As a simple calculation, jobs related to the compressed natural gas (CNG) industry as a function of current and likely near-term statewide demand are very limited in Texas. However, from a macroeconomic and strategic perspective, investments in CNG infrastructure and training programs may provide an opportunity for Texas to take advantage of brewing Federal policy.
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As a simple calculation, jobs related to the compressed natural gas (CNG) industry as a function of current and likely near-term statewide demand are very limited in Texas. However, from a macroeconomic and strategic perspective, investments in CNG infrastructure and training programs may provide an opportunity for Texas to take advantage of brewing Federal policy changes related to energy, natural gas and CNG in particular, and to position the Texas workforce and fuel infrastructure for a more rapid transition to fuel cell vehicles should cost and technological breakthroughs make these fuel cell technologies commercially viable.
Jobs: Current prospects for CNG technicians in Texas are few. Near-term demand for talent can be met with current supply.
Trends: Two developments may potentially change the demand for CNG technicians and related skill sets. First, there are a number of private investments and public policy changes on the horizon that may dramatically alter the market conditions for CNG vehicles and give rise to increased demand. Second, there is good alignment/articulation between CNG and fuel cell vehicle feedstock, infrastructure and skill sets. Successful and widespread commercialization of fuel cell technology will expand and draw upon CNG products and services.
Timing: Both alternative and natural gas policy development as well as fuel cell technology development is underway. The outcomes are unclear and will be slow to emerge, giving the state ample opportunity to respond with training capacity investments if the state and national CNG market changes.
Relevance: There are a number of CNG training opportunities across the US. Most are non-degree courses fulfilled in short, multi-day training session. One California college has developed robust partnerships with CNG original equipment manufacturers (OEMs) to offer corporate training on an as needed basis. Widespread training specific to CNG does not appear to be available or in demand. However, several alternative fuels certification and training programs do incorporate CNG into the curricula.
Vehicles fueled by natural gas operate according to the same principles as vehicles with standard combustion engines: fuel is mixed with air and fed into a cylinder where it is ignited by a spark plug.1 The primary difference between a CNG vehicle and a gas vehicle is CNG is stored as a gas under pressure. CNG takes up about 1/200th of the space of natural gas. CNG also must pass through a regulator near the engine to reduce the pressure. Newer CNG vehicles feature electronic multi-point gas injection systems, which are similar to gasoline injection systems. CNG fueling requires a closed system to prevent natural gas escape. Fueling is accomplished through fast-fill and time-fill fueling equipment. Fast-fill fueling stations require additional compressors and storage tanks to achieve fill times comparable to gasoline. Time-fill fueling stations refuel at a rate of one gallon equivalent per hour. 2
CNG is an attractive technology due to low costs in terms of gasoline gallon equivalents, lower emissions than gasoline vehicles, and abundant domestic supply of natural gas. Over the long-term, diverse, distributed and dispatchable energy and fuel systems will require the type of flexibility and scalability that CNG provides. The figure on page one represents industry analysts’ take on the transition from solid and liquid fuel to gases.3
According to stateuniversities.com there are 370,000 National Institute for Automotive Service Excellence (ASE) certified alternative fuel technicians in the US. ASE alternative fuels certification deals principally with CNG conversion, testing and maintenance. Estimates vary but there are 120,000 to 150,000 CNG vehicles in the US. This means there are as many as three certified CNG technicians for every CNG vehicle on the road today.
Clearly, the servicing of current CNG vehicles can be met with the current talent supply and available job posting information bears this out. A review of hotjobs.com and monster.com revealed very few US job opportunities related to CNG. Only 32 CNG-related positions were advertised on monster.com and two were in Texas. Of those advertised nationally most required advanced engineering degrees and did not require any training specific to CNG. Two following CNG technician postings serve as examples of job opportunities in the US. No salary or wage information was provided but stateuniversities.com claims the median salary is $38,000. Neither position requires CNG-specific training; rather, applicants are expected to have broad mechanical and electrical controls experience.
ASE certification for Alternate Fuels requires technicians to master vehicle inspection, equipment installation, leak testing and repairs, emissions, system diagnosis, maintenance and repair and cylinder safety. For ASE certification, technicians must pass the CNG exam and have at least two years of relevant work experience. Technicians may substitute two years of relevant formal training for up to one year of the work experience requirement.4 The ASE certification test gives the following emphasis to each test component. 5
In addition to service and maintenance, CNG vehicles require inspection. CNG vehicles are required by current standards to undergo inspection every three years or 36,000 miles. CNG cylinder inspectors are certified by CSA International. However, the demand for inspectors and/or certification is unclear. According to the CSA database of certified CNG cylinder inspectors, there is only one in Texas. However, the lack of certified inspectors may be driven by the very narrow focus of the certification. As of August 1, 2008, CSA revised its training and certification CNG program from extensive focus on cylinder inspection to encompass the entire CNG vehicle fuel system including “inspection of containers, valves, PRDs (including vent system) and other fuel system components of compressed natural gas powered vehicles.”6 The program is ISO certified.
As with all alternative fuels, recent interest has been driven by business and consumer concern for high petroleum prices, for secure and predictable energy supplies for the future and for environmental awareness and global climate change. As with other clean and alternative energy technology, the market opportunities are frothy and uncertain and there are several developments that will dictate how the CNG market evolves in Texas. The CNG market is driven by consumer demand, technology development to capture that demand cheaply and efficiently, and, perhaps most crucially, Federal and state policies that support the growth of the CNG market.
Despite growing consumer interest in alternative fuels, the US market for CNG vehicles is anemic. There are approximately 150,000 CNG vehicles in the US.7 However, there are over 8 million CNG vehicles worldwide, indicating that the US market for CNG vehicles is not as developed as other parts of the globe. However, the market is expanding slowly, particularly with respect to fleet vehicles. According to advocacy group Natural Gas Vehicles for America, 22 percent of all new transit bus orders are for natural gas vehicles.
The primary market challenge for natural gas is the difficulty of linking supply with demand. Natural gas use is growing more than any other fossil fuel and is expected to increase for the next two decades. Natural gas for power generation in the US is expected to increase by 80 percent between 2000 and 2020. Although there are large untapped natural gas supplies, nearly one third are “stranded,” where the complexity of extraction and transportation infrastructure and to move the natural gas from the source to the market is cost prohibitive. New technologies, such as horizontal drilling in the Barnett Shale near Fort Worth, Texas, are making stranded natural gas more accessible. But the technologies are expensive and the cost effectiveness of extraction is driven by natural gas spot prices, which are highly volatile and have fallen nearly 50% in the last few months.
Seventy-five percent of natural gas is transported via pipeline and the remainder in liquefied form. Liquefied natural gas transport requires large capital investment and is economically feasible only for moving large quantities from the natural gas source over large distances. CNG may be an emerging mid-distance solution due to fewer requirements for specialized facilities and better modularity and scalability. CNG may be a technological solution to challenges of transporting natural gas but no large-scale CNG transport projects have been fully commercialized.8
In terms of private sector activity at the national level, natural gas vehicles are seen as also facilitating the development of the hydrogen market in two important ways. First, natural gas is the current leading feedstock for hydrogen. Hydrogen may in the future be produced by solar, wind and landfill gas but currently most hydrogen in the US is produced via steam reforming of natural gas. Second, as both natural gas and hydrogen are gaseous technologies, the more mature CNG products and services are providing important technology in terms of fuel storage, fueling, station siting, training, facilities and public acceptance.9
CNG-related job opportunities are an outgrowth of of a robust market for CNG vehicles and an infrastructure to fuel and support these vehicles. Such circumstances do not currently exist.
One constraint on the growth of CNG jobs is the lack of CNG vehicles for US markets. The availability of CNG vehicles from OEMs has declined in the last 10 years. Honda is the only vehicle manufacturer to make a CNG passenger car for the consumer market. GM makes 18 models of CNG cars and trucks, but these are sold only in non-US markets.10
Conversions of gasoline or diesel vehicles to CNG are expensive for both the small volume manufacturers and consumers. As evidenced by the traffic on blogs and online discussion groups, there is a significant interest in after-market conversions of combustion engine vehicles to CNG. However, conversions that conform to existing regulatory and legal requirements are expensive, ranging from $8,000 to $18,000. Some conversions may qualify for a $4,000 tax credit. The high cost of CNG conversion is driven by (1) the high cost of the CNF pressure tanks (new ones are made of carbon fiber) and (2) an environmental certification. (The Environmental Protection Agency certification costs $40,000 to $80,000 per engine family, per model year.)
The California Air Resources Board (CARB) certification, which established standards in California and are set to be adopted by 16 other states (excluding Texas), is also required for CNG conversion in those states. CARB certification can cost up to $300,000 per engine family and model year. Given the costs, small volume manufacturers (converters) only pursue certification for a limited number of vehicles over a limited number of model years.[11 www.cngchat.com forum on CNG service and conversion and conversion FAQ for National Gas Vehicles for America. www.ngvc.org/pdfs/FAQs_Converting_to_NGVs.pdf] Based on review of small volume manufacturer Web sites, most appear to forego certification process and offer only non-certified conversion kits and services. It is illegal to operate non-certified vehicles.
A second constraint to the emergence of robust CNG job growth in Texas is the lack of CNG fueling infrastructure. The concentration of the US CNG market in fleet vehicles is a function of the lack of widespread CNG fueling stations. At the end of 2004 there were roughly 1,100 CNG stations nationwide but only half are available for public use. Texas lags the nation in terms of CNG fueling station infrastructure. According to the US Department of Energy’s Energy Efficiency and Renewable Energy database of CNG stations, Texas ranks 10th in CNG stations with only 17, behind states such as California (186), New York (86) Utah (60) and Oklahoma (50). That said, Argentina has a similar refueling infrastructure of 1,452 stations, yet there are nearly 1.5 million natural gas vehicles operating in that country. Brazil operates over 1 million natural gas vehicles with only 1,138 fueling stations. Alternative fuels have been a national priority in both of these countries for some time and the CNG market is perhaps better organized, less fragmented, and more efficient as a result.11
The CNG market is largely driven by public policy choices at the national, state, and local level. State and local government agencies create CNG markets through their purchase decisions. National and state policy both expands and constrains CNG market opportunities. One bill introduced to the US Congress in July, the NAT GAS Act, proposes that 10 percent of all vehicles sold in the US be CNG compliant by 2018 and would provide incentives and low or no interest loans to OEMs to develop natural gas vehicle production capacity. The bill also offers increased property tax credit for the installation of natural gas fuel pumps at service stations and will require filling stations owned by major oil companies to install natural gas pumps by 2018. The bill also incents home refilling pumps.
At the state level natural gas is seen as critical to the Texas energy mix and policy makers are loath to eliminate any technologies and market opportunities that help the state meet its very high energy and fuel demands. However, CNG is viewed as a transitional technology and state public policy and cluster strategy is aligned accordingly. As the recently released report from the Governor’s Competitiveness Council notes, Texas is more dependent on natural gas to meet its energy needs and any additional demand and a concomitant rise in energy prices may undermine the state ability to sustain and grow its industrial base.12 Natural gas price volatility, which is much greater than oil price volatility, is identified as an impediment to industrial recruitment.
Increased demand for natural gas in a state that is dependent on natural gas for energy production (relative to other states) could potentially have negative knock on effects from a larger economic development perspective. In 2005, 87 percent of the natural gas used in the US was sourced domestically and an additional 12 percent was sourced from Canada.13 However, due to rising demand, natural gas imports are expected to rise from 3 to 20 percent in the near term even as new and better extraction technologies come to market. Increased demand has resulted in US natural gas prices twice that of foreign natural gas. As a result natural gas-dependent industries such as chemicals and plastics are relocating overseas.
Natural gas has experienced a media boost recently with T. Boone Pickens’ efforts to curb oil imports through vastly expanded use of wind and natural gas. The recently launched Pickens Plan14 is quickly mobilizing interest in investment in domestic energy sources. Pickens’ first foray has been in wind energy but natural gas is second among his priorities. Pickens is very much in favor of CNG vehicles but, as yet, it is unclear how the Plan will expand the market and spur increased demand. According to seekingalpha.com, Pickens does own 16 million shares of Clean Energy Fuels, a company that markets natural gas fueling stations for vehicles. This sector and Pickens’ activity in it bear watching. As his investments in wind have been a huge boost for Texas wind energy, Pickens’ natural gas vehicle-related investments may provide similar opportunity for Texas.
Most CNG educational opportunities are geared toward fleet maintenance technicians for government and private employers. A sample of the training offerings includes: