Clean Energy, UPS ink multi-year LNG deals

Clean Energy Fuels Corp., the largest provider of natural gas fuel for transportation in North America, said this week it inked a multi-year bulk fueling agreement in which it will supply liquefied natural gas (LNG) to two Texas-based private stations owned by transportation and logistics giant UPS in Mesquite and Houston.

And it also said that Clean Energy in a separate agreement with UPS will open three of its America’s Natural Gas Highway stations in Amarillo, Mesquite, and San Antonio, Texas to support the UPS over-the-road fleet.

Clean Energy officials said that the fueling agreements will support UPS’s heavy-duty trucks, which it said are one of the largest LNG truck deployments in North America.

“UPS has staked a leadership role by transitioning their fleet to cleaner-burning natural gas,” said James Harger, chief marketing officer for Clean Energy.  “Opening the Texas Triangle to LNG fueling is a significant milestone in the use of natural gas in goods movement and we look forward to supporting UPS’ natural gas fleet as it continues to expand across the nation.” 

Harger told LM that while Clean Energy and UPS have a multi-year contract the exact terms have not been disclosed but he added that UPS has been a Clean Energy customer for several years and Clean Energy looks forward to building that relationship into the future.

When asked what drove the need for this arrangement, Harger explained that UPS has continued the deployment of the largest LNG truck fleet in the nation.

“They have placed orders of 985 LNG trucks and this announcement reflects the need to fuel their vehicles across the key Texas Triangle goods movement corridor and beyond,” he said. “We have been fueling over 50 UPS LNG tractors at our Las Vegas and Phoenix America’s Natural Gas Highway stations for years in addition to fueling UPS’ step vans in Atlanta and Denver.  These agreements are an expansion of this relationship as UPS continues the transition of its over-the-road fleet to natural gas. UPS has stated that they are ‘all in’ with natural gas.  As the largest provider of natural gas fuel for transportation in North America, Clean Energy will continue to support UPS as they continue to roll out their LNG heavy-duty fleet across North America.”

As previously reported in LM, natural gas utilization continues to be a major action item for UPS with the company announcing in early October it will invest roughly $50 million to build another nine liquefied natural gas (LNG) fueling stations.

This followed an April announcement by the company, when it rolled out its plan to purchase roughly 700 liquefied natural gas (LNG) vehicles and build four refueling stations by the end of next year. When these stations are up and running, which UPS expects by the end of 2014, UPS will have 13 LNG stations.

UPS said that when these efforts are completed it will have one of the most extensive LNG private fleets in the United States.  And it added this enhanced LNG fueling infrastructure will support the operation of about 1,000 UPS LNG tractors which will displace more than 24 million gallons of diesel on an annual basis.

The nine new LNG fueling stations will be based in Florida, Illinois, Indiana, Mississippi, Missouri, Ohio, Pennsylvania, and Texas. The four stations announced last April are in Knoxville, Nashville, and Memphis, Tenn., with the fourth one in Dallas, Texas, which are under construction.

UPS has been actively involved on the LNG front for more than a decade and is making a major investment push into LNG to make it part of its domestic delivery network, due in large part to the price disparity between LNG and diesel fuel, with LNG on average 30-to-40 cents cheaper, and U.S.-based natural gas production on the rise.

What’s more, it is already operating LNG tractors in Las Vegas, Nev., Phoenix, Ariz., Beaver and Salt Lake City, Utah, and Ontario, Calif.

“The natural gas industry needs companies to commit to using natural gas to help establish a reliable alternative to traditional fuel, and that is just what UPS is doing,” said David Abney, UPS chief operating officer, in October. “The UPS strategy is both environmentally friendly and economically viable. LNG is becoming more readily available, plus it’s more insulated from market volatilities than diesel fuel. Building these fueling stations is a solid future investment for UPS,” said Abney. “Since vehicles represent approximately 35 percent of UPS’s carbon footprint, a cornerstone of the company’s environmental strategy is to support the development and use of lower-emission alternative fuels. By 2017, our goal is to reach one billion miles driven by our alternative fuel and advanced technology fleet. To accomplish this goal the company must continue to innovate and help pave the way toward more sustainable transportation solutions.”

UPS’s sustainability efforts are well-documented, with the company operating more than 2,700 alternative fuel and advanced technology vehicles, which includes all-electric, hybrid electric, hydraulic hybrid, CNG (compressed natural gas), LNG, liquid propane gas, biomethane, and light-weight fuel-saving composite body vehicles.

UPS said that between 2000 and the end of 2012, the company’s alternative fuel and advanced technology fleet totaled more than 295 million miles, with the fleet in 2012 driving 49 million miles, a 43 percent annual increase over 2011.

A noted green transportation expert told LM that what UPS is doing in terms of LNG-related transportation efforts is highly impressive.

“UPS considers [itself] to be a leader in testing and investing in LNG for transportation,” said Brittain Ladd, a global supply chain consultant. “What UPS has been able to do is convey to corporations that have fleets of similar size and that operate in a similar environment that LNG is not only a viable source of fuel, LNG is becoming good business. As with all trends in business, especially trends that require capital investment and a paradigm shift, LNG has been slowly embraced by a few leading corporations.”

However, said Ladd, this move by UPS reinforces that LNG is worth the investment and for the companies that integrate LNG into their fleets, over the coming months and years they will reap the benefits of being an early adopter of LNG.

“Slowly but surely momentum for LNG continues to increase and it is only a matter of time before trucking fleets and the railroads put as much emphasis on the use of LNG as a fuel as UPS,” he said.