July 9, 2018
When Andrew Littlefair, CEO of Clean Energy Fuels, reached out in March to Patrick Pouyanné, CEO of Total, he was proposing an equity partnership to help his company develop new products and reach the next level of success. What he got may turn out to be a shot in the arm for the entire NGV industry.
In June, the two companies—one, North America’s largest provider of natural gas transportation fuels; the other, the world’s fourth largest oil and gas company—approved a broad strategic agreement designed to drive deployment of heavy-duty NGVs. Total purchased 50.8 million shares of Clean Energy’s common stock for $83.4 million, becoming Clean Energy’s largest stockholder.
“We have a common vision of natural gas as a fuel for heavy-duty vehicles, and together we want to jump-start demand for natural gas trucks across North America,” said Robert Vreeland, Clean Energy’s chief financial officer.
“Total is bullish on natural gas as a transportation fuel. We believe that natural gas for transportation will become as mainstream in the heavy-duty truck sector as it already is in the refuse truck sector,” he added.
With a guaranteed credit support of $100 million from Total, the partners’ first initiative is an innovative truck leasing program that could initially put as many as 2,500 new natural gas trucks on the road and consume as much as 38 million gges of natural gas fuels annually. The program will put the cost of heavy-duty NGVs on par with that of new diesel trucks. And it includes a discounted, fixed price for CNG or RNG from Clean Energy. According to Vreeland, both companies anticipate that the leasing program will reduce the incremental costs of investing in natural gas trucks, which poses a significant economic barrier for most fleet owners. The companies will announce further details about the program in the third quarter of this year when they roll it out.
According to Vreeland, this program will have a ripple effect across the industry. The purchase of more trucks will increase the volume of vehicles, parts, and fuels produced and drive down costs.
“This touches everyone in the industry,” said Vreeland, noting that increased demand will boost business for all NGV industry stakeholders, from tank, fuel system, and engine manufacturers to truck dealerships to fueling station owners.
Beyond that, Vreeland said that Clean Energy appreciates Total’s belief in and enthusiasm for its business and the natural gas transportation fuels industry as a whole. As he pointed out, Total—a major player in the gas and oil industry—has invested in natural gas vehicle fueling stations in Europe with plans to grow that network to 350 stations by 2022, and it has the resources to invest for ensured success.
“Total’s equity stake in Clean Energy is really validating for our entire industry,” he said.
Photo ©Westport Innovations, used by permission