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Summary:

Updated: The former oil baron T. Boone Pickens was so giddy about AT&T’s plan, announced this morning, to make one of the largest purchases of compressed natural gas vehicles in the U.S. to date, that he tweeted about it. AT&T said it will spend $565 million […]

attlogoUpdated: The former oil baron T. Boone Pickens was so giddy about AT&T’s plan, announced this morning, to make one of the largest purchases of compressed natural gas vehicles in the U.S. to date, that he tweeted about it. AT&T said it will spend $565 million over a decade purchasing 15,000 alternative fuel vehicles, including spending $350 million on 8,000 compressed natural gas vehicles. While AT&T said it has found in trials that “a mix of solutions is right for its fleet,” its commitment to natural gas vehicles is a very significant step for a technology that has been slow moving.

If you recall, T. Boones Picken’s Plan includes converting trucks and company fleets in the U.S. that burn diesel and gas to run on compressed natural gas. (His original plan also included building a massive wind farm in Texas, but the credit markets have stalled that idea for now.) Pickens has estimated that it will cost $28 billion to convert 350,000 trucks from diesel to natural gas, which he says could create about 450,000 jobs and reduce oil imports by 5.14 percent. But it will be companies like AT&T — which has thousands of vehicles in its fleet and has to pay for upgrades anyway — that will make the choice to buy natural gas vehicles in the U.S.

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For AT&T, the purchase is smart economics. AT&T can replace its aging fleet over a decade with alternative-fuel vehicles, and depending on which technologies it uses, it could get up to a 39 percent improvement in fuel economy and reduce greenhouse gas emissions by up to 29 percent, according to AT&T. So the largest phone company in the U.S. can save significantly on gas prices, which are predicted to rise over the coming months from their current lows. It can also show its green credentials and likely tap into some of the incentives for green vehicles in the stimulus package.

Natural gas vehicles are not without drawbacks, however. The trade group Natural Gas Vehicles for America (NGVA) says that natural gas vehicles produce around 20 percent less greenhouse gas emissions than a standard gas vehicle, which is about the same as corn-based ethanol — not bad, but not great. Pickens has admitted that natural gas vehicles are a transition to more advanced technology, like electric vehicles, but investing in a technology that makes less substantial carbon reductions now could take away investment from future technology that could reduce carbon emissions further.

There’s also the natural gas infrastructure bottleneck. The NGVA says there are more than 1,100 stations in the U.S. On that note, AT&T says it will work with developers to build 40 new compressed natural gas fueling stations throughout its territory. Oh yeah, did we mention that Pickens is a major shareholder in Clean Energy Fuels, which makes money off of building compressed natural gas fueling infrastructure? (CLNE’s stock is up almost 2 percent in morning trading).

It’s also unclear what company is going to sell the CNG vehicles to AT&T. AT&T didn’t name a supplier, and said “the vehicle chassis will be built domestically by a U.S. automotive manufacturer. AT&T will then work with domestic suppliers to convert the chassis to run on CNG.” (Update: The WSJ reports Ford will be an initial vendor for the CNG chasis, and AT&T confirmed with us.) Realistically there are not that many contenders for CNG vehicles yet: Honda has a $25,000 CNG passenger vehicle, and Pickens and Clean Energy Fuels are working with the investors at Perseus to spend $160 million developing a natural gas vehicle.

Yeah, Pickens has financial interests throughout the entire equation. And he is encouraging more companies like AT&T to convert to CNG — he said this morning:

AT&T’s decision today to upgrade 8,000 of its fleet vehicles to run on natural gas is a demonstration of real American corporate leadership that will be good for their bottom line, the environment and the country. AT&T recognizes that our reliance on foreign oil is one of the greatest threats to our national security—hopefully others will follow their lead.

  1. Nice to hear. I have a few acquaintances already commuting with CNG Hondas. And the nearest city to my neck of the prairie has a public bus system fired up by the same stuff.

    Nicer air than most. And a step forward.

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  2. [...] AT&T to Make Massive Natural Gas Vehicle Purchase – Earth2Tech – 3/11/09 [...]

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  3. Steve Bergman Thursday, March 12, 2009

    “Oh yeah, did we mention that Pickens is a major shareholder in Clean Energy Fuels, which makes money off of building compressed natural gas fueling infrastructure?”

    Promoting a cause, and either investing one’s own money or not investing one’s own money are both no-win scenarios. If you backup your talk with an investment of your own money in the cause you believe in, people do what the author of this blog has done, and cast doubt on your motives because you have a financial interest. If you don’t invest your own money, authors like this cast doubt by saying things like “If this is so great, how come he’s not willing to invest his own money”?

    Both tactics are ultimately meaningless, irrelevant, and quite frankly, below the belt.

    Good news on AT&T’s plans. When you electric proponents have a plugin electric 18 wheeler ready to go cross-country on a regular basis, please let me know. I suspect these new CNG-powered vehicles will probably reaching end-of-life by then.

    Not all applications revolve around running to the store for a gallon of milk.

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  4. @Steve. How is pointing out his investment “below the belt”? Would you have preferred that I don’t point out how he will financially benefit? I think it is totally appropriate context for the story.

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  5. Steve Bergman Thursday, March 12, 2009

    Katie,

    Informing is fine. Mr. Pickens is not at all secretive about the fact that he is willing to back his talk with real money. It’s your tone that exposes your bias and weakens your credibility. Please don’t feign innocence on that count at this point in time. You’ve already shown your hand.

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  6. well we can agree to disagree on that point

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  7. Bi-fuel is the way to go(CNG-gas).EPA needs to modify it’s regulations to make this whole principal to be effective.With CNG only your range ,at this point,is too limited for fleet use.With bi-fuel you at least have a back-up fuel.

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  8. Steve Bergman Thursday, March 12, 2009

    Hey, Katie. I probably have come across a bit abrasively. I really care about these issues, which so many people seem to be apathetic about, every day. I keep my electric consumption under 700KWh per month, drive a 3 cylinder car a meager 3,000 miles per year (yes, really), and distribute inexpensive, but good quality, CFL’s for free in the laundry rooms at the apartment complex in which I live. I consider myself to be a “recovering republican”. I grew up republican, back in the 70′s, and then learned better in the early 80′s.

    It seems a bit surreal to me to be agreeing with T. Boone Pickens, of all people. But the guy is making sense. Wind energy is making real progress, in part due to his efforts (and his investments), as well as Obmama’s efforts. Part of “The Plan” is to generate our electrical power with wind. What good are plugin electrics if they are ultimately fueled by mostly coal? If you look at the numbers, electric production is a far more major factor than transportation in regard to CO2 production. If we can reduce coal consumption (for a huge reduction in CO2 production) and transfer NG to replace gasoline consumption for transportation (at a 20%-25% CO2 savings), it is a big win for CO2 reduction, overall. And an even bigger one for other pollutants.

    As an aside, if you do not already participate in the BOINC project http://www.climateprediction.net , please consider doing so. It’s a good cause, a good group of people, and good science. I’m, “sbergman27″ at that project.

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  9. Steve Bergman Thursday, March 12, 2009

    Rick,

    Fleet vehicles either fuel at a central hub (taxis, package trucks, etc.) or travel along the interstates, fueling at designated stations. If the stations don’t exist now, it’s simple enough to add them at the necessary points. It’s not like every gas station in every podunk U.S. town has to get with the program. When’s the last time you saw UPS, FedEx, or Global Trucking, fueling up at your local convenience store?

    Furthermore, CNG has an octane rating of about 130. Thus much higher compression ratios can be used than with gasoline. This results in substantially higher efficiency, less waste heat, and less CO2. Insist upon bi-fuel, and you limit the engine to the piddly compression ratios, and reduced efficiency, that gasoline can handle. CNG still does a lot better on CO2, and even “more better” on other pollutants. But does not perform to its full potential. Please don’t tether CNG to our gasoline legacy.

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  10. Steve,Bi-fuel is CNG as primary fuel with all of it’s bennies with gas as the secondary fuel.There are conversion kits are available to do this.I,by no means want to tether us to gas YUK! but untill the stations are available between,say Houston and Austin,anyone using CNG will need a backup fuel to get back to thier PHILL unit at home,or thier fleet fueling station

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