Webinar on Natural Gas Vehicle Technology, Best Strategies, and Lessons Learned (Text Version)

This is a text version of the video for Webinar on Natural Gas Vehicle Technology, Best Strategies, and Lessons Learned presented on Nov. 20, 2014.

COORDINATOR: Welcome and thank you for standing by. At this time all participants are in a listen only mode. During the question and answer portion you may press star then 1 from your touch tone telephone. Today's conference is being recorded. If you have any objections you may disconnect at this time. Now I'd like to turn the conference over to Mark Smith. Sir you may begin.

MARK SMITH: Great thank you very much. Good afternoon everybody and thank you for joining us in our second of a series of webinars on natural gas vehicles and thank you for Dr. Jeffrey Seisler who's hosting and will walk us through the second of a three part series about NTVs past and pro-log.

For those of you who don't know Jeff he's been in the business for more than 30 years. He was the first director of the of the NDV coalition now NGV America here in Washington, D.C. He was the first director of the European Natural Gas Vehicle Association and he's the founder and past president of NGV Global.

And through all those efforts Jeff has left his mark on a number of areas including legislation and regulations from the U.S. Congress, the European Commission and Parliament and the United Nations harmonized regulations on vehicles.

Jeff is also a friend of Clean Cities and DOE has worked very closely with our program for many years. And most recently he and Marcy Rood Werpy have worked on the training workshops for natural gas vehicle. Again Jeff is a strong proponent of Clean Cities' model. He speaks to international audiences not only about NGV technology but about the importance of the Clean Cities network for building a sustainable NGV industry. So Jeff thank you so much for joining us here for part 2 and the floor is yours.

JEFFREY SEISLER: Thank you very much Mark. I appreciate the very nice introduction and welcome to everybody who's on the webinar. This is as Mark said the second series of three showing up first in the acknowledgement. And by the way the slides are all numbered in the upper left hand corner except for a couple of them. So if you want to refer questions to any of these please look to the upper left side and we can refer back to the various slides.

First I want to thank the Department of Energy for their support and both the Clean Cities group and the international element of Department of Energy and thanks to Marcy Rood Werpy and Dan Santini for their personal support and enthusiasm for all this work and a special thanks to Dan Santini for his rigorous and dedicated very intellectually challenging involvement in working with me and refining this presentation and spending a good amount of time to make sure that we have everything the way it's supposed to be.

The instruction dynamics on the framework for this presentation, as I said it's part of a much larger presentation which has broken into three parts and essentially the model to this thing is shown here on slide 3 where we focus in part on politics, polytechs, standard regulations, technology politics but all really on how it impacts the shareholders and impacts the market. And from there we try to get feedback on how the policies and how the activities are working and from that try to improve decisions and change directions and strategies in the marketplace.

So this is just an overview of this presentation. First one was on October 6 and that was looking at the background to the success of NGV markets. We did a worldwide review and looked backwards and forwards in terms of what we hoped to see in the market, also looked at standards and regulations.

Today we're focusing on NGV technology, best strategies and lessons learned. And the third one December 15, we're going to be looking at role of government policy making and strategic process, infrastructure concepts and also best strategies, what kind of lessons we've learned.

Okay. So today we're going to focus on technology. Technology availability and the transparency with controlling fuel vehicles is absolutely one of the key requirements for success for natural gas vehicles and there's actually a long history for natural gas vehicles. If you look at the lower left you see the first internal combustion engine using one cylinder.

It was actually running on gas that was made from coal and that's the way natural gas was processed in the very beginning of the gas industry. And you can see the fellow in the middle of the slide actually making his own methane and steaming gas.

And then as we move forward some historical pictures from Ford, the first Ford NGV concept which was really the first OEM concept vehicle back in 1983. And then more practically we had the first dedicated Crown Victoria and 40 of those went out to field test and they were released to the NGV stakeholders for two year trials including me. I used to drive one around Alexandria, Virginia when I lived there.

Now talking about OEMs and we're talking about original equipment manufactured vehicles. One of the benefits of natural gas vehicles is that there are more suppliers of more different models of natural gas vehicles than any other of the alternative fuel vehicles. It includes everything, LPG, obviously hydrogen and electric vehicles being the principal ones.

Total worldwide, there are over 150 OEMs producing vehicles, a wide range of light duty, medium duty, heavy duty trucks and buses. The Europeans as a confident probably produce the most and have the most choices available to customers. And if you look down at the USA we have 40 OEMs listed but in the United States most or many of them—particularly the light duty vehicles—are qualified vehicle modifiers and they're not produced directly online. But also the same process has been very successful in Europe as well.

So it's a technique that as you know is used before there's enough market to demand to warrant full market production on the line. Very often this is a very functional way of getting vehicles into the market that are fully warranted.

Now getting these vehicles into the market and having the market demand coupled with the supply has really been a bit of a challenge. And what this slide basically shows is on the red is we work in the industry to advocate to customers that they should be looking at natural gas vehicles for all the good reasons, economics, environment, safety and good supply of natural gas.

So people get excited. In the past they have and start to look for natural gas vehicles. But in the first instance there were really only retrofit suppliers available. And this has also happened very much in the United States. If you look at the far left hand side—I think that's the late 1980s or so—this is exactly what happened. But then all of a sudden the OEMs become interested.

They see the potential interest and some of the direct interest and see the retrofit people of supplying vehicles. So then they start to produce vehicles but the customers are at some point looking to go away from retrofit vehicles to look at OEMs without those being available the interest starts to wane. But because it takes numbers of years for OEMs to get their models in the marketplace they're just getting all their models together. They look around. Where's the interest?

So their interest may lag a little bit and then when the public has already seen yes, there's a lot of OEMs, they get interested again and these two curves don't quite meet. And part of this process—and this has happened in a number of different places—is to bring those curves together so that the supply side is more consistent with the demand side.

And this chart tells the same kind of story. I think we're missing some of the pieces here. Yes, there they come. Okay. Basically what the message is here is if you look at the bottom we've gone through various conversion generations going back to the United States to the late 1960s and all of those have been retrofit which is in the left hand side of this box. If you look at the dotted line going down the middle on the left you have conversions, on the right you have OEMs.

So the industry starts with the retrofit typically—at least historically that's been the case—and they start to get more and more expensive as we change and the generations become more sophisticated in technology. The storage cylinders, the cylinders have become more sophisticated, more lightweight, holding more fuel but there's a price to be paid there.

So the curve, the financial curve starts to go up but so to those the safety and the reliability of these vehicles. Still there in this section of conversions there's rarely been any vehicles that maintain the warranty because you're now taking OEM vehicles, changing them and the OEMs really don't want to warranty these vehicles anymore because they've been substantially changed.

So at some point we then cross over where we start to see a lot more OEMs. And as we see more of the factory built vehicles then the concept here is that the price will begin to drop as there is a higher number of vehicles made and that's usually the case.

So we're seeing Europe, Japan, South Korea, North Korea - North America and Australia, they're all higher up on the OEM curve and we see the rest of the world coming slightly behind but that's beginning to change and it's changing fairly rapidly.

For retrofit manufacturers there's still quite a number of retrofits particularly in Italy where the industry got started in the mid 1930s. There's some very high quality retrofit companies in Europe and also of course in the U.S. And this is a survey that was done now back in 2011, 2013 in between. So these numbers have changed but they're generally provided to give people an idea that there still are a lot of places that are dominated by retrofit as opposed to original equipment manufacturer vehicles.

Now where these things cost, it's interesting to look worldwide and also compare to the United States on the average conversions for light duty vehicles. This isn't for heavy duty vehicles. And you can see on the far left Japan is amongst the highest cost for convert vehicles. If we put the United States on this chart as well they'd be in that same category as Japan. And this is because the good news is that the OEM vehicles that are supplied through qualified vehicle modifiers, they have to conform with the EPA regulations and that does make a more sophisticated vehicle and so the cost has gone up.

Hopefully as OEMs become more involved with building natural gas vehicles as the other chart showed those unit costs will still come down. But on the average we're looking at vehicle costs roughly approaching $4000 across the globe as an average. But you can see if you look towards the right side, you can see Iran, Argentina, Brazil. The costs are much lower than the United States. Very often they're using steel cylinders. Sometimes the quality varies in different locations so the costs are less than what we see with full compliance for U.S. converted vehicles and OEM vehicles.

The question comes up when we make these, when these vehicles are produced, which is best. It's to reduce the fuel variation, to enable optimized engines or do we adapt the engines for fuel variation because I'm talk about fuel in a little bit. The answer is yes you have to do both because in areas of the world where fuel composition is widely varied adaptive engine technology would be very useful so it can conform to the changes in the BTU content of the gas.

In areas where relatively stable and high quality gas exists the engines can be optimized for these local conditions. And so long as they're not driving into areas with lower quality gas this won't be an issue. That's very often the way some of the buses working in metropolitan areas can be tuned actually to the type of gas that's available. Not as large an issue in the United States as it is for other parts of the world where region by region, sometimes country by country, the gas composition's going to change.

So what we're going to be looking in more detail with that broad overview of - and looking at NGV technology I'm going to go into a little more depth about gas composition and quality. I like to use the term composition as opposed to bad gas and good gas because we're talking about what the components are in the gas and how that affects the engines.

We're going to talk about engines and vehicles by fuel and dedicated engines, some of the longer discussion on dual fuel ahs been removed from this particular presentation because of time. However if there are questions about dual fuel we can address those as well. CNG storage technology which is absolutely critical as well as their systems and equipment that goes along with the cylinders, the pressure relief devices, pressure relief valves, etc., and then we'll talk about fueling systems as well and all this is obviously for the technological twist.

So gas composition, I'm going to talk about CNG, LNG and bio-methane, not the stuff that these guys are brewing right there. I use this picture to talk about the framework for methane CH4 and natural gas and with the emphasis on composition and quality no matter where in the process the natural gas is. So we're starting at the top. We're looking at the production storage for methane natural gas. And here we're talking also about biogas as you can see in that - the row below the methane natural gas.

We're lucky to have a choice of compressed natural gas much of which is fossil fuel, liquefied natural gas which is cryogenic and biogas which we're very grateful to have a renewable opportunity for natural gas as well. Typically and historically LNG and biogas have been put into the pipeline, blended in and injected into the pipeline but it can also be used directly as a vehicle fuel for its - where it's produced.

And CNG typically is only going in as a vehicle fuel although it also has industrial applications. So the gas composition at that point represents one set of compositions. And then once we put it into storage systems start dispensing it various types of vehicles we do see changes in the composition because it's going through some mechanical processes and that's something that has to be considered as we consider the CNG and it has to be considered particularly for liquefied natural gas.

So the requirements and the potential for gas composition is very different depending upon your point of view and which is of the stakeholders group that you have to represent whether you do happen to represent. In the case of energy distribution companies, utility companies, gas companies, they all require pipeline quality gas which is a fairly high methane content and try to get some of the more deleterious elements out of the natural gas.

For the retailers of the automotive methane fuels, the people who supply gas CNG and LNGs stations they don't want any water. There should be no oil pass through as does happen with compressor stations too often. And then there's other stuff. We also find things. When a vehicle has been worked on you may find little fractions of metallic parts and other things that come along that get passed through in the gas. So the retailers of the fuel have to be comfortable with very clean quality fuel.

The manufacturers, they have also a need for consistent clean and very high quality gas and that's consistent with what they think about diesel and gasoline and well. And because natural gas is what it is—natural—there are variations as we're going to see in the next upcoming slides. To drive a customer you want the best quality gas in terms of high BTU or energy content because that's going to affect your range.

It may not affect it tremendously but there'll be if you're in areas which have lower quality or lower BTU gas there'll be changes in what people see in their range which is an issue. If you're a commuter and you fill up a tank of gas then all of a sudden you're not getting quite that range that you anticipate but you're still paying the same price then that becomes an issue as a commuter.

This is a table just to show you what the components in natural gas can have the impact on engines that are compressors. And I'm not going to go through each one of these on this table but I'm going to go through some of the key ones in the next slide. But this just a point of reference to you later you can then you start to see that there are some major effects that changes in gas composition will have on engines and also on compressors as well but particular we're focusing on engines.

So that includes the hydrocarbons, the amount of sulfur that's in there, lubricant contamination, all of these things potentially have a negative and different effect on both engines and compressors. Now what are the key issues? Wobbe Index in broad terms is energy value at the burner tip. And for cars I the burner tip is the engine and it's the fuel injector. And we want to keep that Wobbe Index up fairly high because you're going to get better mileage and better efficiency if your fuel is better.

The methane content which specifically for a heavy duty vehicle should be something in the range of 80%, 87% or higher and this also is going to have an impact and an effect on what the energy value of the gas is. So methane content is important. We see ranges and you'll see in some other slides a variation that go up to close to 100% methane and down low in the Netherlands and Denmark it's as low as 83%. And that begins to create problems with engines if it gets too low.

Then we talked about methane number. And the methane number is really an anti not value which is what octane rating is all about. And so when you go and you look at octane rating in gasoline you'll see different numbers and methane has about the highest octane number of any of the alternative fuels. The auto industry advocate about 70 - a methane number of 70. Now determining this number is a very complex process. There are different methodologies.

One that's been commonly used is what's called the AVL methodology shows looking into another way of calculating octane rating but I'll show you what those octane ratings are. It's a fairly good number for natural gas. Then the other non-methane components as we showed in the table were the content, can affect the cylinders out, the fuel injectors, contaminants such as sulfur which includes odorant and that's going to be an issue for the natural gas industry because they put sulfur or mercaptan into the gas and we want to pull sulfur out.

So an issue with whether or not you have a non sulfur odorant is going to be something that the gas industry's going to have to deal with long term particularly if the market for natural gas vehicles picks up. Other components include propane, hydrogen oil ducts, etc and so all of these things are going to require some degree of active treatment in the actual gas.

We start looking at liquefied natural gas in engines using LNG source gas to rely on higher Wobbe number than your typical pipeline gas. And this is a picture that shows - the orange spot shows European pipeline gas and then you see on the left axis is the methane number so is our octane rating ultimately and then your energy value. The Wobbe index is on the lower scale.

And you can see that the LNG tends to be a fairly high methane number and it also has a fairly large component for energy component because when you do dropdown, drop the temperatures to 163- a lot of components begin to fall out of LNG, for example propane. So this shows though that even with LNG there's still a broad variation depending upon what part of the world it comes from.

This shows directly the Wobbe Index, the energy value that's going to affect combustion and engine power. And in the U.S. as you can see in the second bar on the left the Wobbe index is fairly high. Japan is very high because 99% of their natural gases brought in is LNG. And then you can see in Europe I talked about the wide range of energy values recertification.

We used actually two different numbers. We used pure methane to test the engines and also we used what's called G25 which is a lower energy content gas. And these are the two typical appliance gases. In the U.S. we've got a very good high quality range of natural gas and I think it's probably 80% of the gas supply in the United States is probably in the highest range approaching 85 or 90% methane content. There's some sour gas around the Great Lakes but most of the content is very good in the United States and that makes it better for the OEM vehicles.

Now the methane number of gas worldwide should be sufficient to meet the demands of regional natural gas vehicles. And again you can see in the United States towards the right side of the chart that we're dealing with a very high methane number. So it's a high octane rating and the other parts of the world are lower. The optimum we put it at is about 70. So if you look at the optimum and you look at the high quality of natural gas it's very resistant to knock and that's what the octane rating is.

It's a propensity of fuel not to self ignite. So that makes a very good - better for the engine, easier to control as opposed to diesel which doesn't have an octane rating. It has a C10 rating because it tends to self ignite. So there's the difference that we have and America is blessed with very high quality natural gas.

Now we talked about the methane number. This gives you an idea of the octane rating shown on the left versus the methane rating shown at the bottom. And you can see the number the target of 70 is at 120 octane. Again you're not going to see that if you go to the fuel pump and buy gasoline. You'll never see 120 octane.

So we have a very good smooth running fuel, difficult to ignite which is another issue but engines like it because they're quiet and that's one of the things that make natural gas vehicles and particularly the heavy duty engines much quieter than diesel because diesel you have all this fuel igniting sometimes on its own and uncontrolled combustion.

And so you get that rattle of the diesel engine which you're never going to have in a natural gas engine so all of these components are absolutely important to the different stakeholders but specifically critically important to the people who are producing the cars and trucks and the engines. And again just as a sample of the different natural gas specifications and requirements, I'm not going to go into detail in this topic slide but you can see the methane content in the USA 89%.

I said it's approaching 90% in most parts of the country. And in California the requirements are even slightly a little bit higher. In Japan it's 85% and over and in Europe it's varying between 86% and 100% and sometimes even lower. So this just gives you an idea of how the challenges for technology people when we're talking about engines and vehicles that they start to having to look at the different compositions and whether or not those engines are going to be compatible with the different compositions or whether they have to be made specifically for one's style of gas.

And this is going to depend upon source and like I said even LNG varies quite widely from different regions and have different components. So that's our story about the gas composition. We have work that's being done in Europe where they're discussing a difference between grid vehicle gas and gas that would be made specifically to be put into the gas grid.

The Wobbe Index again is an issue. The energy value is under discussion. And I mentioned before the sulfur limits. The sulfur limits on diesel fuel are coming down and the proposed limit to assure properation of NGV should be in the 10 milligram cubic meter due to the poisoning effect on after treatment equipment. And the value being discussed within Europe are again we're looking at the potential of non-odorized - non sulfur natural gas because the industry is putting sulfur in and that's not a component we want t have.

So there's some of the specific issues and the challenges. So what have we learned from all of this? Well the jury's still out. We do know that you must identify the gas composition for all the different applications. And the natural gas composition standards got to allow for national and regional variations while still achieving the levels of energy content and combustion characters that can satisfy the needs of the regional gas consuming technologies.

The regulations on sulfur could cause a rethink of the gas organization. It's going to be a very big change for a small market in natural gas industry and that's the challenge. The LNG standard is also fairly challenging. We need pipeline quality gas for that and bio-methane is another issue because we're talking about biogas which is about 50% methane being upgraded into gas that's 95, 96, 97% methane, a very high content. But because it's manufactured and it can be upgraded as part of the process it's easier to get a very high quality.

So the compression stations public private and home refueling appliances, we have seen that it's probably good to have gas dryers on the inland side of compressors and filters for oil, dirt and talents on the outlet side. And I think we've seen this around the world and so these are some of the lessons learned but it's very important that into compressors stations that we know are composition is made and the engine manufacturers are going to want to know this as well.

Now natural gas vehicles switch to engines, natural gas vehicles have benefited from improvements in energy technology developments over the years. Fuel injection was a big thing that replaced carburetor vehicles, multi port fuel injections, onboard diagnostics and natural gas vehicles have been also required to use onboard diagnostics to be compatible with those onboard the vehicle.

And there's been in many instances what we call a master slave solution so that you don't have to put an entire OBD system on the natural gas side that raises many of the different points in the engine and the emissions, the output side as we do for gasoline which are some 30 or more points that are actually monitored to keep the right fuel and air ratio depending upon the power that's needed and what the load is.

So the CNG OBDs, they tend to try to be fit into the onboard diagnostics of the gasoline vehicle but not to require the same number of monitoring points and to be able to rely on the master to be of the gasoline system and then slave is the CNG side. OBD is now coming into heavy duty vehicles and that's going to present another challenge for natural gas vehicles. And again the cost of sophistication of these systems is going to go up.

Emissions strategies, the use of exhaust gas for circulation so that there's not as much pollution out the tailpipe, to bring some of those components back into the engine and then to re-combust those. For natural gas it's a very good idea because natural gas happens to have sometimes excess methane coming out the tailpipe and exhaust gas recirculation can bring some that back in so it can be ignited and we have a more complete combustion.

Turbo charging has been very good for natural gas vehicles because as I said earlier it's hard to ignite fuel because it's got a much higher burning temperature than gasoline. It's got 1200 degrees Fahrenheit. For gasoline it ignites at about 850 degrees. So when you get swirled with air you get more complete combustion and therefore you get better power and you get less hydrocarbons out the tailpipe.

And then there are new things reading about Fiat and others when they're talking about multi air electro hydraulic timing, things that'll begin to have the engine systems in each of the cylinders and the valves and the air intake operating more independently. So it's a whole new sophisticated level and all of these things, the better that the engines have gotten for gasoline the better it is for natural gas. It's not always the cheapest thing but in terms of getting better engine performance, better emissions, all the things that improve gasoline, diesel engines typically are going to be very big news for natural gas vehicle engines.

So some of the lessons learned, the better performing petroleum fuel to come as I just said the better it is for NGVs. The challenge for a lot of the NGV systems and equipment suppliers is going to be moving into this tier 1 level. Tier 1 is basically what we look at in OEM quality and enforcing quality control of retrofits and particularly new entry OEMs particularly from developing economy countries is going to be essential.

It's interesting that a lot of the retrofit equipment and all of these systems over time ultimately become adopted by the OEMs, by the and truck manufacturers. But when they demand zero defect quality systems sometimes it's been a challenge for the NGV system suppliers and equipment suppliers to ramp not just the high quality but to the numbers of vehicles, to the numbers of systems.

So that's a real challenge. We also in the NGV business, we want to see more OEMs involved and then they start to look at the equipment. And we've got to make sure that equipment is tier 1 level that's demanded by the OEMs and we've had some problems and issues in developing economy countries where quality control is not quite at the same level that it is in some of the other parts of the world.

And again if OEMs won't use this equipment then they have to be very careful how they're going to do this. Okay so that's on engine technology very broadly. Now we're looking at another technical element which is absolutely critical to natural gas vehicles and that's the CNG storage technology. And in here you can see just a broad sample of some of the early natural gas systems.

These are - I'm not compressed to 200 bar or 3000PSI but these are lower pressure. The technology just didn't exist in the first instance so you see how the middle car in there, they're using steel cylinders. There's no room for those so they cleverly put them on the roof. We see all kinds of interesting configurations. And on the far right you see the dedicated Ford Ranger from 1983 with the first of the type 2 in natural gas - compressed natural gas cylinders.

So we've seen a really large change in technology and the technology's still changing. Now the issue about safety of course comes about and this is that one of the critical links in natural gas safety that focuses on the high pressure cylinders. Now the USDOT studied systematically NGV and CNG accidents in equipment failures and fires from 1976 to the year 2010.

A lot of this information is based on findings from the Clean Vehicle Education Foundation and Doug Horne has spent a long time collecting this and numbers of other people including myself have contributed to providing these kinds of data over the years. And it's remarkable that actually here you're looking from 1976 that we really only identified 138 incidents, 56% United States, 44% Europe and Asia and South America.

And of course some people don't talk about these incidents but we think we've got a fairly good handle on all of these. And all of the vehicles included 51% have been light duty vehicles and trucks. Thirty eight percent of these incidents have been with buses and with others commercial vehicles. Most of the problems were with the individual natural gas vehicles. And very often there were problems because of human failure, not mechanical failures.

Some systemic problems have been identified especially related to pressure relief devices. Twelve percents of these accidents involve fire but most of not attributed to the compressed natural gas systems or the NGVs. A lot of happen have to be from leaking petroleum fuels or different fluids, brake fluids, etc in the engine and they're not always attributed to the natural gas systems themselves.

Okay. There were 135 of these incidents were categorized and then I just put this table together based upon the DOT report just to give an idea of what kinds of incidents and the percentages. We do got some soon to rupture, PRD release but without a fire because that's what it's designed to do. Some vehicle fires put no cylinder rupture because again the systems work the way they're supposed to do and release the gas under higher pressure or under changes in the temperature when temperature relief devices are working, accidents with other vehicles and then of course the single accident vehicles.

Five or six of those were related to actually buses that drove under underpasses and disregarding that they had extra height on the top of the buses so the cylinders were damaged. And then there were some to do with leaking cylinders or leaking fuel tanks.

Many of the PRD related incidents, they're related to PRDs but many aren't design related or due to failures. They're working and 42% of these incidents involving fire they worked properly. And half of these gases ignited but it was attributed to poor insulation of the system. Thirty five percent of the fires didn't release but mostly these were due because the fire didn't reach the PRD.

We found that in some bus systems where the PRDs are located at the end of the tanks and the fire and they've been coming up from the center of the bus started to keep the center of the cylinder. And we've learned over time to make changes where now some of these PRDs are relocated so they're going to be in areas where we do anticipate fire and let's flip the last one.

And 2/3 of NGV accidents with vehicles, there was no gas released. So ultimately we're really saying that things do happen but that our systems are designed to be extremely safe. And as I said CNG cylinders have been a source of accidents not because of the cylinders but due to human error, ignorance, neglect or typically mishandling of the cylinders.

So we've learned a lot of lessons and these few slides were taken from the Clean Vehicle Education Foundation. What have we learned? Inspection's absolutely critical. We have to adopt inspection policies at a minimum every 36,000 miles have been recommended or every three years, whichever comes first. The UN regulations require four year inspection process.

And visual inspection of the CNG fuel systems, at this time it's really - we find the best method for monitoring the overall safety of NGV fuel systems is to have a look at them. We also need to create fuel certified cylinder inspections and then there are questions of how do you inspect the cylinder when it's still in situ, when it's still in the vehicle.

That's something that I think still needs to be evaluated and worked on because of the OEMs, once they build a vehicle they don't want the cylinders removed. So some of the requirements in some countries to remove cylinders are going against the safety compliance rules of some of the OEMs but inspection is absolutely critical. And that's one of the key things that we've learned over the years is to have a look at these cylinders on a regular maintenance schedule.

The retrofit installation issues, a couple of interesting pictures here, nice installation of that cylinder laying in the back of a pickup truck. With the engine market growth conversions of CNG vehicles by independent on train mechanics have really presented some safety concerns. On one of my trips to China to a place called Chun King which is center south of the country, this is was seven years ago - you can actually see people doing conversions on the side of the road.

They pull a vehicle into a parking spot. The guys come out with their truck with their equipment and start a converter vehicle and that's not really the kind of quality control that we want to have. So we've seen a lot of different quality workmanship and equipment in different parts of the world and even in the United States as this market has grown.

So lessons learned is training and certification is absolutely a requirement. Certification programs are needed to train, test and certify the conversion shops and the technicians. They must provide basic standards and regulatory information in the United States. You have a different set of standards and regulations than you do worldwide so the training has to form there.

And what we've done earlier on worked with the - in the United States the automotive service excellence program where some years ago before I came to Europe we did start working with them to develop a certification training system. And we really need to do this on a worldwide basis, on a country by country basis because the more people know about these systems the safer they become.

So some examples of improper installation and failure to take proper action from after accident inspection is another issue. Lessons learned is enforcement. We've got to develop enforcement programs for periodic and after incident cylinder inspections.

So if a car has crashed even though it may not look like something's happened to the cylinder still going to bring it in and have a look. And the training is needed for inspectors, from mechanics, for fleet managers and also very critically for first responders, i.e. fire marshals. And that's why in the United States we put that CNG dive on the vehicle required by the EPA so the firefighter, if he's coming up to a vehicle, will know that he's dealing with a vehicle that's using natural gas as opposed to something that's using petroleum or diesel.

Now the other thing is when you start looking to the end of life cylinders removed from service should be destroyed using prudent methods based on standards and best practices. And a lot of this is really common sense and again it goes back to training, to train the NGV service providers, the inspectors and also to develop a cylinder vehicle tracking methodology, which we've talked about.

And we've also talked about—and in some places has been implemented—radio frequency identification. So that we know when cylinder goes to be refueled it's communicating with the fueling system and with the station it may show up that fuel that the cylinder is out of date. So the customer will be able to get fuel because either they haven't had an inspection on the cylinder or because the cylinder's just out of date.

This is going to take some time to develop these kinds of systems as well as the tracking methodology. There's work being done in the United States with the Clean Vehicle Education Foundation and Canadian Standard Association and NGV Global to try to look at a process that we can use as Doug Horne has done looking at all these cylinders for all these years as well as power tech company has done. But formalize the process because what we see as an example here in this picture in the middle in the Ukraine this guy couldn't sit the cylinder into the trunk of this car.

So clever fellow, what he did was he just wielded - he took a torch, a cutting torch and he cut out a segment of the cylinder and then he refit the end of the cylinder onto the body of the cylinder. So of course the first time he went to fill the vehicle up the thing exploded. The cylinder on the right as the useful date had expired, sour gas from a farm vehicle was used to fuel the vehicle and it had an incident and it ruptured.

So we've learned a lot over the years but again common sense when these things are taken out of service is really important. Another example that I saw once, a guy drilled a large hole in the cylinder. Someone came along and took another piece of steel and wielded it back into the cylinder. They thought they had a good cylinder after that.

So these are the kinds of practices that have really got stopped. We've learned a lot also and still learning about pressure relief devices. Venting systems should never be restricted below the design level. They are and a cylinder is caught in a fire this could lead to a rupture. The PRDs have to be clean. They have to be free of ice and dirt.

And the direction of the venting of the gas shouldn't enter a passenger compartment or any other compartment of the vehicle. It shouldn't block an entrance or an exit on emergency exit on a vehicle. And we're talking about now also designing these PRDs with diffusers to avoid what happens in the Netherlands in October 2012 where there was a fire on the bus and the system works the way it's supposed to. The cylinder let go in terms of evacuating the gas but the gas did catch fire and under pressure this developed and shot this about 30 feet across the road.

So there's work now that our working groups within the Clean Vehicle Education Foundation that are actually systematically looking at PRDs and the direction of venting. We're also looking at this at the United Nations and basically trying to come up with regulatory language and best practices so that we can avoid these kinds of things. But as horrible as this picture happens to look it's actually a function of safety in that the system did work the way it was supposed to work.

So lessons learned about seeing these cylinders and NGV accidents, we need transparent forensic investigation of these incidents and the accidents so we can identify what the root cause is, establishing this incident history done by either industry government or funded by government and done by industry, whatever combination works, allow us to learn lessons and to make corrections in these systems.

Implementation and enforcement of the standards and regulations is absolutely essential to maintain the highest level of safety and there's a wide variety of regulations and standards that can be used internationally and in the United States. And safety standards regulation should be assured so that throughout the entire equipment supply chain by a documentation or a direct inspection of the manufacturing facility but throughout the whole supply chain we've got to actually implement and enforce these standards of regulation so that we can maintain the highest quality of safety.

We always say in the industry that there are three most important things in natural gas industry and that's safety, safety and safety. Well those three essential things are needed to implement those are training, training and training.

Now let's look quickly at the natural gas fueling technologies and systems and we should have a picture of a variety of systems here for CNG, for liquefied natural gas on the far right side, the combination of liquefied to compressed natural gas which I think is a very fruitful advancement in the industry so that we have options to service LNG vehicles which typically in the United States are going to be trucks but also to grow the CNG fueling network and of course the vehicular fueling applies, the fueler. And then we have on the left, we have a variety of different mobile stations as well.

A variety of mobile fueling systems are now available for CNG and LNG. And the interesting feature about that is it's allowing the market, the NGV market to grow beyond just where the pipeline exists. And this is extremely important for various parts of the world that don't have a sophisticated pipeline network as they exist in the United States through Europe. So we've drawn a typology of vehicles just to familiarize people with the possibilities of how to supply natural gas.

And in the far right you can see the mother/daughter systems which was something that was started in Italy and it's used extensively in China where essential compressor station fills mobile tanks on a truck and then a truck can be brought to a customer and set up with a dispenser and to fuel gas. Then there are the packaged systems both the CNG and LNG.

You can actually bring an entire fueling system storage and dispenser to the customer. And for customers who are just trying to get into the market that's a very effective method of getting a customer exposed to natural gas vehicles but yet they don't have to go through the expense of building their own fueling station.

Now of course biogas concepts, here's a humorous side of the industry. The top one there on the left goes back probably to around 1990 or 1991 from GRI. So you can see the linkage between cows and cars and again we're very lucky that natural gas has the ability to be made as a renewable resource. And this adds another environmental benefit to what we're trying to do.

Now that we found that we start to look at what we need to do with compressor stations and listening to the suppliers and the customers is absolutely critical. So as part of the International Gas Union project that has tri-annual projects in 2012 we surveyed about 60 different fuel station installers and customers worldwide to develop a better understanding of the and the best practices for the installation and operation of fueling stations that serve natural gas vehicles.

We took these people from five different continents. Worldwide we had about almost half of the questioners responded. We had 48% response rate and we also used these same people to review the drafts of the report. We used operators and customers of engine refueling systems. Again they also responded at about a 50% rate and we used a lot of them to review the draft reports.

Some of them were in both categories where they were also gas companies who installed their own systems but they also had their own vehicle fleets. So cost reduction, what are some of the things we've learned? This is something on a modular design we talked about for many years and it's beginning to happen in various places.

It's difficult to fine tune a system for every single customer who wants something different but to the best degree possible that we can develop modular systems, elegant price down. Providing adequate compressor capacity, rule of thumb, don't over or under-decide stations. Designed stations for the needs of the system but you can also design for expansion so that when you're laying for example a concrete pad for one compressor you can lay a couple of other ones or one other one if that's what's going to be required.

You can even run the pipes into the concrete pads, the gas pads of the electric service so that you're prepared to expand the system but you don't have to pay for the compressor in the first incident. Reducing the size of the footprint, the compressor and storage system's smaller, something else that's needed in many places because of the lack of space, a fueling space. Adaptive designs, light duty vehicles versus heavy duty vehicles versus a mixture of both have to be considered in different markets and different countries.

In the United States you don't see a lot of trucks pulling up to smaller fueling stations designed for cars and certainly you don't urban buses pulling up to stations that are designed to cars. But in a lot of places in the world these are mix and match. So the compressor stations have to be prepared to supply a lot of gas to larger vehicles but still have enough to supply the smaller vehicles.

The electric costs have been an issue. When you first power up the compressor if the electric company is charging on the basis of a peak demand or a what we call the sticking yield, a peak demand at one particular moment, if that's what's happens when the system powers up the rest of the electric charge, even though there may be a lower demand may be charged at a higher rate. So that's something that compressors station operators and installers have to be aware of. And as I said before the last bullet point—gas dryers—have to be on the inlet side and oil filters have to be on the outlet side.

Lessons learned, opportunities to reduce some of the hidden costs of fueling stations, these are pretty challenging. The grit issues for gas distribution systems have to be considered. The connection feeds universally, we've found complaints about the high cost of connecting the fueling stations.

The inlet pressure need to look at that. The higher the inlet pressure, the cheaper it's going to be in terms of how many levels of compression are needed. That has to be a tight as possible. Of course the shortest distance to hook up the station to the grid is preferable. We also have to educate the local code officials who have to inspect and certify these fueling stations about the fueling systems and particularly safety.

We found a lot of time to the code officials inspecting the systems word of speed or haven't been properly educated about the codes. They'll shut a system down. They'll shut down a compressor station before it opens because of a perception that it's not fulfilling some of the codes so all of these things on the grid issue and on education of code officials are critically important to reducing these costs.

Best possible cost reduction and best practices during the operation of the fueling station, people like remote metering and control. It's desired by many of the station owners we spoke to because it ensure better reliability and provides quicker response to the problems inn order to reduce the station downtime. Onsite monitoring is possible of course and it's done regularly. But the offsite monitoring provides a centralized control of the fueling station, the provider, and also for an owner of multiple stations who are monitoring their own facilities.

People don't mind if something breaks if it can be fixed quickly and that's the concept behind remote metering and control. It's just so a downtime can be spotted and someone can be sent out to try to fix that as quickly as possible. And the fueling station system suppliers perspective, people are actually selling these things and installing them. The lack of harmonization has been seen as the single most important factor that's increasing the cost of the systems for the producers and the installers of the equipment.

Adopting the best practice for safety can reduce the cost by as much as 30% and this is exactly what the people in the business have told us. The good news is that the draft international standards for both CNG stations and LNG stations, the iso-standards are just about ready to be adopted probably in 2015. So we're hoping that this international standard for compressor stations for LNG and CNG will be a critical factor in allowing people around the world to now have a guidance document that can help them harmonize all the activities in terms of installing and operating a compressor station.

So in conclusion we're very lucky as I said before that methane is a diverse and flexible fuel for the transport sector. It's a fossil gas or a bio gas renewable. You can store it compressed. You can store it as cryogenic fuel and transport more easily. So it's a very diverse fuel and we really have to keep our eyes focused on the road ahead and today we have to be concerned about making good policy that gets us where we want to go.

As I said numbers of times the future's a big place. It's going to take a long time to get there but we're really making a tremendous amount of roads in the United States, in Europe, in lots of places around the world. The growth for gas vehicles and the growth for the technology and the improvement in the high quality in technology to be able to be suited to a high quality fuel natural gas is really moving in absolutely the right direction. So that's my concluding remarks. If we can open it up now for questions I'll try to deal with those.

COORDINATOR: Absolutely. We'll now start the question and answer session portion. If you'd like to ask a question, just press star then 1 from your touch tone telephone. Remember to make sure your phone is un-muted and record your name clearly when prompted, one moment for our first question. And we have the name of our first questioner but have you pressed star 1 your line is open.

ERIC POLLARD: This is Eric Pollard with Tulsa Clean Cities and I guess my question is I was really surprised by your slide that had the comparison of conversion costs across the world really. And we're working with our Oakland Department of Labor to develop technician certification processes and fueling station inspection. And so I - and then you had the slide about level of incidents and it was something like 140 so I don't know.

I was hoping you could expand a little bit on how we are going to monitor what these incidents are and I'm just surprised by how low that number was and what is that number really and kind of expand on that a little bit. Thanks.

JEFFREY SEISLER: Yes. These are very good questions. Specifically on the monitoring process it's amazing that there are so few incidents that have occurred. I haven't taken the time to take a look at statistically the world numbers of vehicles and incidents. There are thousands of gasoline fires year that occur in lots of different countries and we haven't seen that with natural gas vehicles.

But as I've said it's absolutely critical that we understand in a very scientific and forensic way why the incident has occurred because just like an airplane crash a lot more people die on the roads than die in airplanes. Airplanes are one of the most safest modes of transportation but it's a very dramatic thing when an airplane falls out of the sky and it's a very dramatic thing when there's a cylinder that ruptures and it takes off from the vehicle

So we're very concerned about monitoring. In the United States and Europe most of these things come up, they occur. There'll be some kind of investigation that goes out from the fire department of safety and hazards people and the Department of Transportation with the industry themselves look at it. And then we discuss and we talk about why the system failed, what do we need to do to improve it and then we fix it and that's exactly the process we use.

In some of the regions of the world where price is a factor, everybody wants cheap, cheap, cheap and cheap is not safe. That's one thing. And in some of these areas of the world the idea of saving face—i.e. not being embarrassed—is very important. So—going to talk about an incident that occurs because it may be embarrassing or it may have liability issues. We're much more transparent in the west and Japan about these things and as I said Craig Webster with Powertech now with CSA has spent a lot of years investigating cylinder incidents.

A lot of the clients have paid for that investigation. Doug Horne, John Dimmick with Clean Vehicle Education Foundation have cracked these things. There's been a few of us in Europe who have also looked at incidents. We try to pool these resources and keep track of them and now it's become more formal been now.

We've come to the point in the industry where we recognize we need to have a tracking methodology for incidents and even in some places and in many places to need a tracking methodology for the cylinders so that we know when they go out of date. The Italians do have a system like that because they lease the cylinders to a lot of the vehicle conversion people so they always see these things and review them.

So I think we really have to formalize the procedures and we're talking between NGV Global and Clean Fuel Education Foundation in Natural Gas Vehicle America, CSA. There's a lot of us concerned about it and we're taking action. There may even be some potential funding from the Canadian and the U.S. government to set something up and we want to broaden this on an international basis so that we can have a better understanding of how to improve safety when an accident does occur.

We don't want to shun it. We want to confront it. We want to investigate it, understand what happened, draw conclusions and then fix the technology. And that's how we move forward and these systems are getting safer and safer.

COORDINATOR: I'm showing no further questions in queue. And again if you'd like to ask a question just press star then 1 from your touch tone telephone.

SANDRA LOI: All right thank you Tony. Thank you so much Jeff for your presentation today. Michael, Marcy do you have any questions for Jeff? Any other thoughts before we wrap up today's webinar?

COORDINATOR: And I have one question that just popped in the queue.

SANDRA LOI: Perfect, thank you. Go ahead.

COORDINATOR: Shawn Hill your line's now open.

SHAWN HILL: I was wondering what's happening with absorbed natural gas technology for tanks.

JEFFREY SEISLER: That's a good question, absorbed technology. First been looked at using the idea of a charcoal absorbent under the concept that if we could get a low pressure natural gas storage system then we wouldn't need to have the high pressure - the compressors so that the cost of actually compressing the fuel would drop down.

And there was work being done going back as early as the early 1980s in the United States and also in the UK. And the DOE had experimented and tested probably 100 different charcoals and none of them really had been adequate because you're adding weight to the cylinder when you put some of the charcoal in and some of the early systems also didn't release all of the gas.

So there was a buildup of residual that didn't allow to get a complete fill so that has changed and the program within the Department of Energy. It's a very exciting program and there are some really wonderful things coming about in terms of cylinder design and new technologies and some of them don't even use the wall of a cylinder. They themselves the containment system in fact is the cylinder.

With the absorbed technology, it's still being developed and whether or not there'll be a breakthrough I think the jury's still out. DOE is putting money into this and I think it's a very valuable opportunity because if we do come up with an absorbent that actually works and we can reduce the level of compression the economics completely changes.

The price of gas will go down. The simplicity of the systems will go up. So it's a real opportunity. I'd suggest you go on the DOE website or just put in ARPA E and you can see that there's a whole range of new and exciting cylinder developments the Department of Energy is sponsoring. Part of that is the absorbent. We're not there to commercial market. It's still R&D and development work but if it happens it can be a wonderful change for our industry.

SHAWN HILL: Thank you.

COORDINATOR: Our next question comes from Chuck Ridge of Argon. Your line's open.

CHUCK RIDGE: Yes. I'm quite a of natural gas. One thing that I really like about it is it's market driven because there's incentive for operating cost. However what happens in that when a politician decides that they want to put a highway tax on it. It isn't like politicians to see highway funds going away with the fuel. Sooner or later they're going to come in and tax it I believe. I just want to know if it's still going to be competitive and how much you've heard about politicians talking on doing that.

JEFFREY SEISLER: Well that's a critical question and it's something that impacts the customers tremendously because they want to be assured that the tax rate's going to be favorable. Taxation and tax incentives are one of the tools of government and they can be detrimental or they can be positive. And I think in the early stages of the market development of alternative fuels one of the very strong incentives are to have a more favorable tax on the fuel as one of the components.

Fuel's just one of those components. You have road taxes. You have property tax on a vehicle. So there's several different levels of taxation that governments can use. Fuel tax is probably amongst the most critical because you see it every time you fill up your car. And in many places like the UK in England, Great Britain 70% almost of the cost of the fuel is taxation. So it's very important that we educate our politicians and our policy makers and that's what NGV America has been attempting to do as to keep a reduced level of taxation.

In Germany they lowered the tax on natural gas but then shortly thereafter several years they decided to try to hike it up again. But they initially told the public they were going to keep this starting in 2003. They're going to keep low taxes until 2020 then they changed their mind. So it's pulling the rug out from under the customer and particularly for commercial customers. They want to be assured of a steady price.

So I think it's an education process. We call it lobbying. We call it education to make sure that the other benefits of natural gas are also realized. The fact that we have a good story to tell our environment is going to impact public health. And the people who pay for public health decide the individuals are also governments, insurance companies, etc.

So there are other monetary values that we can associate with natural gas in the hopes of keeping the fuel tax down. Eventually all fuels, once the market expands will probably be taxed the value of what their energy value is. But by that time I think the value and the market, if we can reach the 10% market impact or penetration with natural gas vehicles I still believe that the fuel price itself historically has been cheaper and I think it'll continue to be cheaper particularly in the United States where there's an abundance of natural gas right now.

And the environmental benefit, if you put a cost benefit on reducing greenhouse gases and CO and smog producing hydrocarbons all of those have a monetary value which then has to be calculated in and that's the job I think of the advocates of the Clean Cities leadership is to work with the politicians to make sure they understand the intrinsic value and many values that natural gas vehicles can bring economically help energy security. So the tax component, it can kill the industry or it can help grow the industry and that's a constant job as to try to keep the fuel price at a favorable rate.

So we're roughly if we can achieve the 30 to 50% price differential where natural gas is lower by that rate than diesel or gasoline that's been historically in some of the back of the envelope numbers that are needed to make natural gas vehicles economical.

COORDINATOR: I'm showing no further questions in queue.

SANDRA LOI: All right well thank you again Jeff. Jeff do you have any final thoughts before we go ahead and wrap up today's webinar?

JEFF SEISLER: No. I just look forward to dealing in the next webinar when we'll be talking about politics. This last question was a combination of technology and politics but more leaning toward policy. And I think in the next section that we deal with we'll talk about what governments have done right and what governments have done wrong and where we can learn from the mistakes of others so we can maybe make different mistakes but not the same ones. So overall our message on technology is very positive and I think overall the message for natural gas vehicles is positive and we'll talk more about that on December 15.

SANDRA LOI: Yes. December 15 at 1:00 P.M Eastern Time so please plan to join us if you're interested for the third and final webinar in the series. And we'll be posting today's webinar on our Clean Cities webinar archive page. This is Sandra Loi so you probably saw notes coming out from me.

Feel free to contact me directly or Jeff as well if you have any additional questions and thank you again for participating today, thank you Jeff again for your time and everyone have a wonderful rest of your week. Thank you.

JEFF SEISLER: Thanks very much to the participants too and thanks again to DOE.

COORDINATOR: Thank you for your participation in today's call. You may now disconnect.