Pioneer Natural Resources knows that its strength is inextricably linked to the strengths of others. The large independent oil and gas producer owns assets mainly in Texas – including in the Spraberry, Eagle Ford, Permian Basin and Barnett Shale plays. It also produces from other high-quality assets located in the gas-rich Raton Basin in southeastern Colorado and the Hugoton gas field in Kansas.
It produced 171 million barrels of oil equivalent in the first quarter of this year alone. With so much supply, it’s only natural that Pioneer Natural Resources would take an active interest in creating demand.
Three years ago, Director of Fuel Market Development Lynn Lyon took the lead on a project that has done just that. Through the company’s membership in the American Natural Gas Alliance, Lyon grabbed the reins on an endeavor to showcase the supply and increase demand of natural gas within Texas’ major metropolitan areas. On the Texas Clean Transportation Triangle project, Lyon worked with both sides – natural gas retailers and fleets running on natural gas – to ensure that retailers would have demand and end-users would have supply.
“We started this project with a feasibility study and that wasn’t meant to impress anyone with the size or amount of natural gas in the state,” Lyon says. “Instead, it showed us the minimum of what we would need to get this project set up. We determined that we would need 550 heavy-duty trucks to provide a base-load demand to develop the connecting stations. And to give those fleets the confidence in supply and pricing to convert to natural gas there would have to be at least eight new natural gas stations.”
Bringing it Together
Lyon explains that fleets wanting to convert to a cleaner and more economical fuel than diesel were gun-shy about the idea. They were unsure of whether or not their trucks would be able to fuel up along statewide delivery routes. On the flipside, oil and gas retailers didn’t want to operate by the “if you build it, they will come” theory. Neither side wanted to move until the other did, putting retail natural gas development at a standstill. The Triangle project acted as a mediator between the two sides, ensuring that retailers would get a return on their investment and natural gas fleets wouldn’t be left stranded.
It also got the support of state government. The Texas legislature agreed to allocate 20 percent – approximately $10 million per year – of the Texas Emissions Reduction Plan to support the conversion of heavy-duty fleet vehicles to natural gas vehicles (NGV), and the development of new natural gas infrastructure within the Texas Triangle. Eighty percent of the funding went to heavy-duty NGV rebates, helping to offset a portion of incremental cost. Twenty percent of the funding went to natural gas refueling infrastructure grants.
“This project focused on infrastructure between Dallas/Fort Worth, Houston, Austin and San Antonio, the four largest metro areas in Texas,” Lyon says. “And it was developed to support fleets interested in moving to natural gas to ensure the connectivity on the route. Even when it came to the retailers, they wanted to know that if they were focusing on Dallas, that someone else was focusing on Houston. It gave people the confidence to order trucks and build stations.”
Expanding the Effort
The project not only gave confidence to its pioneers, but has also encouraged others to join in the effort. In its first phase, the Triangle initiative got fleets on board such as Frito Lay, Waste Management, UPS, FedEx, ATT and Verizon. Even public transportation buses, such as DART, went through the switch to natural gas.
On the retail side, a variety of companies such as Clean Energy, Love’s, Shell TravelCenters of America, CNG4America and UPS joined the fold. Builders and operators such as Trillium CNG were also part of the project. For the past 20 years, Trillium CNG has been a leading provider of compressed natural gas fueling services as well as a single-source provider of CNG fueling facility design, construction, operation and maintenance. These companies have helped prove out the process, giving others the confidence to join.
“Even the government has gotten behind this project and says it’s important to Texas, giving people confidence to order the trucks,” Lyon says. “We have an incentive program that is in place and that’s working to prompt market development. We’ve also brought in private investment. Due to those strengths, confidence in the market and the momentum we have, we will double the amount of stations in Texas in the next 16 to 18 months and adding 60 new stations. That’s an investment of more than $80 million.”
That applies to the state of Texas alone, but Lyon sees this initiative spreading far beyond the Lone Star State. Because of its affordability – less than a dollar a gallon – and its environmental benefits – fewer emissions than diesel – natural gas is an effective fuel alternative. It also makes the nation less energy dependent. Lyon has given speeches about the project in places as far from home as Winnipeg, Manitoba, and Mexico and she sees the actual initiative spreading just as far.
“Because Texas is such a central location in North America, this project to increase connectivity will go beyond Texas and we’re already seeing this,” Lyon says. “It will extend from Texas north to Oklahoma and even further north to Winnipeg. It will spread east to Atlanta, west to Los Angeles and south to Mexico City, and these things are already happening. People are primarily motivated by the lower cost, but there also huge benefits to the environment.” Lyon spoke this summer to the Commission for Environmental Cooperation with Mexican Environment Secretary Juan José Guerra Abud, Canadian Environment Minister Peter Kent and Acting U.S. Environmental Protection Agency Administrator Bob Perciasepe on the broad-based opportunities for all three countries with natural gas powered transportation.
Education is Key
Even with those upsides, however, Lyon says the project has come across some stumbling blocks – snags mostly associated with the unfamiliarity of natural gas.
Before the Triangle project got underway, Pioneer Natural Resources decided to lead by example. In addition to leading the initiative to increase natural gas infrastructure and connectivity, Lyon is also responsible for identifying opportunities within her company to use natural gas. Pioneer has more than 250 trucks running on natural gas – heavy-duty, light-duty and sedans – and the effort hasn’t stopped there.
The initiative doesn’t just stop at fleets, however. Pioneer Natural Resources also wants to educate the general public. Most of the stations developed in conjunction with the Triangle project are public stations, open to company fleets and individual natural gas vehicle owners. Just as it encourages fleets to make the switch to natural gas, the project also wants to reassure the general public that natural gas is a viable energy solution. Spreading the word that natural gas is safe has been paramount. Lyon says that it’s the same gas that runs underneath houses – heating homes and lighting stoves.
“It’s not too unlike the 1970s when they went from having someone pump your gas to people being allowed to pump their own gas,” Lyon says. “People wondered if women would be able to do it and people were afraid of the change. It took someone getting out there and showing that it’s easy to pump gas. We have to show that it’s easy to pump natural gas.”