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AT&T to Make Massive Natural Gas Vehicle Purchase

attlogoUpdated: The former oil baron T. Boone Pickens was so giddy about AT&T’s (s T) 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.


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 (s CLNE), 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 (s HMC) 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.

43 Responses to “AT&T to Make Massive Natural Gas Vehicle Purchase”

  1. Steve,Companies I have started have saved THOUSANDS of trees,eliminated MILLIONS of tons of waste from landfills,employed more than 2000 people,and changed the lives of a great deal of peoples.I am PROUD of being a “greenie” and will continue to do everything I can do to help.Oh yea,and make money too!We are changing gears in the way we do things.We need to do it in the most effective way possible.We can debate the method but when we are done there needs to be results.

  2. Steve Bergman

    Oh, cool your back!

    Please elaborate upon what conversions you are supposedly bidding, and for what market. I asked that earlier.

  3. Oh, cool your back!You think Ford is going to supply chassis with motors that are specifically “tuned” to what you call “CNG in mind”.Not hardly.If they were, why are the conversions not being done by Ford as well?What you are talking about may happen in a couple of years but again,transition is the word here.Transition in the auto industry.Transition in the aftermarket industry.Transition in the private sector.We need to make the changes NOW,not “willy nilly” but now.Stuff happens and if you do not keep your options open it WILL cost you.Bi-fuel IS the transitional system.At least for the next year or so until we set the CNG network of stations.If we are to get off of gasoline we need to do it at all levels, not just fleet but private sector as well.

  4. Steve Bergman

    Katie,Sorry to dive in on your road kill,but it was a lot of fun!!!

    I’m beginning to understand why “greenie” has come to be considered such a derogatory term. A pity, really.

  5. Katie,Sorry to dive in on your road kill,but it was a lot of fun!!!Capitalism is most enjoyable when it not only involves the making of money,but you get to create jobs,AND help the environment to boot!!

  6. Steve Bergman

    Steve,I am bidding the conversions for my market so I am very aware of the range needs.Companies like ATT,Walmart,etc do not want stranded drivers either.

    Please elaborate upon what conversions you are supposedly bidding, and for what market. This all sounds very vague.

    Stranded drivers? Does your company have no management, policies, or plan? Do your drivers just drive around willy-nilly, buying gas at the 7-11 and Bargain Shack, sometimes waiting until the gauge is below the ‘E’ to look for a station?

  7. Steve Bergman

    I was waiting for you to reply to the earlier question before moving on.

    The engine would be essentially identical to the gasoline one… but with a substantially higher compression ratio. What you seem to want to call “a whole other type of engine”, racers would call “grinding the head”, “grinding the cam”, etc. None of it is expensive or exotic. Basically, Ford would provide an engine with valve timing, ignition timing, and compression ratio all tuned with CNG fuel in mind. Ignition timing is easy enough to adjust on the fly. Variable valve timing is also possible, at a cost. But optimum compression ratio is the key for efficiency. And there is no good way, at present, to vary that on the fly. And it’s not like it’s is a new problem. A CNG-tuned engine is basically just another engine. But your “bi-fuel” really is a “whole other type of engine” if it’s done right, and not done as a big, ugly, compromise.

  8. Transition is the opperative word here.CNG/gas bi-fuel to CNG only requires the removal of the gas tank and cylinder replacement only.The conversion system is what allows CNG use not the motor.When the stations are in place then CNG only will not be a problem.BUT,untill then,bi-fuel is the most prudent option.The cost for bi-fuel and/or total conversion is the same.Why limit your options?

  9. Steve,I am bidding the conversions for my market so I am very aware of the range needs.Companies like ATT,Walmart,etc do not want stranded drivers either.

  10. Steve,Are you going to reply to my question about a “whole other type of engine”?Are you saying Ford has to put “CNG engines” into all of the ATT vehicles?If you are ,you are very mistaken.

  11. Steve Bergman

    So now it’s Houston to New Mexico, instead of Houston to Austin. I suspect that you were not looking very hard for CNG stations on that trip. Most people on long drives don’t take those kinds of notes. As it happens, there are CNG stations on that route. (Google it.) However, let’s consider how many stations there would need to be, assuming that none existed today. Houston to Las Cruces is 790 miles. Conservatively assuming a range of 300 miles, would not 2 stations work? AT&T, Walmart, and others who are planning their CNG fleets would seem feeble, indeed, not to be able to work out a deal with local providers to ensure CNG availability in at least two locations along that route. Pretending, for the sake of argument, that they didn’t already exist, or that the existing ones were all wiped out by a freak series of tornadoes or something.

    For individuals… sure, flex-fuel makes sense. For fleets… hardly.

  12. Steve, When was the last time you looked at CNG infrastructure.It is almost non existant at this time for long distance driving, therefore, the need for transitional bi-fuel is an evil we have to endure untill the stations are dense enough for general use otherwise there will be a great deal of stranded motorists.

  13. Steve Bergman


    Why are you avoiding answering my query regarding your example regarding a CNG fleet vehicle traveling from Houston to Austin. You said that we would need to have enough stations before that was practical. The number of intermediate fueling stations required is zero. But just to give you a break, I’ve left the door open for you to argue that one or more are necessary. Your entire argument asserting the need for the complexity of multi-fuel engines rests upon that. Please answer the question.

  14. Steve,Are you saying that we need a whole other type of motor for CNG?If you are ,then you need to do more homework.We have no choice with 18 wheelers than to be bi-fuel because diesel engines,in order to burn CNG require about 30% diesel to run.Otherwise we would have to retrofit all of the diesels to gas engines.Modern gasoline engines will run on CNG with no mechanical mods.Older conversions would require hardened valves,etc. but new retrofits will only require computer adjustments

  15. Steve Bergman

    Fiddling with ignition timing is never going to come close to making up for the difference between 93 octane and 130 octane. I mean, get real!

    You didn’t address my question of whether a fleet vehicle can reasonably get from Houston to Austin (160 miles, your example) on a single tank of CNG. If your answer is “no”, please explain why, and describe the situation, as you see it, if there happens to be a single, solitary CNG station somewhere between.

  16. Bi-fuel systems use computer modules to advance or retard timing,etc. to take into account differances in octane levels,etc..My gripe is that ANY CNG bi-fuel system does not qualify for tax credits or EPA approval.What about doing a battery-CNG(instead of gas)bi-fuel,OOPS,hybred.We need to take steps to get away from gasoline!Steps means transition.Once CNG stations are commonplace a bi-fuel vehicle can be converted to CNG only by simple elimination of the gas tank and the placement of CNG tanks in the hole made by the removal.

  17. Steve Bergman

    And the conversion allows the engine to switch compression ratio’s based upon the fuel it is using at the time? Uhhh…. no.

    So bi-fuel is not CNG with all of its “bennies”. It is CNG with its hands tied behind its back.

    How many CNG stations does a fleet actually need between Houston and Austin? The distance is 160 miles. So, I’d say, somewhere between zero and one?

  18. 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

  19. Steve Bergman


    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.

  20. Steve Bergman

    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 , please consider doing so. It’s a good cause, a good group of people, and good science. I’m, “sbergman27” at that project.

  21. 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.

  22. Steve Bergman


    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.

  23. Steve Bergman

    “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.

  24. 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.