Bills this winter
As long as the weather cooperates, natural gas bills for Lawrence residents should be about the same or lower than they were last winter.
Officials with Black Hills Energy, the city’s largest natural-gas utility, said the price of natural gas is at about the same level it was a year ago. That means that a customer’s heating bill will be determined more by how much gas they use rather than the price of gas this season.
Curt Floerchinger, a Black Hills spokesman, said forecasting services the utility subscribes to predict winter temperatures to be below normal from January through March.
Natural gas prices are down about 70 percent from levels in 2008 as more domestic supplies have been tapped using new extraction technologies.
City leaders on Tuesday were told that there is a big difference between gasoline and gas these days. At a luncheon hosted by Black Hills Energy, the city’s natural gas utility, city commissioners were told that compressed natural gas currently is selling for about 40 percent less than a gallon of gasoline or diesel fuel.
“There is a high level of interest in compressed natural gas right now from cities and other operators of vehicle fleets,” said Tim Hess, manager of Black Hills’ gas marketing program.
Count Lawrence City Hall among those interested. The city already has confirmed that it plans to convert one standard pickup in its Public Works Department to a natural gas vehicle in 2012 to test the technology.
But on Tuesday, City Commissioner Bob Schumm said he wanted the city to be open to an even larger test of the alternative fuel source. Schumm said the city should have serious discussions with the city of Kansas City, Mo., which has more than 200 compressed-natural-gas vehicles in its fleet.
“If the information we get from them looks good, I think we should proceed with buying one new trash truck and see how it really works for us,” Schumm said.
At Tuesday’s meeting, leaders with Black Hills Energy said they were ready to work with the city on a pilot project. Black Hills has a compressed-natural-gas fueling station at its east Lawrence operations facility. The fueling station is not open to the public, but Black Hills officials said they were willing to open the facility to the city and other organizations that want to test the feasibility of compressed-natural-gas vehicles.
Scott Zaremba, an owner of the Lawrence-based Zarco convenience store chain, has filed plans at City Hall to build a retail compressed-natural-gas fueling station as part of a remodeling of his convenience store properties at Ninth and Iowa streets.
Zaremba has city approval to build the station, but he said having a major fleet operator like the city become a customer would make it easier for the approximately $1 million station to proceed.
Not surprisingly, Black Hills officials are bullish on the future of compressed natural gas for vehicles. Hess said fueling stations already are prevalent on parts of the West Coast. The trend is making it way to the Midwest with about 30 retail stations currently in Oklahoma, and stations have opened recently in Lincoln and Omaha, Neb.
“I don’t think it is going to take 10 or 20 years to see major changes,” Hess said. “I think in the next three to five years you will be able to buy natural gas about anywhere.”
Officials at Kansas University’s Transportation Research Institute said it was too soon to say whether such an aggressive time line would prove to be true for compressed-natural-gas vehicles. But Ilya Tabakh, a research associate at the institute, said the technology was getting a lot of discussion in the transportation industry.
“There is definitely potential because you have a ready fuel supply,” Tabakh said. “It all kind of depends on how you get the gas, how you get it to the stations, how you use it in vehicles. You’ll need to do a cradle-to-grave type of analysis to really understand its benefits and drawbacks.”
Natural gas supplies have been on a steady rise since 2008, when “fracking,” a new type of extraction technology, became more prevalent in the industry. As a result, natural gas prices are down about 70 percent from 2008 levels. Fracking, though, has drawn concern from some environmentalists over worries that it can contaminate groundwater supplies.
Currently it costs about $10,000 to convert a standard vehicle to operate on compressed natural gas. But Schumm said research suggests that for fuel-guzzling vehicles, such as trash trucks, the payback can be about three years.
“I think it is a technology that has a future,” Schumm said.