Firm Pledges $1 Billion To Promote Natural Gas Cars

If the U.S. is to convert from a gasoline to natural gas-powered automotive fleet, Chesapeake Energy, a major natural gas producer, thinks it may be up to it to jumpstart the process.

The company, the nation's second-largest producer of natural gas, says it is prepared to invest up to $1 billion over the next 10 years in companies and technologies that will speed development of more natural gas-powered cars and trucks.

Switching from gasoline to natural gas, the company says, will lower energy costs to consumers, enhance national security, stimulate economic growth, create hundreds of thousands of jobs, improve the environment, and “help break OPEC's 38-year stranglehold on the U.S. economy.”

Three-pronged plan

"We have analyzed the U.S. transportation sector during the past four years to determine how to create the best pathway to move our country away from dependence on OPEC oil and the resulting yearly transfer of more than $400 billion of American wealth to foreign countries, many of them often unfriendly to U.S. interests,” said Aubrey K. McClendon, Chesapeake's Chief Executive Officer.

“As a result of our analysis, Chesapeake has developed a three-pronged plan to move America toward greater energy independence and enhanced national security during the next 10 years.”

Chesapeake said it would increase existing domestic onshore oil and natural gas liquids (NGLs) production of approximately eight million barrels a day by three to four million barrels a day through the acceleration of horizontal drilling and hydraulic fracturing to develop oil and gas resources in the U.S.

It will also invest in enough publicly accessible compressed natural gas (CNG) and liquefied natural gas (LNG) fueling stations to reach a tipping point where carmakers of all vehicular classes will have sufficient confidence to increase their production of CNG and LNG vehicles and provide American businesses and consumers access to vehicles that run on natural gas. The company says the fuel should be approximately $1.50 - $2.00 per gallon cheaper than gasoline and diesel.

Finally, Chesapeake said it will deploy scalable GTL processes to convert natural gas into a room temperature, tank-ready, liquid transportation fuel that can be blended with existing supplies of gasoline and diesel or used as a stand-alone replacement product that is cleaner and more affordable and creates jobs.

Redirect funds from drilling budget

Where will the money come from? To fund the effort, Chesapeake will redirect approximately two percent of its forecasted annual drilling budget away from efforts to increase natural gas supply toward projects that will instead stimulate increased natural gas demand.

Honda already produces a CNG Civic, with a list price of about $26,000. The Chesapeake initiative is designed to encourage other car makers to do likewise, by providing more places where consumers can fill up.

Carmakers, however, have already started down a different alternative energy path. At the U.S. Government's encouragement, they have spent billions developing electric cars. It remains to be seen which technology will ultimately win out.

Many city buses and taxi cabs already run on the fuel. Three years ago, when gas prices were also at record highs, investor T. Boone Pickins strongly pushed natural gas as a motor fuel, saying it would provide a strong boost to the U.S. economy and provide virtual energy independence.