go figure …
where fuel has replaced labor as the
biggest expense—is economics. It costs
$2.50 a gallon for Saddle Creek to fill up
with CNG at this writing. The price is
pegged to natural gas futures prices, which
as of mid-September sat at about $2.77 per
million British thermal units (Btus),
according to data from the Department of
Energy’s Energy Information
Administration (EIA).
By contrast, the average cost of a gallon of
diesel fuel stood at more than $4.08 a gallon, according to
EIA data through Sept. 24. Since July 2, the start of the third
calendar quarter, diesel prices have risen about 46 cents a
gallon.
DelBovo estimates that, after all costs are included, Saddle
Creek saves the equivalent of 20 cents a mile by running on
natural gas instead of diesel. The company’s rigs log, on
average, about 110,000 miles a year.
106%
The driver turnover rate at the nation’s big truckload fleets in 2012’s
second quarter, the highest level since the fourth quarter of 2007.
SOURCE: AMERICAN TRUCKING ASSOCIATIONS
THE INFRASTRUCTURE HURDLE
Beyond the cost of the rigs, Saddle Creek spent $3 million
to erect a natural gas compression and fueling facility on its
Lakeland campus. The facility was built and is maintained
by Clean Energy Fuels Corp., a Seal Beach, Calif.-based natural gas provider for transportation.
Saddle Creek also uses a fueling depot at a public facility
at Hartsfield Atlanta International Airport, and it has
access, as do others, to Clean Energy’s fueling network.
All of Saddle Creek’s CNG fleet vehicles operate in the
Southeast so drivers can have access to the Lakeland or
Atlanta fueling depots. The dynamics of the company’s current fueling infrastructure illustrate the biggest hurdle for
CNG use: the absence in large swaths of the country of the
pipelines required to move natural gas in its compressed
form to fixed locations.
A LEAP OF FAITH
For Saddle Creek, the three-year project was a big and
uncertain leap. There were questions about the costs, the
integrity of largely untested equipment, and whether a
return on investment (ROI) could be achieved within an
acceptable time frame.
The challenge was compounded by the lack of data needed to measure and model the project’s cost-effectiveness. In
the end, the company estimated a four-year ROI, assuming
its rigs run their normal miles and diesel prices hover
around $4.15 a gallon.
Saddle Creek delayed purchases of new or replacement
rigs for several years so it could watch the marketplace
evolve. This also gave it time to husband resources until it
was ready to move forward.
Fortunately for the company, the project coincided with
the onset of the drilling and exploration boom that would
unlock massive quantities of shale oil and gas from regions
like the Bakken Formation in the Northern Plains and the
Marcellus Shale running through five Eastern states.
Convinced natural gas supplies would become more plenti-
ful and prices would plummet, Saddle Creek decided to act.
