prototype Liquid
Carbonic 1994 TX 4 Freightliner LNG Detroit Diesel S60G Prototype Natural Gas Yes

Norcal 2004 CA 14 Cummins

- Westport G X LNG Solid Waste Yes
California

- Based LNG and CNG
Total T rans Services 2008 CA 8 Kenworth T800 LNG Drayage Yes

Ryder Systems
Inc. 2011 CA 182 Freightliner M2 CNG
20 Peterbilt LNG Truckload Y es

Schn e ider National 2011 CA 4 Freightliner M2 CNG and LNG Truckload, LTL Y es

C.R. England 2011 CA 5 Kenworth T800 LN G Full service lease PacLease Truckload, LTL N o

UPS 2011 CA to
NV 48 Kenworth T800 LNG (+11

previously converted trucks) LTL Yes

CNG Outside of California Paper Transport 2010 WI to IL 7 Freightliner CNG 8.9L Truckload, LTL 5 of 7

Ruan 2011 IN, TN,
KY 42 Kenworth T440 CNG biomethane

Full service lease PacLease Raw Milk Y es

Foodliner 2011 IL 6 Freightliner M2 CNG Truckload Food Y es Hribar Logistics 2011 WI 2 Kenworth T440 CNG Fly Ash Yes
Saddle Creek Corp. 2011 FL 40 Freightliner M2 CNG (130 DGE)
40 more in 2012 Truckload, LTL No

LNG Outside of California
TriMac 2008 TX, CA,
AZ 43 to date

14 Kenworth T800 LNG in 2010 LNG & Chemicals for
Natural Gas Producers Yes

Dillon Transport 2009 TX, OH 24 Peterbilt 384 LNG 8.9L Temperature sensitive bulk liqu id tanker Yes trucks
No station
Robert Transport 2010 QC (CAN) 180 Peterbilt 367 and 386 LNG 15L

deployed over the next 3 years Truckload, LTL No

EnviroExpress 2011 CN 18 Kenworth T800 LNG Incinerator Ash to landfill Yes

Heckmann Corporation 2011 LA 20 0 Peterbilt 367 LNG on order Water for Natural Gas
Producers N o

Vedder Transport 2011 BC (CAN) 50 Peterbilt 386 LNG Bulk Liquid and Dry
Food No

Sysco 2011 UT 9 Kenworth T800 Truckload Food Yes
Figure 29 . Examples of heavy duty truck fleets using natu ral gas in North America.

### 34

Initial Tests:

Not surprisingly, some of the f irst businesses to
test LNG are those who work closely with the natural gas industry.

Liquid Carbonic , an LNG producer and distributor in Texas, worked with the National
Renewable Energy Laboratory from 1994 to 1997 in the first test to run LNG in a heavy trucks fleet. This test provided a valuable example showing that LNG cou ld be used in heavy trucks . Operating costs were substantially higher at that time, but improvements to en gines and price of equipment have improved dramatically since
then.

TriMac hauls LNG and chemicals used in natural gas production. In 2008, they began testing three demo tractors in Houston and one in California. They took delivery of 19 more
tractors in 2010; seven haul LNG on thei r California to Arizona lane, one hauls LNG in their Texas lane, and 14 work local lanes hauling chemicals. They now have a total of 42 LNG

tractors.

California

- B ased LNG:

California tax incentives and air quality rules
have spurred the development of LNG infrastructure and adoption of LNG within the state. This has dramatically taken off in the last year with Ryder's natural gas leasing program and a new natural gas compliant maintenance facility in the state and a number of businesses who have taken advantage of state and federal grants.
Ryder System Inc. joined the San Bernadino
Associated Government 's N atural Gas Vehicle Project to purchase 202 heavy duty natural gas vehicles, upgrade three natural gas compliant
maintenan ce shops, and build two fueling
stations. The CNG and LNG vehicles are now available for lease or rent. Ryder has secured lease agreements for 87 heavy duty natural gas trucks. Customers include Staples, Pacer international, and Golden Eagle Distributor s, Inc. Schneider is testing four Freightliner M2's with
8.9L Cummins

- Westport engines for use in California. Three are LNG and one is CNG. The trucks cost an up

- charge of $30,000 to $40,000, most of which was covered by a California Air Resource Board (C ARB) grant. They estimate the cost to upgrade their shop to be compliant with CALOSHA and FEDOSHA requirements for natural gas would cost approximately $1 million dollars per shop bay so they are outsourcing maintenance at this time. They expect an 11%
in crease in maintenance costs over diesel and a
7%

- 10% reduction in fuel economy.

C.R. England is leasing 5 Kenworth T800 LNG

tractors under a full service lease from Paccar.
The tractors will be used in their dedicated California refrigerated carrier oper ations

.

LNG O utside of California:

Dillon Transport is currently running 14
Peterbilt 384 LNG bulk tankers based out of Dallas, Texas and has deployed 10 more in Lodi, Ohio. The Texas trucks haul 80,000 GVW liquid
and industrial materials. Beginning in 2 012 they will be used to haul product to a shingle roofing plant 125 miles away; each truck will make 2 trips per day. The high volume and short range
fits well with the LNG model.

Dillon chose to use the 8.9L spark engine rather than the Westport HD 15L b ecause they are extremely weight sensitive and wanted to eliminate the extra diesel tank and diesel after

treatment system required with the compression

- ignited engine. They will be alpha testing the 11.9L spark ignited engine and think
that this will be the right engine for the 80,000 GVW loads, the 8.9L engine works, but is at its upper limit with these kinds of loads.

They opted for LNG rather than CNG because
the CNG woul d have required twice as much

t ank volume which would have been bulkier,
heavie r , and more expensive. In addition, LNG refueling is as fast as diesel, whereas CNG "fast

fill" stations will only fill quickly to 75%; the remaining 25% is filled as a trickle. They use an

### 35

81 DGE LNG tank and are experimenting with dual LNG tanks for long er hauls.

The main disadvantage of using LNG is that the trucks must get back to the station to refuel every night, "you can't just let a truck sit for 7 or 8 days" because when the fuel warms up it turns to gas, builds pressure, vents out of the

t ank an d evaporates. This is lost fuel. In addition, the tanks work better when they are cold, the first couple of refueling s take a long time as the tank cools and "gets seasoned". For high

- volume, short range applications, LNG works great.

Dillon partnered wi th Clean Energy to build LNG refueling stations in Texas and Ohio. They are currently using mobile refueling stations (3,000 DGE), provided by Clean Energy, until these stations are complete. Clean Energy has LNG plants in Willis, TX and Boron, CA. Fuel is trucked to fueling stations from those locations. Another potential source of LNG is local natural gas utility companies who sometimes store surplus natural gas as LNG during the summer
months.

Refueling the truck is different, but simple. The
tank lo oks like a regular diesel tank on the side
of a truck. It takes about five minutes to refuel. If the fuel drips, it just evaporates

- there is no diesel spill. As a side

- benefit, "no one can steal your fuel" as can be a problem with diesel.

The trucks were purchased from a California dealership because the California dealers were more familiar with the natural gas trucks and Dillon Transport hopes to be able to resell the vehicles more easily in California. They would have preferred to lease until the 1 1.9L engine became available, but leasing was not an option at that time (it is now).

Normally, Dillon does the maintenance for their trucks "in

- house", but maintenance for the LNG
trucks is outsourced to a dealer who is located very near their Texas termi nal. They have run accelerated oil changes (every 10,000 miles) because of the severe duty cycle for these 8.9L engines, but plan to stretch this out to every 12,000 miles. Drivers have had some anxiety over operating the new trucks and this
sometimes ma nifests as maintenance concerns, but they have had no real issues with the
trucks.

They are happy to be using a domestic fuel, believe the national security message is important, and do a lot of work for oil and gas customers in Texas, but ultimately, thi s was a business decision based on the price differential of oil vs. natural gas. It has also added a new dimension to their customer relations as they can help customers save money and meet their sustainability goals. Customers are now asking for it in o ther locations.

Robert Transport is the first genuine for

- hire long

- haul LNG operation i n North America. They currently have 10 LNG trucks in service and plan
to add at least 1 80 more by 2014 . The trucks
are Peterbilt models 386 with the Westport GX (15L) engine and two 119 gallon LNG tanks (116 DGE). The trucks run 600 miles between Mississauga , Ontario and Quebec City. Refueling infrastructure plans include three
sites between Mississauga and Quebec City

. Accelerated depreciat ion for natural gas trucks
is 168 % in Canada for a period of three years and helped justify the higher cost of the trucks. They needed to modify their repair garages in order to perform the maintenance on the
trucks

. Robert specs his trucks over a 10 year lifecycle. The trucks cost close to $225,000. They expect to break

- even with the current fuel prices and save money over the long term as the price differential between natural gas and diesel diverges.

CNG in Close

- Loop Applications:

Outside of California, natural gas use in heav y trucks ha s so far been limited to "closed

- loop " applications

, because LNG infrastructure is not yet available. In these operations trucks travel
out and back to return to a "home" terminal or fueling station to refuel. CNG, however, is being
used in bot h closed

- loop and dedicated lane operations with ranges up to 350 miles. More tanks can provide even larger ranges but are heavy and expensive

.

### 36

Paper Transport currently runs seven Freightliner CNG trucks with the Cummins

Westport 8.9L engine between Gr een Bay, Wisconsin and Chicago, IL. They are currently able to operate in a 300 to 350 mile range with the five 15 DGE CNG tanks mounted in the "behind the cab" configuration, but plan to add
another 40 DGE side

- rail mounted tank to further increase their range. The incremental cost of the trucks is approximately $50,000 and fuel savings are between $1.60

- $2.90 per gallon. Maintenance costs are substantially higher because they are running the trucks significantly more miles tha n what they are designed fo r. Upgrades to the shop were not necessary because maintenance is contracted out to Cummins. They do not consider weight to be an issue, because the day cab is light and the engine is smaller and lighter than what they would normally use. Normally, Pape r Transport would use a more powerful 13L or 15L engine for their 80,000 pound payload. The Cummins

Westport 8.9L ISL

- G engine works well on the flat terrain in the Midwest, but would not be practical with this payload on hills of any significance. They have had no issues with the fuel or trucks and are "getting everything that they hoped." They received a Clean Cities grant for five of the seven truck s that they now operate and plan to add additional trucks in the future. Some will be the 8.9L engines, but most will be the 11.9L engines when they become available. Jeff Shefchik, President

, says that the driving factors in using natural gas are economics (fuel savings), the environmental benefit, and the fact that natural gas is an
Amer ican fuel and sup ports the U.S. economy

.
Ruan , a bulk food transporter, and Fair Oaks Dairy farm recently announced the largest renewable CNG project in the United States.
Ruan is running 42 Kenwor th T440 CNG trucks
with two 40 DGE side

- rail tanks and 55 DGE
mounted bac k of cab (600 mile range), the 8.9L
Cummins

- Westport ISL

- G engine, and Allison
3000HS six

- speed automatic transmission. The

tractors ’ specifications are able to handle the 80,000

- lb gross combination weight, though at its upper limit. The trucks are oper ated under a full service lease from PacLease.

The trucks haul raw milk from Fair Oaks Farms to processing plants in Indianapolis, Indiana, Kentucky, and Tennessee. The Indiana routes are "out

- and

- back", but the Kentucky and Tennessee routes are beyon d the range of the fuel carried on board, so "relay

- operations", where a driver hands off his entire r ig, are required. The southbound driver with a load of milk trades off with a northbound driver transporting an empty milk trailer. The
southbound driver takes the empty trailer back to Fair Oaks Farms, while the northbound driver takes the full load of milk south for de livery to the processing plants.

Federal and state grants helped offset the higher cost of the CNG tractors and the cost of building two C NG filling stations. In order for it to make financial sense, each tractor need s to get abou t 250,000 miles per year. Fair Oaks Dairy personnel preload the tank trailers for the
Ruan drivers to reduce down

- time at the farm.

The tractors weigh about 17 ,000 pounds with
l ightweight disc wheels, brake drums, air tanks, fifth wheels, jacketing, milk tankers , and eliminating the product pumps.

Fair Oaks Farms operates four bio

- digesters that produce methane from cow manure. One of these digester s will supply methane to the new
CNG filling station at Fair Oaks. As part of this project, another filling station was built 220 miles away as part of a State of Indiana effort to
create a CNG corridor on I

- 65

. Saddle Creek Corporation has agreed to purchase 40 Freigh tliner M2 trucks in 2011 and 40 more in early 2012 for their Florida fleet

. The trucks will use two 25 DGE CNG tanks
behind the cab and two 40 DGE rail

- mounted tanks and expect a usable range of 560 miles. President Mike DelBovo says, "because the cost

o f natural gas is less volatile than diesel, it allows us to have more control over our fuel
costs and our customers to have a more stable fuel surcharge".

### 37



## 7. Policy Options to Support the Adoption of Natural Gas Heavy Trucks

1

. Weight Exclusion

. Trucks a re limited to a certain Gross Vehicle Weight (GVW) on a given roadway. Any addit ional weight to the truck (e.g. natural gas fuel tanks) reduces the payload that they can carry. Fleet managers are constantly looking for ways to minimize weight
and maximize payload.

A weight credit for the addit ional weight of natural gas truck fuel tanks would eliminate the

concern a nd financial impact of a diminished payload

. A credit for the empty weight of the
CNG or LNG tanks would be easiest to determine because weig ht differential varies greatly depending on the diesel truck that is used for comparison. This would translate to a slight payload benefit for using natural gas
because the natural gas itself is lighter (per Btu) than diesel and natural gas trucks do not require diesel after

- treatment systems

. This would hold no benefit for operations that are not weight sensitive ( Pick Up and D elivery
modeled here ). Fi gure 31 shows a possible weight credit for various tank configurations.

2. Eliminate th e Federal Excise Tax (FET) for
N atural G as Heavy Trucks : Federa l Excise Tax accounts for rough ly 10% of the incremental cost of a heavy duty natural gas truck. An FET exclusion for natural gas trucks reduces the high capital cost of the truck and make s an investment in nat ural gas trucks much more attractive. This would not impact trucks less than 33,000 GVW because they do not pay FET.
3. Ensure a minimum $1.25

- $1.50 price differential between diesel and natural gas

. A

p olicy that maintain s this critical price differential would ensure that the price spread between diesel and natural gas does not narrow below a point where it is not profitable for most fleets to invest in a fleet of natural gas trucks. ( Figure 28). It would also reduce concern and risk associated with a lar ge capital investment in natural gas vehicles followed by a narrowing in the price differen tial

. This policy c ould be a n extension of the $0.50/D G E tax credit , although this would need to be guaranteed for at least 5 years to ensure confidence. A more e ffective approach could take the form of a "feebate" where a "fee" on oil pays for a natural gas "rebate"

- this c ould be written to take effect only if the price differential between diesel and natural gas f alls below the sensitive $1.50 per DGE level

.
4. Tax Credits and Grants for Infrastructure and
Vehicles. A tax credit for the additional cost of a natural gas tractor reduce s the high cost and associated risk of investing in natural ga s. Tax credits are not necessary to make an
investment in natural gas attractive for high mileage fleets if the current price differential between natural gas and diesel persists. However, an 80% tax credit (as p ro po sed in the
NATGAS Act HR 1380 and S 1863 ) will accelerate the adoption of natural gas by high mileage flee ts and make it attractive to lower mileage fleets.

T he high capital cost to upgrade maintenance shops to be safe and complian t remain s a financial and operational barrier

. There are currently very few natural gas compliant shops
available to service natura l gas vehicles and it is not always practical or cost effective to travel long distances for ma intenance. A tax credit for upgrades to natural gas maintenance garages would help mitigate this issue.

6 . Access to Capital. The incremental cost of natural gas trucks is high because of the specialized tanks required. Most fleets have limited access to capital to make this
investment. Banks may be unlikely to lend for new technologies like natural gas vehicles. In the absence of grants and tax credits, low
in terest loans would help fleets overcome this
hurdle.

7 . Biogas Support. The environmental benefit of using biogas (farm waste, wastewater treatment, and landfill gas) natural gas as a transportati on fuel arguably ju s t ifies additional

### 38

government support. Bo x 2 discusses biogas in more detail; Box 3 discusses other alternative fuel technologies.

Biogas is one of the least expensive renewable sources of energy. It is cheaper than gasoline and diesel, but more expensive than fossil sourced natural gas due to th e high cost of purification. It is not likely to be able to compete with low

- priced fossil sourced natural gas prices without monetizing its environmental benefit. Again a "feebate" could be used where a fee on fossil sourced natural gas and/ or oil
would pay for a rebate on biogas to make it cost competitive with fossil sourced natural gas.

Figure 30 shows the es timated impact of policies on the minimum number of annual miles per truck to be economically attractive.

- With no policy changes, natural gas mak es sense for hi gh mileage trucks (>90,000 miles/year ). - Natural gas becomes att ractive for lower mileage trucks (4 0,000

- 50,000 miles/ year) with

a $0.50 per D GE tax credit for natural gas

.

- A Federal Excise Tax Exclusion for natural gas
vehicles r educes the minimum number of miles to between 30,000 and 50,000

.

- A weight exclus ion for the empty weight of
CNG and LNG tanks would lower the minimum number of miles to includ e trucks traveling 53,000

- 63,000 miles per year, with a larger benefit for CNG

. This would not benefit operations that are not weight sensitive.

- Combined, these policies w ould make natural gas attractive for trucks traveling 25 ,000 to 35,000 miles/ year

.

- Alternatively, an 80% tax credit for the additional cost of a natural gas truck makes a spark

- ignited na tural gas truck attractive for low mileage fleets (those traveling around 15 ,000 miles/ year). It also becomes attractive for trucks with higher power requirements (HDPI 15L) traveling at least 25 ,000 mile s per year.

Fi gure 30. Estimated Impact of Suggested Policies on the Minimum Number of Annual Miles per Truck to Achieve 20% ROI. Assumes $1.50 price differential for base case (Diesel $4.00/ gallon; Natural Gas $2.50 / DGE) . Farm Pick Up and Line Haul are weight sens itive operations. Pick

- Up and Delivery is not weight sensitive.

### 39

Figure 29. Proposed Weight Credit for Natural Gas Fuel Tanks (empty weight).

Box 2. Renewable Natural Gas: Bio

- methane and Biogas. Tank Configuration Weight Credit for Empty Tank CNG (5) 15 gallon back of cab (75 DGE) 1,650 lbs CNG (2) 40.5 gallon side rail mounted (81 DGE) 1,200 lbs LNG (1) 119 gallon side rail mounted (60 DGE) 800 lbs LNG (1) 150 gallon side rail mounted (75 DGE) 1,000 lbs

Biomethane or "biogas" is very attractive from an environmental perspective. Methane that would otherwise enter the atmosphere as waste from farms, landfills, and wastewater facilities can be used as a fuel in natural gas engines, thereby removing a methane source and displacing a fossil fuel sou rce at the same time. Methane is 25 times more potent as a greenhouse gas than CO 2 , so using it as a fuel dramatically reduces greenhouse gas emissions. It also allows fleets to partner with customers' sustainability initiatives by using their waste as a fuel.

Biogas, like fossil sourced methane, can be used in natural gas vehicles. Biogas has been used successfully in natural gas powered refuse trucks (landfill gas) for many years and more recently in trucks hauling milk (dairy farm waste). The perfect application for a biogas fueled truck is a return to base fleet that returns to the site of biogas production. As with any fuel, fuel quality must be ensured in order to avoid maintenance problems. Various processing techniques are used to "scrub" the biog as and remove impurities in order to bring the fuel to above pipeline quality. There is no warranty issue with using biogas in a natural gas engine.
Biogas is less expensive (per Btu) than other renewable fuels (solar and wind), but more expensive than f ossil natural gas. A program called "RNG

- 10" under development by Clean Energy is designed to bring bio

methane to market at a more competitive price. Fleets willing to pay 10 cents more for natural gas will get credit for fueling their vehicles with biog as and cover the cost of biogas production elsewhere. This allows fleets that are not able to refuel with biogas directly to indirectly fuel their fleet with renewable biogas and reduce GHG emissions by 80

- 90%. This program can easily transfer to an op tional surcharge for shipping customers interested in "green transportation" for their goods. Figure 31. Proposed Weight Credit for Natural Gas Fuel Tanks (empty weight).

### 40

Box 3 . Other Alternative Fuel Technologies. OTHER ALTERNATIVE FUEL TECHNOLOGIES :
Hydrogen is considered the ultimate zero emissions, domestic, and renewable fuel. It can be generated by running an electrical current through water, spli tting it into water and hydrogen. The electrical current can come from renewable sources of energy (solar, wind, landfill gas, or photosynthesizing microbes) and is sometimes thought of as a "battery" for its ability to store intermittent renewable source s of energy to be used later as fuel. More commonly, is it made from natural gas in a process called "steam

- reformation" in which high pressure steam reacts with natural gas to form "synthesis gas" which then reacts with water to form hydrogen. When bur ned as a fuel, hydrogen emits only oxygen, water, and very few NO
x emissions. However, the high cost of production and vehicles means that hydrogen is at least a decade away from being commercially viable as a transportation fuel.

Hydrogen, as a transporta tion fuel, is faced with similar, or even more challenging issues than natural gas. 1.) It is less dense (Btu/gallon) so must be stored at even higher pressures (10,000 psi) or colder (

- 432  ̊ F) temperatures at high pressure in heavier, more expensive tan ks. Hydrogen has the potential to be stored without tanks as a Polymer Electrolyte Membrane (PEM) where hydrogen atoms chemically bond to materials for storage, but this technology is still in the research and development phase. 2). It faces similar
refu eling infrastructure issues. 3.) It is more flammable than natural gas, so faces even more challenging safety issues.

Natural gas is considered to be the "technological bridge" to hydrogen because advances in natural gas vehicles, tanks, refueling infra structure, safety solutions, workforce training, and business alliances directly or indirectly apply to hydrogen, lower the hurdles that must be overcome, and move it closer to being economically viable. For example, natural gas engines can burn a compr essed hydrogen/CNG blend with only minor modifications; tanks used to store hydrogen use the same base technology as natural gas CNG and LNG tanks; shops that are upgraded to comply with natural gas safety guidelines, are well on their way to being hydroge n compliant as well; natural gas refueling infrastructure has the potential to be modified to fulfill hydrogen refueling needs and paves the way for similar permitting and business relationships; and as people begin to understand natural gas, hydrogen beco mes easier to accept.

Hydrogen is not a near

- term solution to our transportation energy needs, but will become economically feasible more quickly because of the technological and infrastructure advancements that will come with a transition to natural gas.

Hybrid

- Electric Vehicles work best for low speed operations with frequent stops or engine idling such as in

city pick

- up and delivery vehicles and service vehicles. They are not a practical solution for on highway heavy trucks because fuel efficiency gains are minimal at high speeds (> 35

- 45 mph) with little stop

- and

- go.
During braking, energy is captured and stored in the batteries (or in the case of hydraulic hybrids, stored as hydraulic pressure). This energy can be used exclusively to power the truck d uring take

- off, power electrical equipment without engine idle, and to supplement diesel power during acceleration. This "regenerative braking" also extends brake life.

Hybrid tractors are usually used for applications below 33,000 GVW, but in some cases have been approved for up to 54,000 GVW. The incremental cost of a hybrid delivery tractor is similar to or slightly less than a natural gas tractor. The main benefit comes from a higher fuel economy (15

- 30%) compared to diesel in stop

- and

- go situations.
Payback on a hybrid vehicle depends on the amount of stop and go, time spent at low speeds, and time spent at idle, but under the right conditions, a hybrid truck can be a better alternative than natural gas.

### 41



## 8. C onclusions

This is an exciting tim e for heavy

- duty natural gas trucks.

1. Refueling infrastructure is finally underway . Clean Energy and Flying J

- Pilot have partnered to build a foundational grid of LNG fueling stations for heavy

- duty trucks along major interstate corridors

, with $300 milli on dollars invested in this projec t. Plans are in place to have 80 new stations opened along coast

- to

- coast corridors by December 2012. They anticipate having an LNG filling station every 200

- 300 miles on major highways by June 2013 and 300

- 400
stations s erving all regional routes by 2015.

2. The price spread between natural gas and diesel has reached a tipping point where natural gas has suddenly become profitable to a large number of heavy truck operations. H igh m ileage fleets (those traveling 60,000

- 9 0,0 00 miles per truck per year) see an attractive ROI from fuel cost savings, even when considering maintenance costs, fuel economy penalty, loss in payload from additional weight of the tanks, and the higher cost of the

tractor . This is true for both CNG and LNG trucks, but only for the lower cost spark

ignited engines. Existing compression

- ignited engines are restricted to very high mileage fleets (1 4 0,000 miles per truck per year).

3. The "game changer" 11.9L spark

- ignited engine will be available in the firs t quarter of 2013. This engine will fit a much larger number of class 8 truck operations than the existing 8.9L spark engine which was designed for refuse trucks and transit busses. It will not need the heavy diesel after

- treatment technology and will of fer a much more cost effective, lighter weight, higher fuel capacity alternative to the existing 15L compression

- ignited engine. Also in 2013, the Navistar 13L dual

- fuel engine will be entering test phases. However, a handful of barriers still remain

to t he mainstream adoption of natural gas by heavy truck fleets.

1. Refueling infrastructure is still limited compared to diesel. Even with 300 new LNG refueling stations, fleets will be limited to routes where fuel is available. This means fleets using dedicated natural gas engines must sacrifice their ability to "go anywhere" to meet customer needs.

2. Natural gas trucks are substantially more expensive than a diesel truck

. This is primaril y due to the cost of the specialized CNG and LNG fuel tanks. This is a signi ficant barrier to fleets and owner

- operators with limited access to capital.

3. The high capital cost of upgrading a maintenance shop remains a factor that
can make an investm ent in natural gas
truck s considerably less attractive. Full
service leases or main tenance packages are available, but this is not always practical for fleets in rural areas and is generally less desirable than performing maintenance "in

house. "

4. Operating range is limited by the tanks that can fit on a truck at an economical price . This is generally the 75 DGE configuration (LNG ) and 40 DGE side rail or 75 DGE back of cab (CNG). Although it is possible to fit 150 DGE (LNG, "spark" engine), 143 DGE (CNG, "spark" engine), and 116 DGE (LNG HDPI 15L) on a truck, the high cost of the additi onal tanks decreases the financial payback substantially. This means that until infrastructure is widely available, fleets will be limited to routes where fuel is available and centrally

- fueled operations.

5. LNG use is limited to operations where trucks a re refueled every 1

- 2 days so that venting of fuel is not an issue. This i s not likely to be a large problem because natural

### 42

gas trucks do not make financial sense for
low mileage fleets.

6. Fleets are apprehensive about new "high risk" technology. It takes time to learn about and carefully test a new kind of truck and fuel

. Despite these barriers, i f oil prices remain high and natural gas prices remain low and stable, then high mileage fleets are likely to initiate tests of natural gas trucks where infrastr ucture is available in the next few years, even without government subsidies. If those tests are successful, then they will begin to purchase new natural gas trucks as old trucks are retired. Tax incentives can help accelerate this transition and make na tural gas attractive to lower mileage fleets.

1. A weight exclusion for the additional weight of natural gas tanks would
eliminate concern and cost associated with a loss of payload.

2. A Federal Excise Tax exclusion for natural gas trucks would reduce the
inc remental cost of a natural gas truck by around 10%.

3. A policy that ensures a $1.25

- $1.50 price differential between natural gas
and diesel would ease concern over the risk of a narrowing price spre ad and maintain a critical price difference for fleets who invest in natural gas trucks to achieve a desired ROI

.
4. Tax credits for the additional cost of natural gas vehicles would help accelerate the transition to natural gas and make natural gas attractive to lower mileage fleets. This could be paid for via fu el tax.

5. Tax incentives or grants for upgrades to maintenance shops that service natural gas vehicles would help alleviate the high capital cost and practical issue of being abl e to maintain a fleet of natural gas vehicles. 6. Low

- interest loans would help fle ets with limited acces s to capital make the investment in natural gas trucks.

7. Support for biogas would help make
this renewable, low carbon fuel cost competitive with fossil sourced natural

gas.
In summary, c onditions are right for many high mileage fle ets to begin investing in natural gas in the next few years as refueling infrastr ucture expands, more engine options become available, and the price differential between natural gas and diesel remains persistent.

T he most attractive fleets are those with high
miles (>60,000

- 9 0,000 miles/truck per year),
that have fuel available within a 350

- 450 mile operating range, and that have operations compatible with a spark

- ignited engine (7.6L, 8.9L, or 11.9L) or very high miles (>14 0,000 miles per truck per year; 15L HDPI).

This is likely to be a gradual process that
accelerates in Q1 2013 as two of the primary
barriers : 1.) lack of infrastructure and 2.)
limited engine options, see major breakthroughs. Where refueling infrastructure is available, fleets are lik ely to initiate tests of natural gas trucks and if these tests are successfu l (i.e. profitable and reliable ), then
fl eets will begin to replace older diesel trucks with natural gas trucks through attrition

. Policy incentives that address remaining barri ers: 1.) the high incremental cost of natural gas trucks, 2.) uncerta inty over the cost and requirements of upgrades to maintenance shops, and 3.) the additional wei ght of natural gas fuel tanks would help mitigate these
barriers and acce lerate the transi tion to natural

gas by heavy truck fleets.

Policy that is timed to coincide with the Q1
2013 release of the 11.9L engin e and expanding refueling infrastructure would have the greatest impact by removing uncertainty over potential future policy and adding to the growing momentum of interest in natural gas as a transportation fuel

.

### 43



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### 47



# App endix

Figure A

- 1. Fire Codes Related to Natural Gas Repair Garages and Fuel Systems.