Evidence of meeting #25 for Transport, Infrastructure and Communities in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was propane.
A recording is available from Parliament.
9:20 a.m.
Liberal
Denis Coderre Liberal Bourassa, QC
Mr. Shaw, I was interested in your statement on infrastructure, because basically I believe in options. Of course hydroelectricity is an asset for us, and we should use it, but it's not one size fits all. In certain areas, if we have an alternative, it's great, but it's all about infrastructure, isn't it?
Did I hear you well when you said that we would be able to have refuelling on our own, from our house or from...? Would you expand on that?
9:25 a.m.
Vice-President, Natural Gas Policy Development, Encana Corporation
Home refuelling—
9:25 a.m.
Liberal
Denis Coderre Liberal Bourassa, QC
Is it one day the barbecue, the second day the car? How do you manage that?
9:25 a.m.
Vice-President, Natural Gas Policy Development, Encana Corporation
That's right. Home refuelling units have a compressor and a pipe, and you connect it to your car. It comes off the natural gas line to your house.
If you think about the infrastructure across Canada, you realize there's a lot of piping that carries natural gas to your residence. You can use it for refuelling your vehicle, or for fuelling your barbecue, your fridge, or your stove, and so forth.
9:25 a.m.
Liberal
Denis Coderre Liberal Bourassa, QC
For example, if we already have Gaz Métro in Quebec in our home, then all we need is to add a device, and instead of plugging our car into the electricity, we just plug it in. Is that how it works?
9:25 a.m.
Vice-President, Natural Gas Policy Development, Encana Corporation
That's right. In my handout, I'll show you pictures of home refuelling units. What we're trying to do is get the best technology out of the different units to bring the price down.
9:25 a.m.
Liberal
Denis Coderre Liberal Bourassa, QC
Is it a matter of figures, then? We're all talking about private-public partnership here. How much would it cost to have that kind of infrastructure?
We spoke about the regulatory approach; that's an issue with CSA and all that. How would you perceive it, if you had to go for the next budget? How would you see it?
9:25 a.m.
Vice-President, Natural Gas Policy Development, Encana Corporation
For the home refuelling infrastructure, it would be a case of going down to The Brick and buying a home refuelling unit, just as you would for your fridge or stove and so on. It would really be the customer. Obviously, this is being driven by the fact that they have to have a natural gas vehicle, either a converted one or one from the OEM side.
One of the things I would also like to say is that in terms of Quebec or B.C. looking at hydro, you can sell the hydro for a higher price than you can actually get for the natural gas. There is a continuum of energy sources, and you make more money selling your hydro and fuelling your transportation with natural gas.
March 6th, 2012 / 9:25 a.m.
Conservative
Blake Richards Conservative Wild Rose, AB
Thank you, Mr. Chair.
I appreciate having both of you here today, including Sam from my home province. It's nice to have a fellow Albertan here. I appreciate both of you being here.
I have a number of questions for both of you. There will be a few mixed in that are for one or the other. I'll just ask, because I have a number of questions, that you try to be as brief as you can with your answers so that I can try to get through all the questions I have in a seven-minute period.
Both of you focused a lot on fleets. I can understand the reasons for that at this point in time with both types of fuel. I'll start with some questions about fleets and about some of the challenges and costs and various things. Hopefully, if we have time, we can talk about the individual consumer and some of the challenges that might be there as well.
Starting out with fleets, I know, Sam, that you specifically mentioned the mobile filling stations. Obviously for fleets—and I'm thinking of operations such as the one you mentioned your fleet at Encana is on—operations like Encana or other oil and gas companies often service remote areas, and you have to be able to have the fuel there. For a lot of fleets, for a lot of larger companies, being able to do that would be a pretty key part, and I'm sure there would be a lack of fuelling stations.
I'm a little bit curious about some of the costs. First of all, for each of you, what are the costs to convert to either natural gas or propane per unit, per truck, and what would a mobile fuelling station cost?
I'm not sure if you'd be suggesting propane for a fleet situation or not. I know there's certainly more availability of propane fuelling stations, but maybe I'll ask you both to answer about the costs for corporations to set up their fleets.
9:30 a.m.
Vice-President, Natural Gas Policy Development, Encana Corporation
First of all, for the station, you're looking at between $1 million and $1.3 million in terms of what we've done with Strathmore and some of our stations in the U.S. In terms of the mobile refueller, I'd have to get back to you on the specific costs because we're looking at some patents on that.
Again, it's one of the first in terms of innovation on that side. In terms of some of the little units, we just opened up our first LNG Tango unit. It's about 14 million dollars. It will service the transportation sector down in Louisiana. Those are the hard costs for supporting the infrastructure for transportation.
The other element we're starting to see is that you can rail or truck LNG to any stop to provide that kind of infrastructure. What's occurring are those triangles for return-to-base. Even though those base triangles may be thousands of kilometres long, there are points at which you can look at refuelling. One heavy tractor-trailer will go between 800 and 1,000 kilometres. Those are the triangles we're starting to build.
In terms of the costs coming down, we see some real innovation. We're looking at a design of a station unit that you can put in any existing service station and look at CNG. We don't have the complete engineering on that—we're going for patents on it—but it will be very innovative at a fraction of the cost of doing a new station.
9:30 a.m.
Conservative
Blake Richards Conservative Wild Rose, AB
What about the cost of converting individual trucks? What is the cost per truck, roughly?
9:30 a.m.
Vice-President, Natural Gas Policy Development, Encana Corporation
The conversion costs are typically $8,000 to $12,000. Of that, 40% is the cost of the tank. The difference in cost from $8,000 to $12,000 is roughly the difference between using steel tanks and carbon fibre. It's more expensive for the carbon fibre, but it is lighter.
If I can just add something, the 3M material will actually be lighter and have higher capacity. There's innovation coming in regard to tanks. The key for the tanks is the volume.
We talk about regulatory issues. Why can't you import to Canada a natural gas vehicle, say, from Italy, where there are over 660,000 vehicles? It is because it costs the OEMs so much, because of the safety testing and so forth, that it's better to develop here in North America.
9:30 a.m.
President and Chief Executive Officer, Canadian Propane Association
There are two parts to your question. The first part is about the cost of conversion. The second part is about the fuelling station set-up costs.
I'll give you a range for the unit cost for the cost of conversion for propane. With more volume, of course, the cost will drop as you take advantage of economies of scale, but the cost of conversion ranges between $3,000 and $6,000, approximately, and it's between $45,000 and $55,000 to set up a fuelling station.
9:30 a.m.
Conservative
Blake Richards Conservative Wild Rose, AB
Great.
Obviously some set-up costs are absorbed by the fleet owners, but what about fuelling costs over the course of a year? Obviously there are savings. What are we looking at in terms of savings per year per unit?
9:30 a.m.
President and Chief Executive Officer, Canadian Propane Association
For a propane-powered vehicle, it really depends on your usage. You can recoup your initial investment in less than nine months without too much problem.
9:30 a.m.
Vice-President, Natural Gas Policy Development, Encana Corporation
We typically say that there's a three-year buyout if you start looking at OEM vehicles and so forth. We've seen between $5,000 and $7,000 in savings for some of our pickup trucks. They're operating up north, in Fort Nelson.
9:30 a.m.
Conservative
Blake Richards Conservative Wild Rose, AB
I'd like to look quickly at the individual consumer at this point. How much time do I have?
9:30 a.m.
Conservative
Blake Richards Conservative Wild Rose, AB
It will be really quick, then.
In terms of the number of fuelling stations in Canada for natural gas, I know that you mentioned, Jim, that there are about 2,000 of them.
To each of you, are there any challenges in taking them into the shop or providing special training for the mechanics because of the conversion to that type of fuel? Are there any safety issues? I know that with propane, there's an issue with underground parking. Are there any safety issues involved for individual consumers?
9:35 a.m.
President and Chief Executive Officer, Canadian Propane Association
Let me deal with the last part.
Propane is safe. Yes, mechanics will have to be properly trained on conversion, and they should be, absolutely. In terms of individual consumers moving to propane, at the end of the day it really depends on how long they're going to keep the vehicle. Do they want to spend between $3,000 and $6,000 to do an aftermarket conversion? If we could go to OEM, it would be a whole lot better.
9:35 a.m.
Vice-President, Natural Gas Policy Development, Encana Corporation
In regard to training, if you look at Chrysler, they're already rolling out training for all their mechanics at all the dealers across Canada, because they're introducing a new product. In terms of the issues, clearly there's a big difference between propane and natural gas. Natural gas dissipates. There's not an issue with that. Again, you can park underground.
What we're actually seeing is that the OEM point is really critical in terms of the training and the consumer being able to get the car serviced.
9:35 a.m.
Conservative
Ed Holder Conservative London West, ON
Thank you very much, Chair. I'd like to thank our guests for being here today. I find your testimony thus far very helpful.
Mr. Facette, you made a reference to our London police force using propane for their vehicles. I'm proud to say, being from that city, that we have certainly embraced that technology. In fact, it was rather interesting. We made a decision, because of the challenges in Ford Talbotville, to buy up all the Crown Victorias they had so that we could put them in storage until we could utilize them again, with the notion of converting them. We also have probably the largest taxi fleet, Aboutown, that not only has all of its vehicles on propane but is a propane supplier, as well, across the city.
I'm trying to understand better the economics of all of this, and the payback. Mr. Facette, I think you said that depending, of course, on usage, it could be as little as a nine-month payback. Mr. Shaw, I think you said that potentially you would set that out generously as a three-year plan. If you'll forgive the pun, why haven't conversions exploded?
