How will Coronavirus affect the Natural Gas Vehicle Industry?

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March 22, 2020

This is another edition of the weekly NGV World Podcast. Thank you all for your comments and likes over LinkedIn, I’m still excited about this new format where we have Top News, Natural Gas Price Report and also my favorite NGV Content of the week.

Please don’t forget to give me your feedback, get in touch, ask me questions all this you can do it on my website as well as revisiting all previous podcast episodes. This podcast I recommend you to look for it on your Spotify app, Apple podcast or google podcast app to be able to subscribe and get the next episode automatically on your phone while you sleep.

It’s been a very dramatic week with the overwhelming European outbreak of the Coronavirus but still a very interesting week for NGVs.

We will be covering a very important NGV Association request to the Environmental Protection Agency in the USA, an interesting move from the company Clean Energy Fuels and much more interesting news from India, the USA, and Spain.

I will share with you some material on how Coronavirus is affecting the transportation industry around the world.

We will have our regular GAS PRICE OVERVIEW section where we will analyze the correlation between natural gas, oil prices and liquid fuel prices, and also a quick review of what’s happening with the offer and demand at the end of this week.

And of course, we will have our Great NGV Content of the week where I’m excited to show you Volvo Trucks, LNG Deployment and a great video from our friends at USGAIN.

Let’s go into the news

News of the Week

U.S. industry asks EPA to issue more incentives for natural gas trucks

Natural Gas Vehicles for America (NGVAmerica), the Coalition for Renewable Natural Gas, the American Public Gas Association, and the California Natural Gas Vehicle Coalition submitted joint comments to the EPA urging it to consider developing strong incentives for medium and heavy-duty natural gas vehicles as part of the agency’s Cleaner Truck Initiative. 

EPA unveiled its initial plans for the program in an Advance Notice of Proposed Rulemaking published in January. That notice did not include regulatory text but requested input on future emission standards and incentives for cleaner trucks.

They urged EPA to recognize the potential benefits of meeting much lower NOx standards. In this regulatory undertaking, the primary focus is on lowering the standard for NOx while also addressing real-world emissions and certification test cycles,” the coalitions said.

Given that natural gas vehicles are available today that meet these standards and are likely to have a significant emission advantage for many years to come, they urged EPA to include strong regulatory incentives in its program to reward manufacturers that are selling lower emitting engines today. 

They also encouraged the Administration to work with Congress to consider support for extending the alternative fuel tax credit for natural gas and fixing the harmful excise tax on new trucks that penalizes cleaner trucks. 

This incentive originally expired on December 31, 2017, but was retroactively extended through December 31, 2020.

These are just a few of the suggested changes they recommended. Congratulations to our Friends Daniel Gage and Johannes Escudero for submitting these very organized requests, I’m confident that the right incentives will be put in place.

Keep up the good work guys.

Clean Energy To Repurchase Up To $30 Million Of Stock

When a company has excess cash at the end of the day, there are only a few things that it can do with it. They can save it for a rainy day, invest in new property and equipment for the business, acquire another company, retire debt, issue a one-time special dividend to shareholders, or buy back shares of their stock on the open market. A “stock buyback program,” which can also be known as a “share repurchase program,” is when a company buys its shares back from current shareholders through the open stock market. Buyback programs can be seen as a signal that a company believes its shares are undervalued and is often viewed as an efficient way to put money back into its shareholders’ pockets.

Clean Energy Fuels Corp. (CLNE) today announced that its Board of Directors has approved a share repurchase program for up to $30 million of the Company’s common stock with a pre-arranged stock repurchase plan under Rule 10b5-1 of the Securities Exchange Act of 1934 (“10b5-1 Plan”).

The Company has delivered continuous and sustainable improvements to its operating and fiscal management resulting in a dramatically enhanced balance sheet.

“Our decision to launch a stock repurchase program reflects the confidence that we have in the company’s current financial stability and our potential for future growth,” said Andrew J. Littlefair, Clean Energy president and CEO. “We have a great team that is working hard every day to further expand the use of our Redeem™ renewable fuel to fleets across the country. Redeem grew by 30% in 2019 and as we indicated in our latest earnings report this week, we anticipate that the acceptance of the ultra-clean fuel by additional customers to continue.”

Repurchases under the repurchase program may be effected from time to time through open market purchases, privately negotiated transactions, structured or derivative transactions, including accelerated share repurchase transactions, or other methods of acquiring shares, in each case subject to market conditions, applicable securities laws, and other relevant factors. Repurchases may also be made under Rule 10b5-1 plans. The repurchase program does not have an expiration date, and it may be suspended or discontinued at any time.

Kudos to Clean Energy for this interesting move!

Tata continues investing in NGVs this time with its first LNG Bus Model

Engineered and built by Tata Motors, the Starbus LNG is the first passenger vehicle with an integrated LNG system developed for the Indian market. Apart from the model delivered to LNG Petronet Limited, Tata Motors also offers 36-seater Starbus LNG with 2×2 layout (available in AC and non-AC options) in the ICV segment (intermediate commercial vehicles), and 40-seater with 2×2 layout and 56-seater with 3×2 layout (available in non-AC option) LNG Starbus in the MCV segment (medium commercial vehicles).

The fuel capacity of the LNG buses is up to 2.5 times more than CNG ones and can operate up to 600-700 kilometers in one tank fill.

Indiana’s largest biogas plant opens, will supply LNG to Midwest fleets

Kinetrex celebrated the completion of the Indy High BTU plant at the Indianapolis South Side Landfill. It will convert landfill methane gas into approximately 8 million gallons of pipeline-quality renewable natural gas each year. Indy High BTU is the largest biomethane plant in Indiana.

Kinetrex recently announced a six-year agreement with UPS to supply the global shipping company with up to 52.5 million gallons of LNG for its Class 8, LNG-powered fleets in Chicago, Toledo, Columbus, St. Louis and Indianapolis.

Spain’s first station of the Redexis/Cepsa strategic alliance is fully operational

How is Coronavirus affecting demand of Natural Gas and CNG

First of all, I will comment that “all of the extrapolations about global oil demand through the next three quarters are premature until we know how this outbreak proceeds.” The “duration and extent of the decline is as unpredictable as the spread of the coronavirus.”

Let’s see how have affected the fuel industry: Over the four-week period ended Feb. 28, U.S. jet fuel consumption was down 5.5% from the same period a year ago, according to the Energy Information Administration. Motor gasoline consumption was up by 1% for the same period, but distillate demand, which is mostly diesel, fell by 3.8%.

The impact of coronavirus on public transportation

In the case of public transportation, it is starting to reduce demand and one of the reflections can be seen with the Metropolitan Transportation Authority, State of New York MTA Press Conference on March 9th

The impact on taxis and small fleets

Also, Thailand’s taxi and tuk-tuk drivers say passenger traffic has dropped 80% due to coronavirus outbreak. This is what the demand for natural gas fuel could drop in a worst-case scenario for CNG station owners. See the video down below:

Also, NYC cab drivers and Uber drivers are starting to feel the consequences. And it’s getting worse.

Gas Price Overview:

(For the week ending Wednesday, March 11, 2020)

Price Overview:

  • Excess production, depressed demand, and weak prices: this sums up the natural gas market right now even better than it sums up the oil market. Unfortunately, with the China coronavirus outbreak on track to become global, things for gas may well get worse before they get better. And while oil is suffering, at least it’s got a cartel to attempt to balance things out. Gas doesn’t, putting it at an even greater disadvantage.  
  • The global oversupply is evident.
  • In Europe, the benchmark has lost 27 percent since the start of the year
  • In the United States, Henry Hub futures prices are currently below $2 per million British thermal units until July, when the futures price tops $2 per mmBtu. According to Richard Soultanian, president of energy consultancy NUS Consulting Group, prices in the U.S. could weaken further, to $1.50-$1.60 for near-month contracts, before they begin improving later in the year.
  • Yet demand could pick up sooner, at least in some parts of the world and notably the U.S., according to NUS Consulting Group’s Soultanian. He expects increased electricity consumption during the summer season will provide some relief for U.S. gas prices as will gas exports to Mexico. The country is one of the biggest buyers of U.S. gas. With its demand growing as its population grows, Mexico will remain an essential outlet for surplus U.S. gas for lack of enough domestic production.

The Prices

  •  The Henry Hub spot price rose from $1.80 per million British thermal units (MMBtu) last Wednesday to $1.92/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the price of the April 2020 contract increased 5¢, from $1.827/MMBtu last Wednesday to $1.878/MMBtu yesterday. The price of the 12-month strip averaging April 2020 through March 2021 futures contracts climbed 8¢/MMBtu to $2.238/MMBtu.
  • The net withdrawal from working gas totaled 48 billion cubic feet (Bcf) for the week ending March 6. Working natural gas stocks total 2,043 Bcf, which is 64% more than the year-ago level and 13% more than the five-year (2015–19) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, fell by 62¢/MMBtu, averaging $3.69/MMBtu for the week ending March 11. Because crude oil prices generally set the ceiling for natural gas plant liquids (NGPL) while natural gas prices set the floor, and crude oil prices fell rapidly while natural gas prices held steady, heavier NGPL saw larger price declines (natural gasoline, butane, and isobutane fell by 20%, 22%, and 29%, respectively) than lighter NGPL (ethane fell by 5% and propane fell by 9%).
  • According to Baker Hughes, for the week ending Tuesday, March 3, the natural gas rig count decreased by 1 to 109. The number of oil-directed rigs rose by 4 to 682. The total rig count increased by 3, and it now stands at 793.

NGV Content of the Week

Here are the 3 pieces of Great NGV content of the week mentioned in this week’s podcast episode:

  • Volvo Trucks – Climate Wise Edition – Every improvement matters,
  • PG&E, LNG and CNG deployment, Redding,Ca. 2016
  • U.S. Gain – The Future of Fuel

We’ll meet again next week!

Stay Safe…

1 Comment

  1. Erick A Cruz says:

    Amazing info 👌

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